The most common causes of DeFi attacks are ‘centralization issues’: CertiK.
DeFi projects in 2021 suffered losses running into billions of dollars because of several weak points in the centralized setups. The issue may be because decentralized finance or DeFi is not decentralized enough. Researchers of CertiK, a blockchain security company, issued a report on security issues that DeFi faced in 2021. They said that centralization issues caused the most attack vectors within this sector. The firm provided reports of 44 DeFi attacks that caused up to $1.3 billion worth of losses in 2021. It is more than $500 million than the losses incurred in 2020.
Not Sufficient Decentralization
The firm underlined the importance of better decentralization to ensure DeFi projects are more secure. It said project operators have to do more to achieve this goal. According to it, centralization is against the DeFi ethos and increases security risks. Centralization leads to the creation of weak points that both hackers and others with malicious intentions can exploit. According to a research report by ImmuneFi, hackers and scammers have caused losses exceeding $10 billion in the last year. It exposes discrepancies in the way exploits are tracked and classified. Most researchers agree that there has been an increase in attacks on DeFi projects.
The Saving Grace
While these exploits have caused a loss of legitimacy among investors, CertiK offered some hope. It said these losses in 2021 are only 0.05% of the total market capitalization of crypto. It is down by 17% compared to the last year. In 2021, the cryptocurrency market capitalization started with less than $800 billion and crossed $3 trillion in early November. Crypto saw its biggest growth due to DeFi projects and grew from $20 billion to $260 billion in 2021.