DeFi is simply short for Decentralized Finance. Decentralized finance encapsulates financial technologies dependent on Distributed Ledgers for security and transparency. The DeFi system does away with the traditional financial institutions centralized in nature with cohesive regulations, authorities, and bureaucracy.
Sadly, DeFi platforms are not foolproof, especially in recent times. Hackers often cart away large sums of money and assets after tactically issuing a cyber attack on the DeFi protocols concerned. The section below overviews the four biggest DeFi hacks in history and how they came to be.
What were the Biggest DeFi Hacks in History
There have been a few large-scale DeFi hacks, all things being considered. However, there are a few that top the list, and this has seemed to happen recently. Some of them are examined below.
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1. Ronin Platform
The Ronin DeFi network was hacked earlier in the year when the Lazarus Group in North Korea exploited its vulnerability. The web is particularly renowned for its gaming products, and hackers targeted the validator nodes of the games. They made away with 173,600 Ethereum and $25.5 million with a combined digital asset of $650 million, although the network reimbursed the affected users.
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2. Wormhole Platform
The Wormhole is a service platform that allows users to send a currency to the platform protocol to be converted to a collateral contract on the same currency’s blockchain. Unfortunately, the Wormhole protocol was hacked, and the 120,000 wETH worth $326 million was minted without depositing any funds for exchange.
3. Poly Network
The network was specially built to enable users to exchange cryptocurrency coins across blockchains. However, in 2021, a vulnerability was exploited in its code, which led to a massive token loss worth a vast sum of money. The Poly Network hack cost the network about $601 million.
4. Beanstalk Farms
Beanstalk farms function on an Ethereum-built stablecoin. The platform was hacked maliciously, when the hacker used a flash loan to get enough voting power to approve smart contracts that transferred a deposit to their account in line with the Proof-of-Stake system. After using the warranty, the hacker paid off the flash loan and absconded with about $76 million.
How were these DeFi Hacks Achieved
There are standard ways hackers get into DeFi networks; one of the most common ones is by exploiting a vulnerability in the network nodes. One particularly recurring theme for many of these hacks was the exploitation of vulnerabilities. In the case of the Ronin network hack, the hackers got access to users’ private keys and made fraudulent withdrawals. They exploited a backdoor vulnerability and faked the signature to validate the fraudulent withdrawals. Sadly, it is projected that more hacks directed to DeFi platforms are still to come, given the rapid advancement in technology and the skills of malicious actors.
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Conclusion
Although there have been significant attempts to improve the quality and state of security, these hacks show that these platforms may not be passed off as infallible. Despite decentralized finance’s decentralized and secured nature, malicious personnel can still exploit the weak links to effect attacks on the network. Nothing is indeed foolproof, and these hacks are apparent evidence of that.
