Decentralized Finance (DeFi) has become increasingly popular in recent years, with more individuals and institutions participating in this alternative financial system. However, as DeFi has grown, so has the number of hacks and scams targeting its users. According to a recent report from Web3 portfolio app De.Fi, over $204 million was lost in DeFi hacks and scams in the second quarter of 2023.
The report, titled “Q2 De.Fi Rekt Report,” provides valuable insights into the state of DeFi security during this period. The data for the report was obtained from De.Fi’s “Rekt Database,” which tracks and analyzes reported DeFi incidents. The report reveals that over $208.5 million was initially lost in Q2, but $4.5 million was eventually recovered through various methods like prosecutions, deals with hackers, and other recovery mechanisms.
One of the most notable findings in the report is the significant increase in the number of DeFi hacks compared to the same quarter of the previous year. The number of incidents rose by “almost 7 times,” with a total of 117 hacks occurring in Q2 2023 compared to only 17 in Q2 2022. These incidents resulted in a staggering loss of over $665 million in the first half of 2023 alone.
The report also highlights the top five hacks of the second quarter, which affected Atomic Wallet, Fintoch, MEV-Boost, Bitrue, and GDAC. The Atomic Wallet exploit, which took place on June 3, accounted for $35 million, or approximately 17% of the total losses. Fintoch users lost $30.6 million in what is believed to be an exit scam, while the MEV-Boost attack resulted in a loss of $26.1 million. These three attacks collectively contributed to over 45% of the total losses during Q2.
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The report identifies “access control issues” as the most common cause of losses in DeFi, accounting for $75.8 million or a quarter of the total losses. This refers to situations where hackers gain unauthorized control of a user’s wallet. Exploits, totaling $55.3 million, were the second most common cause of losses. Additionally, users lost $47.3 million through rug pulls or exit scams in Q2.
However, it is worth noting that despite the significant losses incurred in Q2, DeFi hacks and scams were actually smaller in scale compared to the previous quarter. In Q1 of 2023, CertiK reported over $320 million in losses from January to March, indicating a slight improvement in security measures and response mechanisms.
These incidents highlight the inherent risks associated with participating in decentralized finance. While DeFi offers a range of exciting opportunities for individuals to earn passive income and participate in the global financial system, it is vital for users to exercise caution and adopt robust security practices. By implementing best practices such as using hardware wallets, conducting thorough due diligence on DeFi projects, and remaining vigilant against potential scams, users can mitigate the risks associated with this innovative financial landscape.
The De.Fi Rekt Report serves as a valuable resource for individuals and organizations operating within the DeFi space. It sheds light on the evolving nature of threats and highlights the need for continued efforts to improve security measures and educate users about potential vulnerabilities. By staying informed and proactive, the DeFi community can work together to build a more secure and resilient ecosystem for all participants.
As the popularity and adoption of DeFi continue to grow, it is important for users to prioritize security and remain vigilant. By learning from past incidents and implementing robust security measures, the DeFi space can become even more secure and trustworthy, facilitating the widespread adoption of this groundbreaking technology.
