London, March 30 (Reuters Breaking View)-Cryptocurrency revolutionaries admire the open and experimental spirit of the movement. However, the explosive growth of unstable new blockchain networks presents opportunities not only for legitimate users but also for criminals. The risk is that rampant hacking is inherent in the so-called decentralized finance boom.
Decentralized finance, or DeFi for short, represents a community of developers building financial products that operate on blockchain ledgers rather than traditional trading systems controlled by traditional banks and stock exchanges. We hope that such networks will make transactions faster and cheaper over time. But they have big problems with cyber theft.
On Tuesday, the blockchain project Ronin, linked to the popular online game “Axie Infinity,” was attacked by attackers. Eject $ 540 Million The value of cryptocurrencies. According to blockchain analytics group Elliptic, Wednesday’s haul is worth about $ 600 million, the second largest cryptocurrency theft to date. Occurs shortly after a $ 320 million crypto service wormhole was hacked in February read more .. On an annual basis, these attacks alone mean that DeFi thefts were carried out at a rate of $ 3.4 billion annually in the first quarter of 2022, compared to $ 2.3 billion in 2021. according to To chain analysis.
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Indeed, cryptocurrency Die Hard may point out that larger attacks are just a feature of the larger industry. According to Breakingviews analysis of Defi Llama data, the average daily deposit on DeFi products was $ 133 billion in 2021. This means that the thief stole about 1.7% of the total value of this sector. Equivalent annual figures for 2022 are about the same.
But there is reason to think that such a hack would be a permanent feature of the DeFi system. By its very nature, products and codes in this area tend to be scrutinized by everyone. This makes it easier to plan an attack. Wormhole hackers have discovered a pending security fix uploaded to GitHub, a tool that developers use to collaborate on code.
Indeed, it’s hard to imagine the hacking of the Core Ethereum network, which underpins much of decentralized finance. However, its security has its drawbacks. Transactions are validated by hundreds or thousands of participants who expect a monetary return on their efforts. These “gas charges” put pressure on the system. Ronin’s solution was to speed up with only nine validators. But it came at the expense of security. Hackers only had to put five participants at risk to control the system. Many potential users are clearly steered when the result of innovation is a greater risk of fraud.
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Contextual news
-The blockchain project Ronin said on March 29 that hackers stole about $ 615 million worth of cryptocurrencies from the system.
-According to the project, an unidentified hacker on March 23 stole 173,600 ether tokens and US $ 25.5 million coin tokens. At current exchange rates, stolen funds were worth $ 615 million, but at the time of the attack they were worth about $ 540 million, according to Reuters.
–Ronin is used to enhance the popular online game “Axie Infinity”.
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Edited by Neil Unmack and Oliver Taslic
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