In the rapidly evolving landscape of cryptocurrency, centralized finance (CeFi) entities have emerged as the primary victims of hacking incidents in 2024. Deddy Lavid, co-founder and CEO of Web3 security firm Cyvers, has indicated that these entities represent a significant proportion of the vulnerabilities and financial losses within the industry.
According to Lavid, approximately 70% of the financial losses due to cryptocurrency hacks stem from CeFi platforms. This figure not only highlights the frequency of attacks but also underscores the substantial amount of funds compromised. The following details from Lavid further emphasize the gravity of the situation:
“CeFi entities constitute about 70% of the hacking incidents, both in terms of the volume of lost funds and the number of exploits. Although smart contract-based projects are also experiencing an increase in attacks, the most significant vulnerabilities today arise from deficiencies in the code and personal oversight.”
Strengthening Web3 Security
In response to these threats, Cyvers has embarked on a strategic partnership with layer-1 blockchain Arthera Chain. This collaboration aims to fortify Web3 security through advanced real-time threat detection and extensive monitoring solutions. The partnership is expected to address vulnerabilities not just in individual projects but across entire networks, considering both technological advances and human factors that contribute to security risks.
One of the most notable recent incidents occurred on July 18, when a hacker exploited vulnerabilities in WazirX, an Indian cryptocurrency exchange, leading to a loss of over $230 million. This event marked the second-largest cryptocurrency hack of the year. Such incidents underscore the urgent need for a holistic and mature approach to Web3 security, as advocated by Lavid:
“To effectively counter these vulnerabilities, we must adopt a comprehensive and conscious security strategy that encompasses entire networks. This approach should integrate technological solutions with an emphasis on human factors to mitigate risks effectively, especially as Layer 2 (L2) networks expand.”
Trends and Predictions for Future Security
The landscape of cryptocurrency hacking is evolving, with an increasing trend toward more sophisticated and lucrative attacks. In the first quarter of 2024 alone, hackers stole $542.7 million in digital assets, marking a 42% increase from the previous year. However, the integration of artificial intelligence and enhanced real-time monitoring systems promises to bolster Web3 security significantly:
“By incorporating AI and continuous monitoring, we aim to preempt these threats. A shift towards securing entire networks rather than isolated projects will significantly improve our ability to protect assets and reduce vulnerabilities, making it increasingly difficult for hackers to achieve their objectives.”
While the focus often remains on CeFi entities, it’s noteworthy that improvements in smart contract security have shifted hackers’ focus towards more accessible targets such as private keys. In 2023, over 55% of the hacked digital assets were attributed to private key leaks, a stark contrast to the decrease in losses from smart contract vulnerabilities, which plummeted by 92% to $179 million from $2.6 billion in the previous year.
| Year | Loss from Hacks | Major Targets | Improvement in Security Measures |
|---|---|---|---|
| 2023 | $179 million | Smart Contracts | 92% decrease in vulnerabilities |
| 2024 | $542.7 million | CeFi Entities | 42% increase in stolen assets |
The continuous threats faced by CeFi entities highlight an urgent need for enhanced security measures within the cryptocurrency industry. By integrating advanced technologies and adopting network-wide security protocols, the industry can hope to safeguard against the escalating wave of cyber threats.
Featured image credit: Sora Shimazaki via Pexels
Follow us for more breaking news on DMR