HomeTechnology & InnovationThere’s a greater chance of being defrauded on DeFi
By Mayank Sharma
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January 17, 2023 12:49 pm

There’s a greater chance of being defrauded on DeFi

Time to batten down the hatches
DeFi defrauded
DeFi

From the crypto crash to the FTX fiasco, events in the crypto verse in 2022, have seen investors move their funds from the comforts of centralized finance (CeFi) to the decentralized finance (DeFi) ecosystem. However, it isn’t all hunky-dory with users having lost more money to hacks and scams in the DeFi ecosystem as opposed to CeFi, according to a new report by Immunefi.

Immunefi has identified 168 instances of hackers and scammers defrauding investors across the Web3 ecosystem, taking away almost $4 billion in 2022. 

“The global web3 space was valued at over $934 billion in 2022,” noted Immunefi, adding that this amount of capital “represents an unparalleled and attractive opportunity for blackhat hackers.”

Read More: Will 2023 be an exciting year for crypto?

Notably, crunching all the numbers, Immunefi discovered that DeFi emerged as the main target of successful exploits with 155 incidents costing over $3 billion, accounting for 80.5% of the total losses. On the other hand, CeFi suffered only 13 incidents which amounted to just over $760 million or 19.5% of the total losses. 

The report also identifies the year’s top 10 losses in each of the four quarters of the year. However, the incidents at Ronin Network and Wormhole (in Q1, 2022), and BNB Chain and FTX (in Q4, 2022), account for a majority of the losses suffered during the year.

Furthermore, Immunefi found that the two most targeted blockchains last year were BNB Chain and Ethereum, with 65 and 49 unique security incidents each. Solana came in third with 12 incidents, representing 6.7% of total attacks across chains. Next up was Avalanche with 8 incidents, followed by Polygon with 4 incidents, NEAR with 2 incidents, and Polkadot with 1 incident. 

In 2022, hacks continued to be the predominant cause of losses (134 incidents) as compared to frauds, scams, and rug pulls (34 incidents). Fraud accounted for only 4.4% of the total losses in 2022 ($174 million), while hacks accounted for 95.6% ($3.7 billion).

But it’s not all gloom and doom though with investors having recovered over $200 million of the stolen funds in 12 specific situations. While the sheer amount of the loss is worrying, Immunefi notes that the silver lining is that the overall losses have decreased a whopping 51.2% from the 2021 total of over $8 billion. 

Still, the report should be a wake-up call for all DeFi players, who should use this as an opportunity to reinforce their defenses.

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