The Biggest DeFi exploits of 2022: Harmony Bridge, Wormhole and Ronin
As of June 30, 2022, REKT leaderboard records show that in the first half of this year, over $1.63 billion worth of funds were stolen due to hacking. This number is significant compared to the total amount of DeFi defi protocols that have fallen victim to attacks in the whole of 2021, which accounted for $2.29 billion. For this, communities demand higher security as the Web3 ecosystem grows, and the number of hacks is ever-increasing.
Despite recent events surrounding the crash in the crypto ecosystem and the de-pegging of UST, hacks and scams in decentralized finance are still among the greatest issues resulting in major loss of funds for investors and DeFi protocols. Understanding risks is the first step for investors to create a mitigation strategy for their portfolio
The biggest hacks of 2022
As of today, the leaderboard shows a total of 25 hacks that occurred in 2022, of which we’ll highlight the latest and biggest so far.
The biggest hack in 2022 occured in late March, where $624M was stolen from Ronin Network. A group of hackers sponsored by the North Korean state, known as Lazarus, managed to find their way in through forging the withdrawal. This enabled the attacker to gain access and control to sign and approve transactions on behalf of the remaining validators. This massive number alone has sparked awareness amongst investors and has increased the communities’ demands for security measures to protect their capital.
The second-largest DeFi hack of 2022 took place in early February and was inflicted on WormHole, which cost them $326 million worth of funds. The incident was able to take place through a loophole bypassing Wormhole’s ‘guardian’ accounts, enabling the attacker to manipulate transactions. Wormhole offered a $10 million bug bounty to the hacker for the stolen funds, which the attacker refused. Fortunately, Wormhole was able to get back all the stolen funds, although it is still unknown how they managed to do so yet.
One of the biggest and very recent hacks at the time of writing has been against DeFi protocol Harmony bridge, which was exploited for $100M worth of cryptocurrencies. It has been said that the hackers were able to drain the account by compromising only two private keys. In other words, the hackers were able to access the servers by gaining control of only two multi-signature addresses leveraged in Harmony’s bridge to execute the transactions.
Even though the numbers in these recent and biggest hacks may sound scary, it is a wake-up call to investors to improve their investment strategy and consider a safety net as they build their financial future and freedom.
Insurance: a key component for web3
The need for decentralized insurance has become increasingly crucial and is only expected to grow as the crypto space matures. In addition, hacks, scams, and extreme bearish trends are bound to happen as this market tends to be volatile and unpredicted. For this, the demand for risk solutions whilst building assets is a huge discussion amongst investors.
To protect the crypto community, DeFi insurance projects are on the rise. Cointelegraph and Coinbase predict that insurance will be a key component for web3 in 2022 and that insurance will empower and motivate investors to navigate the DeFi space fearlessly.
Up until the market took a turn, more and more investors are protecting their digital assets to minimize potential losses. Insurance protocol Nexus mutual average cover amount grew to over a million and risk providers like InsurAce showing significant growth — totaling up to $343M since its conception.
As hacks continue to arise and black swans are around the corner, we expect a paradigm shift towards risk mitigation and diversification. Adding protection against hacks, stable coin depegging, rugpulls and protocol failure is a sensible safety net to mitigate risks. Insurance should be part of any investor’s plans against the possibility of unforeseen events.
About Bright Union
Bright Union is the world-leading multi-chain decentralized finance cover marketplace. A platform to aggregate and match supply and demand, it also accelerates the industry by providing strongly needed insurance liquidity.
By aggregating & accelerating the entire web3.0 insurance landscape, Bright Union is uniquely placed to offer easy integration to any dApp, wallet, exchange or metaverse and provide their investors an extra layer of trust by offering the best insurance policies on point of need
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