The industry of Decentralized Finance (DeFi) is going through turbulent times. In addition to geopolitical instability and wild gyrations in financial markets slashing the wealth of many, market participants have been defrauded out of an estimated $12bn in 2021, a seven-fold increase from 2020.
With more hackers transitioning from primitive social engineering attacks to more sophisticated code exploits, DeFi projects are in need of proactive risk mitigation strategies and on-chain threat monitoring systems to protect their smart contracts post-deployment.
The Wild West of Finance
Despite the pace with which DeFi movement has been gathering speed — with the total locked capital reaching $247bn in 2021 — the industry’s relative immaturity still occasionally spells trouble. For one, the growing presence of malicious actors within DeFi has led to a remarkable increase in cyberattacks and financial crime over the last two years.
There are now more attackers on the prowl than ever before. They are also utilizing more sophisticated techniques. Phishing and other social engineering attacks of the past have now been replaced by smart contract exploits, which are associated with far higher total losses. Cross-chain bridges — with numerous attack vectors — have proved to be attackers’ favorite targets.
The many high-profile hacks have by now ingrained the terms “flash loan exploit” and “re-entrency attack” into the minds of most DeFi market participants. Meanwhile, reports of hacking groups affiliated with North Korea helping to launder funds used in the country’s nuclear and missile programs have also elevated the security issue to one of international importance.
All that is to say that cybersecurity is no longer a nice-to-have — it has become a business imperative.
Cyber Risks in Global Markets
To be sure, the growing emphasis on cybersecurity in DeFi mirrors the transformative changes within other global industries. “Cyberattacks” is now frequently cited as the main threat to business growth. This sentiment is reflected in the PwC’s 25th Annual Global CEO Survey, with more than 49% of CEOs from a representative global sample of industries responding that they are either “very” or “extremely concerned” about cyber risks. Their impact on sales, innovation, and brand reputation means that cyberattacks now occupy more space within CEOs’ minds than “macroeconomic volatility” (43%).
Unsurprisingly, cybersecurity is now frequently deemed a key operational goal, with spending on data analytics and risk monitoring technologies set to increase dramatically. Such priorities are substantiated by the PwC’s 2022 Global Economic Crime and Fraud Survey, which found that some 46% of the surveyed organizations have been victims of economic crimes or fraud within the last 24 months, with ‘hacker’ identified as the second-biggest external perpetrator category.
Detect, Monitor, Prevent
Both within DeFi and traditional finance, organizations that are currently ahead of the pack are the ones that have proactive risk mitigation strategies in place. They have long recognized that all effective risk management strategies should include systems that provide real-time identification of risk events.
For Web3 projects looking for that extra layer of smart contract protection, Lossless has designed an always-on threat monitoring system with firewall-like capabilities. Aegis is our flagship Web3 security product that utilizes predictive analytics to identify suspicious smart contract interactions, anticipate threats, and prevent exploits before they happen.
Our flexible product design covers all smart contract types and comes with a dedicated API and an intuitive dashboard to monitor all interactions. Aegis provides zero-configuration threat monitoring capabilities and real-time alerts without integration. More advanced firewall-like protection and blacklisting features for smart contracts are enabled with on-chain and off-chain integrations.
We will be currently providing Beta access to a small group of selected projects to collect feedback. Stay tuned for more updates on the launch timeline and product features.
About Lossless
Restoring trust in web3 security. Lossless incorporates a new layer of blockchain transaction security, protecting projects and their communities from malicious exploits and the associated financial loss.
Lossless protocol implements an additional layer of blockchain transaction security for ERC-20 standard tokens, mitigating the financial impact of smart contract exploits and private key theft. Lossless protocol utilizes community-driven threat identification tools and a unique stake-based reporting system to identify suspicious transactions, providing real-time protection.
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