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Decentralized finance, better known as DeFi, may not be “decentralized” enough, as attackers exploit centralization weaknesses to drain billions of users in 2021, according to research by blockchain security firm CertiK.
In a new report on the state of DeFi security in 2021, CertiK researchers Say “The problem of centralization is the most common attack vector in decentralized finance”. The blockchain security firm cited 44 DeFi hacks that have resulted in a total of $1.3 billion in lost funds in 2021. This is an increase of more than $500 million compared to 2021.
“This underscores the importance of decentralization and the fact that many projects still have to work towards this goal,” CertiK said, adding:
“Centralization goes against the spirit of DeFi and poses significant security risks. Both dedicated hackers and malicious insiders can exploit a single point of failure.”
Research conducted by ImmuneFi Revealed that over $10 billion in value was lost to DeFi hacks and related scams over the past year, revealing significant differences in how exploits are categorized and tracked. However, most research on the matter seems to agree that there has been a sharp rise in security breaches targeting DeFi projects.
Although DeFi exploits In the eyes of traditional investors and the traditional financial system, the legitimacy of the cryptocurrency market has been undermined, and CertiK offers a silver lining: the loss in 2021 is only 0.05% of the total cryptocurrency market capitalization, down 17% from the previous year.
related: What is a honeypot encryption scam and how to spot it?
This Cryptocurrency market peaks above $3 trillion November 2021, after starting the year below $800 billion, according to CoinGecko. DeFi is a major growth catalyst for cryptocurrencies, with the total value locked in the industry rising from less than $20 billion in early 2021 to Nearly $260 billion in December. Total Value Locked, also known as TVL, refers to the assets that are locked Currently staked on DeFi protocols.
CertiK cites the growing popularity of Binance Smart Chain (BSC) as one of the biggest reasons for DeFi’s success. Between January 2021 and December 2021, BSC’s TVL grew by 31,000% from $62 million to $21 billion.
Demand for CertiK’s blockchain security services appears to be on the rise as more projects look to avoid falling victim to scams and exploits. The company audited a total of 1,737 projects in 2021. As Cointelegraph reported, CertiK is approaching unicorn status After securing an $80 million Series B2 investment closing in late November 2021.
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