Vulnerability Of Smart Contract, A challenge for Defi Adoption?
The coming of decentralized finance to the digital world has been an entry that has opened a lot of financial opportunities to cryptocurrency investors. It was easily adopted by investors because it gives full control of funds back to them, unlike what we observed in the centralized financial system.
However, there are always two sides to everything. Defi operates on smart contracts which are prone to attacks if there exists a loophole in the codes that built up the smart contract. Many Defi projects have been hacked and users find stolen. 2021 witnessed the highest Defi attack in history and this has created fear among Defi lovers.
Defi projects in the quest to protect their project from such attacks have always employed the services of Smart contract auditing companies. The presence of these companies has helped reduce the rate at which Defi projects are hacked but the fact remains that there is no guarantee that an audited smart contract may not be compromised in the future.
One of the unique things about Defi projects is that it offers investors the opportunity to grow their funds, through staking and lending, but to use these services, one has to interact with a Smart Contract. People only make judgments on the security of a Defi project based on the report from the company that audited their smart contact, they cannot be able to verify the claims by themselves because they do not have the right knowledge and tool to do so.
Many investors have confined themselves to hodl in order to avoid falling victims to hackers especially now that there are fraudulent smart contracts that can spend your fund with or without your approval. It is normal for Defi to see these attacks because it is still new, the security will improve over time. We just need to protect ourselves by investing in projects that have been audited by a reputable audit company, disconnecting smart contracts from our wallets after making transactions, etc.
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