DeFi made headlines with its meteoric rise in market cap in early 2021, but it correspondingly uncovered the sector to potential cyber threats. Along with a total of 10x market growth, illicit transactions towards DeFi protocols have grown by 1,1964% in the past year. The rising concern has become a point of discussion across the crypto-verse.
The above report from Chainalysis suggests that illicit addresses by service category have risen by 1,964% in 2021. Veterans across the space have been discussing potential DeFi protocols which could plausibly prevent the space from fraud. Notably, AAVE, LINK, and Algorand taking the lead to achieve zero percent frauds in 2022.
AAVE:
Despite the pullback pressures AAVE has managed to launch several upgrades to enhance the security measures. Recently, the community has voted unanimously to merge HAL for facilitating notifications about the safety of their investments in their platform. Co-founder of HAL Manilo Poltronieri asserted that the “health factor” notification mechanism is a major solution for the management of liquidation risks on DeFi tokens.
Moreover, AAVE v3 is on the verge to go live on the mainnet. The upgrade aims to offer increased security, and an advanced cross-chain mechanism. And despite the market crash, AAVE protocol still holds the TVL above the $20 billion mark. Hence, it is one of the emerging tokens which is adding more security measures to avoid fraud.
Algorand (ALGO):
Algorand is prospering to transform the DeFi section. The ecosystem’s unique strategy is to resolve the blockchain trilemma, by eliminating the major security issues. Moreover, the blockchain trilemma is the difficulty of ensuring the central features such as security, scalability, and decentralization of the network.
However, the network is attempting to resolve the blockchain trilemma with randomness. The feature chooses validators erratically from all ALGO holders, a highly practical method that ensures security. Hence, this is one of the promising tokens that is optimistic about building the secure DeFi infrastructure for the future.
Chainlink (LINK):
Chainlink has seen phenomenal growth in 2021 with 1000+ integrations and collaborations. The main growth areas set for 2022 are being to achieve high security, staking, and abstraction layer for enterprises. The ecosystem secured over $75 billion total value secured, and executed secure off–chain computing via making use of decentralized oracle networks.
The much-awaited feature LINK token staking is expected to integrate the cryptographic and economic security of the Oracle network. The token could be then locked as a security measure to develop revenue from trader fees that could be decreased in the case of malicious nodes.
Collectively, as DeFi space continues to evolve, it is important to shift focus to strengthen security measures. Especially, AAVE, ALGO, and LINK appear to have realized the need of the hour. If they continue to work on upgrades to build robust and secure platforms for users, then these tokens would skyrocket once the market sentiments turn bullish.
Source: https://coinpedia.org/defi/aave-algo-and-link-thrive-to-eliminate-defi-frauds/