Research by blockchain analytics firm Elliptic showed that fraud and theft @ decentralized finance platforms have led to $10.5 billion in losses so far this year. Cash has been pouring into the so-called DeFi platforms, reflecting the explosive interest in crypto-currencies.
DeFi platforms allow users to lend, borrow and save (usually in crypto) while bypassing traditional gatekeepers of finance such as banks. The technology offers cheaper and more efficient access to financial services.
Data by sector tracker DeFi Pulse shows that cryptocurrency worth $86 billion is currently stored on DeFi platforms, compared with some $12 billion a year ago.
However, the explosive DeFi growth came along with booming organized crime in the mostly unregulated finance sector.
Users are thought to have suffered over $12 billion in losses through crime at DeFi apps, lending platforms and exchanges since 2020, with the majority of losses coming in 2021 alone.
Those losses were mainly attributed to fabricated and designed bug and code flaws, as well as a hacking technique that involves exploiting loopholes in how the DeFi service operates.
Decentralized apps are designed to be trust-less in that they eliminate any third-party control of users’ funds. But you must still trust that the creators of the protocol have not made a coding or design mistake that could lead to a loss of funds.
Major DeFi platforms say they take measures to bolster security that range from hiring external firms to audit code for vulnerabilities to maintaining keys and passwords needed to access user wallets in secure environments.
RT. com / ABC Flash Point News 2021.