Over $718M Lost To Web3 Attacks In Q2 2022

Web 3 security firm Beosin recently released its 2022 Q2 Web 3 Security Report, analyzing the latest attacks and exploits to impact the blockchain sphere. It found that over $718 Million were lost to related schemes during that time – most of which occurred in the defi space.

The report – produced in collaboration with Footprint Analytics – cited 48 major “attacks” as responsible for those losses. These attacks were far from equal: three alone (Beanstalk Farms, Elrond, and Harmony) each accounted for over $100 million in losses, with 28 making up between $1 million and $10 million lost.

Last quarter’s losses are technically a 40% drop from the near $1.2 million lost in Q1, 2022, but is still a 2.42 times increase from the $296.56 million lost in Q1 2021. Furthermore, losses in Q1 2022 were likely dominated by the infamous Ronin Bridge hack, which netted over $600 million for the attacker.

Data shows that April was the most active month for hacking, with “19 major security incidents” and over $374 million lost. Losses significantly decreased in May alongside Bitcoin’s price, but saw an interesting spike in June despite the market’s continued decline.

“All chains and attacked projects saw a significant decrease in TVL values in May,(…). Most projects experienced a decrease in TVL immediately after they were attacked.”

The report said

The Most Common Attacks

Decentralized finance (Defi) was the overwhelming target among web 3 hackers. Defi allows crypto users to access financial services like borrowing and lending in a decentralized manner using self-executing smart-contract programs.

About 79.2% of attacks occurred in this space last quarter, accounting for 63.3% of losses. The most common attack method was to exploit vulnerabilities in smart contract code, netting hackers $138 million in total. These comprised 45.8% of attacks, compared to 50% of attacks in Q1.

The next most common attack method involved the use of flash loans – defi loans that don’t require collateral but must be paid back in short order. Hackers often use flash loans to amass vast control of a given protocol’s governance token, allowing them to pass malicious protocol changes. Such attacks netted $233 million in Q2 – more than any other hacking method.

Another $131.15 million were lost to compromised private keys, around which security “continues to be a concern.”

52% of attacked projects had reportedly been audited. Audited projects still accounted for the vast majority (76.2%) of stolen funds.

Summary

DeFi security remained a focus of concern in Q2 2022, with approximately 79.2% of attacks occurring in the Defi space. For two consecutive quarters, DeFi has been the focus of hacker attacks. Although NFT, cross-chain bridges, and exchange security incidents are not as frequent as DeFi incidents, several incidents involved large losses. Web3 projects of all types should strengthen security.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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