Certik Report: Most DeFi Hacks In 2021 Had Centralization Issues

According to a new Certik report, the blockchain security company showed that most DeFi hacks in 2021 had something to do with centralization. The data is present in the Certik report where the company also examined the growth of defi in 2021 and how other chains became alternatives to Ethereum’s high fees so let’s read more in today’s crypto latest news.

According to the report, the centralization issues in defi protocols were the most common attack vector for hackers last year and about $1.3 billion were exploited using single points of failure. Certik made 1737 smart contract audits in 2021 and found 286 instances of discrete centralization risks:

“Centralization is antithetical to the ethos of DeFi and poses major security risks. Single points of failure can be exploited by dedicated hackers and malicious insiders alike.”

One of the protocols which suffered the most from this kind of vulnerability was BZX when the attacker managed to phish the private keys using an email with a malicious macro. The attacker took control of $55 million from the protocol at that time and this is a part of what the company classified as a privileged ownership vulnerability. The report recognized the huge growth in the defi environment experienced last year and Certik stated that the volume traded on DEXes tripled while the total value locked in DEFI-based protocols quadrupled and ETH fee revenue surged. Commenting on the growth of Ethereum, the report noted:

“There is clearly a voracious appetite for the smart contract-driven decentralized applications that Ethereum enables. DeFi, NFTs, and other applications such as ENS (Ethereum Name System) have all contributed to this growth.”

However, because of the many challenges Ethereum has been facing in scaling especially, a number of competitors managed to take a third of its dominance in the DEFI space. Certik stated that the Binance smart chain, Terra, Solana, and avalanche were the more popular chains chosen as alternatives for the users’ defi activities. Even with the ETH block space trading at a premium, the chain hit $153 billion TVL but with the user migration to other chains, the decentralization debate only got wider. Solana as one of the chains aiming to replace Ethereum has been facing quite the troubles recently but they were acknowledged formally but the team.