As a seasoned analyst with over two decades of experience in the financial sector, I find it fascinating to observe the dynamic interplay between centralized and decentralized platforms in the rapidly evolving crypto landscape. The Q3 2024 report by Immunefi provides valuable insights into this ongoing battle against cyber threats.
In the third quarter of 2024, there was a drop in cryptocurrency hacks and fraud incidents resulting in losses, as per a report from Immunefi. However, Ethereum (ETH) continued to be the most frequently attacked smart contract platform during this period.
Losses Primarily Due To Centralized Exchange Hacks
Immunefi recently published their Q3 2024 report, outlining the particulars of cyber attacks on cryptocurrencies that took place during this period. The report highlights two significant exchange hacks – one at WazirX in July 2024 and another at BingX in September 2024. Combined, these incidents accounted for a staggering 69.5% of all funds lost in Q3 2024, amounting to a total loss of approximately $287 million.
It’s worth mentioning that WazirX and BingX are types of exchange platforms, and each suffered losses of approximately $235 million and $52 million respectively. Interestingly, centralized financial platforms (CeFi) were involved in 74.8% of all successful hacks during the quarter, whereas decentralized finance platforms (DeFi) accounted for only 25.2%.
It’s noteworthy that despite only three instances of loss, Centralized Finance (CeFi) platforms experienced a hefty $309 million in funds lost during Q3 2024. On the other hand, Decentralized Finance (DeFi) platforms endured losses totaling $104 million across 31 separate incidents in the same timeframe – a significant decrease of 79.2% compared to Q3 2023. Conversely, CeFi losses have increased by 66.4%.
Referencing the contrast between Centralized Finance (CeFi) and Decentralized Finance (DeFi) occurrences, Mitchell Amador, Founder and CEO at Immunefi noted:
There’s been a rising trend in DeFi platforms being targeted by more incidents, whereas CeFi encounters fewer incidents, but these tend to result in more severe outcomes, such as the theft of hundreds of millions of dollars in a single attack. The main challenge in CeFi lies in managing private keys, which are crucial for self-custody of cryptocurrencies and aren’t usually scrutinized through security audits. Proper key management necessitates strict policies, practices, and emergency plans to ensure safety.
Additionally, the report provides insight into decreases in losses from both cryptocurrency hacks and scams. Specifically, compared to Q3 of 2023, the decrease in losses due to crypto hacks was 38.2%, while losses from frauds dropped by a substantial 86.4% in Q3 of 2024.
Ethereum Reigns Supreme As Hackers’ Favorite Blockchain
The report emphasizes that Ethereum and Binance Chain (BNB) were the two most targeted smart contract platforms in Q3 2024. While Ethereum suffered 15 incidents, representing 44.1% of the total losses across targeted networks, Binance Chain was responsible for 23.5% of the losses with 8 incidents.
Among various blockchain networks, Coinbase’s Base chain accounted for approximately 5.9% of total losses. Additionally, other affected blockchains include BLAST (Blast), Solana (Solana), and Arbitrum (Ethereum layer-2 scaling solution Arbitrum), each experiencing one incident separately.
It’s not unexpected that layer-2 scaling solution protocols face attacks due to their early stage development and limited security resources. This year, Emin Gün Sirer, co-founder of Avalanche (AVAX) blockchain, highlighted potential warning signs to look out for in emerging layer-2 projects.
1) The recurring occurrence of cyber attacks and frauds within the cryptocurrency market emphasizes the significant function of ethical hackers, both white-hat and gray-hat, as demonstrated by the recent event involving DeFi protocol Rho Markets. Currently, Bitcoin (BTC) is being traded at $64,650 with a 1.3% increase in value over the past 24 hours.
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2024-09-27 11:42