By George Ward
The year 2022 can be considered one of the most notorious for the crypto space. According to Forbes, scammers and hackers stole more than $3 billion from the crypto sector, ranging from cross-chain exploits to code breaches.
The report claims that there were 125 hacks in the industry this year alone, and hackers moved $1.48 billion across the top five protocols. The Decentralized Finance (DeFi) ecosystem recorded the highest number of hacks among all sectors of the crypto industry.
This year, hacking against DeFi made up as much as 49% of the total hacker exploits in the crypto space. According to on-chain data, the effects of these attacks are immeasurable. Hence, it is no surprise they have led to a decline in investment in the DeFi sector.
The Total Value Locked (TVL) in DeFi protocols, according to DeFiLlama, decreased from more than $166 billion at the beginning of the year to $38.91 billion at the time of this writing. Industry experts remain displeased with how much hackers exploit protocols, particularly bridges.
The Five Biggest Cryptocurrency Heists Of 2022
Forbes said that the $160 million Wintermute hack, the $182 million Beanstalk Farms breach, the $190 million Nomad Bridge breach, the $325 WormHole Network exploit, and the $625 million Ronin Network hack were the five top breaches of the year.
According to the on-chain analytics platform, Elliptic, blockchain bridges were the hackers’ primary target, causing 70% of all losses this year. Explaining the dangers present in so-called blockchain bridges, Sam Williams, CEO of blockchain security company ArweaveAR, claims that many blockchain bridges took several shortcuts out of necessity.
According to Williams, the distribution of private keys for multi-signature wallets is another example of an ecosystem vulnerability. Multi-signature wallets exist to distribute decision-making authority among various parties, making it more challenging to compromise one key and harm the ecosystem.
However, in many cross-chain attacks this year, such as the Ronin Network and the Harmony Bridge attack, hackers used numerous private keys owned by a single party to access the protocols of these bridges. While NFT projects and cryptocurrency exchanges recorded several flaws throughout the year, DeFi witnessed the most hacks.
Crypto.com, one of the first exchanges to be hacked, lost up to $35 million in mid-January. The hack did not stop the exchange from operating, but it proves that no trading platform was immune to attack by hackers.
Numerous attacks on the Discord platforms of high-profile NFT ventures, such as the Bored Ape Yacht Club (BAYC), occurred as hackers developed various schemes to defraud investors.