Malicious actors had a terrific year in 2022, it seems.
In 2022, cryptocurrency businesses faced severe difficulties; some filed for bankruptcy. In addition to these difficulties, Forbes reports that over $3 billion was stolen from cryptocurrency ventures this year. These disappointments have upended the sector and prompted worries about its stability.
The top five thefts, all employing decentralized finance (DeFi) protocols, accounted for $1.48 billion of the total money taken, the research claims. Crypto projects saw more than 125 hacks.
DEFI Protocols suffered the most losses in 2022
According to Forbes, the top five cryptocurrency thefts have included cross-chain hacking, code flaws, and flash loan attacks.
The top five hacks are $625 million by Ronin Network, $325 million by Wormhole, $190 million by Nomad Bridge, $182 million by Beanstalk Farms in a flash loan attack, and $160 million by Wintermute.
The research claims that 49% of the total cash stolen by hackers this year came through DeFi breaches. As a result, less money has been invested in the industry. According to Elliptic, a blockchain analytics company, DeFi protocols lost 75% of their total value locked (TVL) in 2022. But that also explains why asset prices are falling.
DeFi Llama data also demonstrates a decline in TVL from DeFi protocols, from 166.58 billion at the beginning of 2022 to $39 billion in December.
According to a Forbes study, hackers’ top target this year was cross-chain bridges, which allow tokens to be traded between blockchains. In 2022, hackers will be responsible for 70% of all cryptocurrency theft, stealing around $2 billion from blockchain bridges.
Hackers enjoy DeFi
The studies also demonstrate that, despite DeFi’s originality, it has grown to be a favourite hangout for hackers. But how is this taking place?
The majority of thefts in the DeFi area, according to blockchain analytics company Chainalysis, are caused by faulty coding, and smart contract faults have been exploited to steal money from protocols.
The open source nature of the DeFi ecosystem, according to the research, allows anyone, including hackers, to look for flaws or faults and prepare exploits in advance.