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thisCrowd - Audio Read
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In the ever-evolving realm of cryptocurrencies, trust remains an essential factor, but the industry’s battle against relentless thieves has been an ongoing struggle. The staggering amount of $3 billion was brazenly stolen through 125 hacks last year, with decentralized finance (DeFi) platforms being the hardest hit, accounting for nearly half of the total losses.
Amidst claims of transparency, DeFi protocols faced a significant blow, losing a staggering 75% of their total value locked in the past 11 months, plummeting from $166.58 billion to a mere $39 billion by mid-December. This startling revelation came from Elliptic, a blockchain analytics firm.
The primary targets for these crypto heists were blockchain bridges, which constituted a massive 70% of all the losses, with the thieves making off with almost $2 billion from DeFi protocols. The appeal to hackers lies in the temporary reserves of transaction value held by these bridges, which facilitate the movement of tokens between different blockchains.
The unfortunate truth is that many cutting-edge blockchain bridges were constructed with speed and convenience in mind, rather than focusing on security. Sam Williams, the CEO of blockchain security firm Arweave, brought attention to the vulnerability of private keys to multi-signature wallets, which hackers exploited to gain unauthorized access to the bridge’s protocols by targeting single parties with multiple private keys.
The year 2022 witnessed some of the most audacious crypto heists, surpassing the $3 billion mark. Among these, the Ronin Network faced the largest heist, where a staggering $625 million worth of ether and USD coin were stolen from the blockchain supporting the popular non-fungible-token-based video game Axie Infinity. This attack was later traced back to the North Korean state-backed hacking collective, Lazarus Group, by the U.S. Treasury Department.
In another striking instance, the Wormhole Network fell prey to an unknown attacker who exploited a vulnerability in the bridging protocol, managing to create 120,000 wETH on the Solana blockchain without providing the necessary collateral.
Meanwhile, the Nomad protocol suffered from a hacker who craftily exploited a code weakness, sending stored tokens without proper authorization. This exploitation was so simple that it required no significant programming skills.
Beanstalk Farms, unfortunately, lost over $150 million in crypto when an attacker cleverly utilized a flash loan from the decentralized protocol Aave to borrow nearly $1 billion worth of crypto. With a 67% voting stake gained in Beanstalk, the attacker could easily transfer tokens to their own wallet.
Even established entities like Wintermute, a prominent crypto market maker in London, were not immune to these attacks. They were hit with a $160 million hack, seemingly originating from a service called Profanity, which generated “vanity addresses” for digital-asset accounts.
These incidents serve as a stark reminder of the paramount importance of robust security measures and vigilant oversight in the cryptocurrency market. As the industry continues to evolve, staying one step ahead of the relentless thieves remains a collective challenge that must be faced head-on to ensure the trust and longevity of cryptocurrencies.
