NEW YORK– More than $2.2 billion in cryptocurrency has been stolen from various DeFi (decentralized finance) projects so far this year, according to a new report.
The losses have been driven in large part by the rapid proliferation of DeFi start-ups such as Beanstalk, which has given rise to a new type of threat as the loosely regulated ventures allow people to borrow, lend and conduct other transactions without banks or brokers, relying instead on a system governed by code, according to the New York Times.
Using DeFi software, investors can take out loans without revealing their identities or even undergoing a credit check, the Times noted.
“As the market surged last year, the emerging sector was hailed as the future of finance, a democratic alternative to Wall Street that would give amateur traders access to more capital,” the Times reported. “Crypto users entrusted roughly $100 billion in virtual currency to hundreds of DeFi projects.”
But as the Times and other analysis have noted, some of the software was built on faulty code, leading to the more than $2 billion in thefts, according to the crypto tracking firm Chainalysis.
One Company’s Experience
Among those companies was Beanstalk, where a hacker exploited a flaw in its design to steal more than $180 million from users.
According to the Times, many of the thefts have stemmed from flaws in the computer programs — known as “smart contracts” — that power DeFi. T
“The programs are often built hastily. And because smart contracts use open-source code, which provides a publicly viewable map of the software, hackers have been able to orchestrate attacks on the digital infrastructure itself, rather than simply infiltrating someone’s account,” the Times stated. “It’s the difference between robbing an individual and emptying an entire bank vault.”
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