Crypto Hacking Reached $3.8 Billion in 2022 (Biggest on record)

Chainanalysis | Feb 1, 2023

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2022 was the biggest year ever for crypto hacking, with $3.8 billion stolen from cryptocurrency businesses.

• DeFi protocols by far the biggest victims of cryptocurrency hacks accounting for 82.1% of all cryptocurrency stolen by hackers — a total of $3.1 billion — up from 73.3% in 2021. And of that $3.1 billion, 64% came from cross-chain bridge protocols specifically.
  • Bridges are an attractive target for hackers because the smart contracts in effect become huge, centralized repositories of funds backing the assets that have been bridged to the new chain — a more desirable honeypot could scarcely be imagined. If a bridge gets big enough, any error in its underlying smart contract code or other potential weak spot is almost sure to eventually be found and exploited by bad actors.

See:  Do Industry Operators, Researchers, and Regulators Agree On How Big Crypto Crime Is?

• Double edged sword:  DeFi is one of the fastest-growing, most compelling areas of the cryptocurrency ecosystem, largely due to its transparency.  But that same transparency is also what makes DeFi so vulnerable — hackers can scan DeFi code for vulnerabilities and strike at the perfect time to maximize their theft.
  • The core issue is that DeFi developers prioritize growth over all else, and direct funds that could fund security measures to rewards in order to attract users.
  • DeFi code auditing conducted by third-party providers is one possible remedy to this.
  • Test protocols with simulated attacks.
  • Circuit breakers. DeFi protocols should build out automated processes to pause their protocols and halt transactions if suspicious activity is detected

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