The value of assets damaged by hacking in DeFi has decreased by 40% due to security incidents from 2023 to 2024 as protocols have improved, bridges have become stronger, and advanced encryption measures have been implemented.
According to the annual Web3 Security Report by the blockchain security company Hacken, enhanced security measures for DeFi have emerged concurrently with Centralized Finance (CeFi) facing a gloomy year.
CeFi breaches have doubled, and losses have skyrocketed to $694 million as centralized exchanges have become the primary targets for access control vulnerabilities and other critical security risks.
The report's findings highlight the stark contrast between the progress of DeFi and the challenges faced by CeFi, providing crucial insights to examine both spaces and underscoring the vulnerabilities of centralization.
Hacken's 2024 report shows a significant reduction in financial losses for DeFi in 2024, from $787 million in 2023 to $474 million this year.
The report notes that exploit incidents related to bridges, a significant vulnerability in DeFi's history, have decreased significantly from $338 million in 2023 to only $114 million in 2024.
Despite improvements in DeFi, such as Multi-Party Computation (MPC) and zero-knowledge (ZK) proofs, challenges remain, as evidenced by the fact that access control vulnerabilities account for nearly half of DeFi's total losses, such as the $55 million hack of Radiant Capital.
According to Hacken's report, 2024 for CeFi is in stark contrast to the improvements seen in DeFi, with financial losses doubling from 2023 to $694 million.
The increase in breaches is primarily due to access control exploits and notable incidents such as the Q2 hack of the DMM exchange and the WazirX hack in Q3.
These hacks involved compromised private keys and exploits of Multisignature vulnerabilities, enabling the theft of $305 million and $230 million, respectively, from the exchanges.
Dyma Budorin, the co-founder and CEO of Hacken, stated that the report's findings highlight the "critical vulnerabilities" in CeFi's operational security, primarily due to "poor private key management, weak Multisignature setup, and centralized control flaws".
The significant difference in financial losses between the DeFi and CeFi sectors highlights the opportunity for improvement in both industries.
Budorin said that the attackers exploited vulnerabilities in security setups and that it is crucial to "implement stricter key management practices and automated monitoring systems" to mitigate these risks.
The risks highlighted by the Hacken CEO can be seen in the North Korean hackers stealing over $1.3 billion in cryptocurrency this year through 47 incidents, according to the Chainalysis report on December 19.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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Minh Anh
According to Cointelegraph
