DeFi Has a $4 Billion Hacking Problem. EOS Has a…

If there’s been one motif that’s defined this bear market, it’s hacks and exit scams. Which are essentially the same thing. One minute your money’s there. The next it’s gone. And while it would be easy to invoke mantras about “not your keys, not your coins” and the need to self-custody, the truth is, this isn’t a custodial problem.

While the second biggest collapse of the year involved centralized crypto app Celsius, most of the billions that have been hemorrhaged to hackers in 2022 have been wholly DeFi-based. In other words, they emanated from an industry that’s meant to have no central points of failure and where users are responsible for safeguarding their own funds.

In reality, a hellish brew of smart contract flaws, badly built bridges and front-end exploits have served to separate even the smartest DeFi traders from their tokens. The latest such affair, a $115M loss by Solana’s Mango market, has brought the total value of DeFi assets plundered to $4.8B. October has been the second worst month of the year, with $687M stolen. Something’s got to change and the EOS development team think they’ve found a solution that will stop the rot.

 

DeFi Done Better

Yves La Rose is CEO of the EOS Network Foundation. In a recent Twitter thread, he outlined his vision of “DeFi 3.0” as it will materialize on the revitalized blockchain network. La Rose noted the billions lost to hacks and revealed that the Foundation “had asked some of the smartest minds in DeFi to try to solve these problems.”

The result of all this big brainstorming has been two novel products: Yield+ and Recover+. The first of these is focused around growing the TVL on EOS so that there is greater liquidity for users to draw upon. It doesn’t directly address DeFi’s insecurity problem, but it creates an environment that is conducive to trading. But where there’s money, there’s hackers willing to chance their luck at illicitly obtaining it. That’s where Recover+ comes into play.

It’s a solution for recovering funds that are hacked and returning them to their rightful owners. La Rose describes it as “an opt-in program for projects that offers them an opportunity to recover hacked funds in the event of an emergency.” It’s essentially DeFi insurance on EOS. The idea is that to be eligible for Yield+, projects must be enrolled in Recover+. Therefore, explains EOS Network Foundation’s CEO, “the DeFi protocols that offer the best staking rewards will also be the projects that are least vulnerable to hacks.”

 

Mo’ Yield, Mo’ Security

The twin products that EOS Network Foundation has identified aren’t just theoretical: they’re currently under development and scheduled to launch in Q3. In other words, expect them to be dropping very soon. Recover+ cannot prevent hacks themselves from occurring, it should be noted. Rather, it enacts a framework for responsible asset recovery, where possible, coupled with bug bounties that incentivize hackers to act ethically.

19 projects are enrolled in the initiative so far, with a combined TVL of $47M. And, crucially, they have had zero incidents to date to deal with – though it’s early days of course. If EOS’ dual products are successful in growing liquidity, incentivizing better security, and arranging restitution in worst-case scenarios, expect to see similar initiatives springing up on other chains. Anything to stop DeFi’s $4.8B hacking problem.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice

Source: https://cryptodaily.co.uk/2022/10/defi-has-a-dollar4-billion-hacking-problem-eos-has-a-solution