DeFi Abuse sheds light on the importance of compliance in Web3
DeFi Protocols have accounted for more than 50% of cryptocurrency crimes since 2021
DeFi Protocols are revolutionizing the financial world, but as the technology is relatively new, it is still vulnerable to attack. Criminals primarily target platforms for financial crimes, which include theft, money laundering, and fraud, and the numbers have remarkably surged since the beginning of 2021. Today, over 75% of crypto attacks occurred in the DeFi domain.
The Web3 space lost over $1.9 billion between January and June 2022. So far, in 2022, DeFi Protocols stand to be the top recipient of illicit funds and stations for crypto crimes.
But most pioneering sectors face these pitfalls in their formative years, and abuse of any new technology doesn’t shock anybody. It is only a matter of time when all public and private sectors acknowledge the growing benefits of cryptocurrencies and come together to make DeFi and web3 a safe space. In fact, in some ways, they already have.
The need for regulation in blockchain garnered significant attention from Web3 companies and users. With the detected North Korean hacking group in the DeFi space, the US Government issued alerts to block their efforts. Compliance is key to stamping out these DeFi crimes so new users can feel safe adopting the technology, and the industry continues to grow.
Astra Decentralized Compliance Layer
Compliance and safety on blockchains are not only essential to build trust between users and usher in mass adoption but also a matter of international security. But how to ensure DeFi is safe without dampening its decentralization?
Decentralized Compliance Layers verify the authenticity of users before they’re allowed into the ecosystem through KYC processes. While real-time AML processes help identify high-risk transactions and prevent illicit funds from moving between criminal wallets.
Astra Protocol focuses on improving security in DeFi through its unique decentralized compliance layer. Their safeguard protocols only allow verified users into its ecosystem, which reduces the risk of scams and builds accountability. Enhanced consumer protection is arguably the key that will unlock DeFi’s true potential.
DeFi needs its own set of specific regulations that help the industry thrive. Fortunately, Europe and other regions are pressing with various laws that will set clear objectives. We are on course for precise and consistent rules that will create a much safer and more trusted Web3 for all users. With these compliance measures coming into force, Astra is now a vital component of any DeFi or digital asset platform.
A Decentralized Compliance Layer for the Web3 Economy and Delivering the Compliant Blockchain for the future.