The first week of 2024 already has DeFi users on edge after three security incidents in five days.
Over the new year, South Korean cross-chain bridging project Orbit Chain lost $80 million in assets to hackers who’d raided the protocol’s multi-signature wallet.
The team says it’s now working with domestic and international law enforcement to determine the next steps and ways to execute a viable recovery plan.
On Monday — two days after the Orbit attack — cross-chain money market Radiant Capital lost an estimated $4.5 million in a flash loan attack.
A bad actor had manipulated the liquidity index of a freshly created native USDC market on Arbitrum to rapidly siphon crypto from the protocol, leading to pauses in lending and borrowing activities through Radiant.
The attack left Radiant Capital with bad debt and the team says it has since taken steps to re-capitalize. The hope is that users could regain access to their deposits.
Next up was liquidity management platform Gamma Strategies, where an estimated $3.4 million was lost on Thursday. The attacker manipulated Gamma’s accounting mechanisms to mint an excess of liquidity provider tokens, which allowed them to illegitimately withdraw more than 1,300 ETH.
Gamma has since shut off deposits on public-facing vaults to prevent further attacks.
Continued exploits across DeFi have left some concerned about the future of the space.
“DeFi really needs to wake up,” Paul Frambot, CEO of software research and development company Morpho Labs posted on X. “It has been seven years, yet every week, new large-scale hacks, incidents freezing platforms, economic attacks.”
“We are missing orders of magnitude. We need to change the current paradigm.”
This sentiment is shared by Phillip Shoemaker, executive director of Identity.com, a non-profit organization providing decentralized identity verification.
“Security audits are critical for this industry, including for smart contracts and data storage. But I don’t think there’s nearly enough security audits happening in the digital asset space as a whole,” Shoemaker told Blockworks.
He noted that the blockchain space needs to be doing “much, much more in this regard.”
“I think these hacks and various breaches are pushing a lot of people away from engaging with the industry – people just don’t know what’s secure and what’s not. This is something that we as an industry really need to address more thoroughly,” Shoemaker said.
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Source: https://blockworks.co/news/defi-hacks-new-year