44 DeFi hacks in 2021 were the result of centralization issues, according to a report by blockchain security firm CertiK. The report noted that security is becoming a priority task as DeFi picks up even more speed.
Blockchain security firm CertiK, in a report published on January 8, said a significant number of DeFi hacks in 2021 were a direct result of centralization issues. The State of DeFi Security 2021 report places centralization issues as the most common attack vector for attackers, resulting in the theft of $1.3 billion across 44 incidents.
Noting that the DeFi space has seen tremendous growth in 2021, he pointed out that blockchain security has become more important than ever, especially as new niches like NFTs and blockchain gaming become mainstream. Compared to 2020, the amount lost due to hacks, exploits, and scams increased by $500 million.
But as more and more funds were stolen, the projects focused more on security. Year-over-year growth in demand for security solutions has increased by over 1000% as CertiK audited 1737 projects in 2021.
CertiK said its auditors encountered 286 discrete centralization risks and called for greater decentralization to reduce theft. As an example, he cites the mismanagement of bZx’s private key, which led to the theft of $55 million.
Following the centralization, the risks were the missing event missions, which accounted for 211 cases of attacks. Unlocked versions of the compiler and lack of proper input validation accounted for 176 and 104 instances respectively.
The report also highlighted the growth of other networks, which reduced Ethereum’s market capitalization by more than a third over the course of the year. But as other networks grow, so do the opportunities for exploitation.
Ethereum has found stronger competition in 2021
Ethereum has, by all accounts, had a strong 2021, even though its market share has been eaten away. The leading DApp and DeFi network processed more than four times the number of transactions per day than bitcoin, at 1.28 million. Ethereum generates 64 times the revenue of bitcoin. The network’s success has led Pantera’s CIO to say that Ethereum could even facilitate 50% of global financial transactions within the next decade.
However, high network fees, relatively slower transaction times, and competing platforms have allowed other networks to gain traction. Binance Smart Chain, Solana, and Terra also made significant progress in 2021, which may persist well into 2022.
CertiK sees some macro trends taking hold in 2022, namely NFTs, metaverse, green energy solutions for mining and regulation. These trends have become the main talking points and will likely shape the market in the coming year.
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