It goes without saying that timing the market is of utmost importance for the success of any business. This was the logic behind Lossless entering the DeFi market at exactly this moment in time.
Specifically, the decentralized finance (DeFi) industry has seen remarkable growth and mainstream interest in the past several years. In just the two opening months of 2021, the total value locked (TVL) in DeFi has grown from $16 billion to a whopping $40 billion.
The growth is also demonstrated by a staggering growth in the number of active participants. Namely, the number of total users in the DeFi markets has risen to 1.4 million, which is seven times higher than the mid-2020.
However, the true potential of this growth has been hindered by a major issue — countless hacks plaguing the space and leaving enormous damage in their wake, measured in billions of dollars in 2020 alone.
Attracting hackers like moths to the flame
Some of the most damaging attacks have included:
- a minting hack that dropped the company’s token price by 80%,
- an exploit against DODO that caused it to lose $3.8 million,
- a flashloan attack on Alpha Finance and Cream Finance worth $37.5 million,
- an “evil contract” exploit against transaction protocol Furucombo that damaged it by $14 million.
It’s easy to see why the industry has drawn interest from malicious individuals. After all, huge amounts of money are transferred through decentralized exchanges each day, paid directly from and to addresses.
There’s also not much regulation here by the traditional systems (governments, laws, and the like) and platforms sometimes make mistakes that hackers are all too ready to exploit. Additionally, the market has no fully efficient mechanisms that would prevent such situations.
No competition
We were surprised to find plenty of cybersecurity companies and products in the general online space but none of them being efficient in the DeFi area. Specifically, we haven’t yet found any solution that is freezing and reversing hacked assets — at least not without compromising the essential quality of the market — its decentralization (e.g. Tether’s ‘freeze and destroy’ approach).
So far, the best ways to address these hacks have been either through hack mitigation via audits or post-hack solutions like insurance or money tracking — neither of which is ideal and only works in certain situations. Other ways include hack bounty programs or one-off bugs.
Seeing this, it became clear to us that an ideal method to prevent these hacks would have to combine the best of centralized and decentralized worlds, so the idea of Lossless came into existence. And — considering the rampant hacking and exploits — not a moment too soon.
With almost non-existing competition in the current DeFi cybersecurity market, Lossless has plenty of room for rapid market share growth.
This is mostly due to its unique business model that will:
- make the platform sustainable,
- a community of developers and white hat hackers incentivized and engaged,
- allow investors to enjoy their DeFi investments securely and reliably.
The enormous potential of the Lossless solution
In 2020, 122 hacks were responsible for $3.8 billion stolen in the DeFi ecosystem. This is a total addressable market for the Lossless protocol as all or at least most of this money could’ve been saved and kept with its investors — where they belong.
Let’s look at the numbers. A 10% market share of the $3.8 billion DeFi market would result in the prevention of $380 million in losses. On top of that, an estimated 7% fee that will be paid from the stopped hack transaction (paid in native tokens and only when the transaction is stopped) would return $26.6 million in income for the Lossless protocol.
Keeping in mind that the hacks and the hacked amounts will increase, this presents a unique growth opportunity for the project.
However, instead of taking the standard route — developing a solution and then integrating it — we’re taking a reversed approach. The Lossless token standard will be ready at the same time as the initial DEX offering (IDO) is launched, ensuring we can start onboarding new tokens with Lossless standard through our strategic investors immediately. These investors will, in turn, promote the Lossless code integration through audits or launchpads.
The LSS token and code
At the core of our platform is the Lossless (LSS) token that has multifold utility:
- Finder staking (to be eligible for finder fees, white hackers must stake $5,000 worth of LSS tokens before a hack freeze can occur — if the hack is false, the staked tokens are slashed from finders),
- Finder fees (community finders are paid in LSS tokens after the fee is collected from the hacked project),
- LSS token governance (allows active users to provide feedback and make suggestions about the protocol, roadmap, various parameters, and the whole codebase),
- Promotion and referral program (paying influencers, audit companies, other platforms bonuses for referrals in LSS tokens, LSS token airdrops to help control liquidity of our wallets),
- Early access and insights (early and exclusive access for top LSS token holders to our newest product features, tools, and latest cybersecurity insights, invite-only initiatives).
Token creators participating in this system will use a part of the Lossless code when creating their token contract. They will be given out-of-the-box tools for existing tokens to relaunch their token using the Lossless code, such as:
- token relaunch swap interface,
- airdrops for relaunched tokens to existing holders,
- managing token relaunch with centralized exchanges (CEXs).
Once the Lossless platform and the rest of the functionality are developed in Q3 2021, existing tokens with the Lossless code will be able to use the full range of hack protection features, as well as provide peace of mind to their holders.
The tokens which are equipped with the Lossless hack protection will receive an ‘L-’ prefix, e.g. ETH and BTC would be L-ETH and L-BTC. On Ethereum, users will be able to deposit their ETH and receive L-ETH via smart contract — Lossless Ether.
This way, users will be able to participate in all the DeFi activities (staking, farming, and the like), but with a much lower risk of losing capital.
Are you ready to contribute to a better DeFi future, with minimized losses from hacks, exploits, or social engineering? You can learn more and show your support by checking out our:
