DE-FI Hacks Are On The Rise

in LeoFinancelast month

Hey Jessinvestors

The bull market is sucking in more capital each day, and while most institutional money is still fully focused on Bitcoin, Ethereum and company equity looking to beat the traditional market returns. The retail investor is looking for a far more aggressive ROI on their capital. Not simply content on trading your positions or HODL'ing, many investors are moving into DE-FI.

Crypto markets are still trying to establish a yield curve for Bitcoin and other tokens, and in this competitive race, platforms are spinning up almost weekly to tack additional supply to the need for yield.

Uniswap was the first to popularise DEX's, yield farming and DE-FI on-chain, and since then, we've seen several clones roll out on ETH and now onto Binance Smart Chain, TRON and other chains.

The ease of spinning up a DE-FI platform and tweaking the tokenomics to get liquidity has become the new ICO, and while rug pulls are still a considerable problem for DE-FI, another scourge continues to make the rounds in hacks. As DE-Fi smart contracts grow in value with investors dumping millions into these half baked protocols, they become a honeypot for hackers.

defi-hacks.png

Hundreds of millions hacked

In 2020 it was reported that around $120 million was stolen in DE-FI hacks, and the trend continues in 2021. EasyFI that was built on Polycon/MATIC the ETH side chain was recently hacked for $80 million, Spartan on BSC was hacked for 30 million while BSC based Uranium Finance loses $50M in a recent hack. The year is not over, and we've already beat last years numbers with a total of $160 million lost in hacks.

DEFI is an awesome innovation, but we have to look at what cost it comes at, why education in the space is so low, and greed in the space is so high. People are falling for unsustainable yield curves only to be suckered into filling hackers accounts.

I also think the frequency of hacks make me feel as if there is collusion in this space and spinning up contracts with vulnerabilities is an easy way to make money for a few weeks work.

In the decentralised space, there are no regulatory bodies to step in and save you; on, you can save yourself. DEFI coins sucker you in with high yields and illiquidity to keep you holding their coins long enough to either rug pull or end up being hacked.

DE-FI at your own risk

If you are going to participate in DE-FI, be sure you either have direct contact with the founders and community, that contracts have been audited (not that this is a guarantee of security), that they have a track record of products before this, that the DE-Fi protocol's code is open source and can be audited if needed.

I believe DE-FI has a future, and there will be many variations of it as we find the best way to bridge chains and move capital more efficiently. I have experimented with DE-FI, but I am not yet totally convinced that this is a good use of my capital yet.

I would much rather focus on staking coins or borrowing out for a return. However, in the future, I think my portfolio will become more diversified as these protocols mature and we see a yield curve established that actually has some merit.

Have your say

What do you good people of HIVE think?

So have at it, my Jessies! If you don't have something to comment, "I am a Jessie."

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Lucrative activities that require a lot of research are prone to scams.

Monetary rewards often blind people from the necessary research they ought to do.
However, in this case, I think Defi are still at their beginning phase and trusting them completely isn't always the smartest move. Completely my opinion though.

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Wise woman...

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Agreed! The returns or rather promise of returns blinds you to the risk and people want to take on or two trades to be rich lol it doesn’t work that way trades like that are never short term trades in fact you have to take a lot of heat and shit for those trades as you bet against the market

Like holding Bitcoin for 10 years would have been a trade like that, but these wham bam thank you ma’am trades are only there to enrich the premine owners abs hackers

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I wasn't going to participate in DeFi if it wasn't for Leofinance, truth is, too much prospect for APR and ROI makes people blind to scams.

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I have been using uniswap but that was from ages ago cub is the only other one I’m using! I’m no yield chaser I didn’t put too much in it! When I got into Uni ETH was cheap and with cub the airdrop was enough to cover costs to get in

Otherwise I’m not really interested in these protocols yet m! I am looking at stuff on the liquid network but haven’t dived in

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Well many are yield chasers, those outrageous ROIs and well... this particular bull run came with a lot of DeFi opportunity imagine 120$ million lost.

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Yeah they dumping in, then pulling out the return and then harvesting into the next platform and they’ll continue to chase it until they get burned

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Hahaha the craze for these risky money keeps getting better and better

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People want quick profits and I think that is the problem.. People don't ask questions like will this project be on for the next 5 years? People don't ask about use case, they just look at APR and go in. Some go as far as using all their money to stake and then cry out in regret

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Lol that’s why I don’t mind the hacks, if they don’t get burned they never learn the only way to teach people is to hit them in their pockets

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Thanks for the article. This makes me rethink my analysis when looking at Defi. There are many projects where the team is anonymous and your point on "collusion" is quite scary, because truth is, you never know.
I only have a little bit in CUB because I know the team, and despite FOMO in Pancake, I think I'll hold out for now.

