How to protect DeFi from exploits
Decentralized finance is increasingly exposed to exploits. According to DefiLlama data, in 2021 there was about $200 billion of liquidity locked in smart contracts on the DeFi market. Of the total blocked liquidity, at least 10% was stolen by cybercriminals. Attacks on decentralized finance are carried out regularly.
Most often they are related to the vulnerability of the callback function. As you know, it is often used by credit protocols. With its help, smart contracts can check the user's collateral balance before issuing a loan to him. All this is done in a single transaction.
In order to cheat the smart contract, the hacker returns a function call so that the process starts from the beginning. Since the transaction is not completed in the blockchain, the function once again issues a loan.
Often, development teams use the code bases of other open source decentralized finance projects to deploy their own smart contract. They make some changes to the source code to add their functionality. This leads to a change in the logic of the smart contract and makes it vulnerable.
Cybercriminals also carry out attacks using flash credits. They are becoming more and more popular. Scammers use several protocols to borrow and drag liquidity to the final act, where they increase the price of the token through oracles or pools of liquidity and use it to pump and dump fraud and disappear with liquidity.
Some attacks using flash credits were directed at Pancake Bunny, as a result of which the protocol lost $200 million, and at Cream Finance, and over $ 100 million was stolen.
How to provide protection against DeFi exploits?
To create a secure protocol for decentralized finance, you need to invite experienced teams. They can provide guarantees that the DeFi protocol will be really safe and reliable. It is also necessary to carry out testing. Testing should be carried out at all stages of project development and after its launch on the market.
But even the aforementioned measures cannot provide full protection. The reason is that cybercriminals are constantly improving their methods of attacking platforms. Therefore, if the DeFi protocols want to effectively protect themselves from attacks by organized groups of hackers, they are forced to regularly conduct testing, invite companies to audit. In this case, the risks of hacking will be minimized.
Author: Dan, analyst Сoin-signal.com Club
https://coin-signal.com/cryptonews/how-to-protect-defi-from-exploits/
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