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We just saw another defi hack last night for 11 million this isn’t going to stop! People are spinning up these contracts for next to nothing and then holding millions ofcourse it’s going to look tasty as a money grab

Personally I prefer multi-sig solutions o over smart contracts and the contract can just be run off chain and leave the settlement to the chain like they do with HODLHODL

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Interesting, I'll look up Hodlhodl cuz I understood 2% of what you just said XD
The other thing I've been thinking about is whether game theory dictates that these players will actually play to play and not play to win. It makes more sense to keep it legitimate instead of being a money grab

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Most of these exit scams and rug pulls are copy cat code, so they pull the smart contract from github, reskin the site and tweak the tokenomics, give themselves a nice premine and waiting to dump on noobs.

the idea of competing with other protocals means you have to deliver something of value and compete with the other platforms for liquitidy long term, who wants to do that if I can spin up and scam in a the space of a week or 2 and walk away with a few million

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That's what I thought as well, a lot of them are:

  • Anon devs
  • Fork of some other platform
  • Have some food related name
    XD

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Give it time your bullshit detector will be calibrated over time, I wouldn't take away peoples need to want to shitcoin, if that's what you want to do! We all learn with time

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This post just made me very scared as to whether I should stop investing in defi and just stick to buying coins. I am just involved in only cub as regards defi but I am putting in about 20% of my funds and I have been compounding it. I am kind of worried... So what's your say ass regards #cun?

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I am fine with cub because khal has put his neck on the line here many of these defi scams are anonymous not that people can’t change on us but you can see cub is not promoting itself as a defi clone woth only high yield as the offering and they growing slowly

While it may not hit the headlines I’m more confident then these other clones! I’ve seen some people in the cub discord I posting about these other spin off contracts but o wouldn’t touch it with a 10 foot pole

I also like that cub was an airdrop and not just a premine like these other projects

It takes time to review these things and I don’t have much time to do that

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Thank you for your reply

Hard decision. Take the chance and the risk or drop it? I say no risk no fun😆
Stay healthy

Lol there is no such thing as too much risk only incorrect position sizing! But at this moment I’ll keep my defi positions small I have no need to shoot the lights out on trades

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That's so true, a lot of Farms are being erected and people are investing like mad.
Mainly because of lucrative yield. But you made a good point about the security aspect. Some of them could be orchestrating these hacks, who knows ?
CUB is the one i want to try because of the team behind it.
Surprised to see that many hacks and the money involved. Was there any major hack in Hive space recently ?
!ENGAGE 10

Not the hive space directly but the w-blurt contract on uniswap was hacked and the wLEO contract back in the day but since Hive doesn’t have smart contracts there isn’t much place to hack short of getting consensus on the chain

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Way too many yield farms for this thing to be sustainable. Hopefully they whittle down to a couple of quality ones.

I’m all for farms if they connected to other protocols so the liquidity can be used to effectively but the focus is too much on earning with the defi tokens instead of providing on ramps and off ramps for defi trading

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Ohh woww thanks for bringing this to everyone's attention. I for one did not know about that many DeFi's have already been hacked and guessing on the funds stolen I believe these were decent ones if they were able to get miillions of dollars staked into them.

This makes me rethink about my decision of powering down my HP and moving to DeFi to just chill and reap the rewards. I already powered down around 600 HP and is currently planning to do another power down but reading this I might have to rethink about this.

How do we know if it is secured though?! Currently I have put some into CubFinance and Pancakeswap as I am FOMO-ing.

I didn’t really FOMO into cub all I did was use my airdrop I was given, While hive hasn’t done much compared to other projects I prefer to keep the HIVE seperate! I did convert some HIVE to BNB to pay on chain fees but that’s about it

I am wondering when diesel pools will have something similar going and what’s going to happen with Actifits BSC defi

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that contracts have been audited (not that this is a guarantee of security)

For the most part, isn't the audit suppose to help check for vulnerabilities and this make it less likely to be hacked? I know it isn't a guarantee and I personally am not using any other Defi platforms besides CUB right now.

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Yes less likely but as more variables are added and connections to different assets and chains are added it opens up new attack vectors. Many of these platforms are also so focused on growth that security gets skimped on as they compete with one another for liquidity

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