As DeFi projects such as lending, borrowing and decentralised exchanges have dramatically increased in popularity over the last two years, the market has grown to a staggering $88 billion.
As investors pursue the generous returns afforded by the market, the large influx in resources may also come at a price. Globally, crypto criminals ran away with $432 million within the first 5 months of 2021. About 56% of that, or $240 million were DeFi-related. There have been several instances where high-value ‘rug pulls’ have caused investors to lose out on vast sums of money. This is where, (largely anonymised) actors exploit hacks or faults within smart contracts in order to withdraw all funds from projects, leaving investors with no recourse to regain their stolen assets.
“Fear of missing out is fueling growth and an urgency associated with participating in DeFi, but the DeFi space overall lacks adequate due diligence, exposing individual investors to significant risks,”
— CipherTrace CEO Dave Jevans.
DeFi “rug pulls” and exit scams made up 99% of all crypto fraud schemes in the second half of 2020. Simple smart contract audits are not enough, as shown in the case of Compounder, where $10 million of funds were stolen by developers. Compounder was previously audited by Solidarity Finance, who found that elements of the smart contract contained ‘unnecessary risk’.
The mere existence of this possibility hinders the entire market from realising its full potential, with the unpredictable nature of the market proving too exposed for risk-averse institutions.
Trust [ truhst ] noun
reliance on the integrity, strength, ability, surety, etc., of a person or thing; confidence.
confident expectation of something; hope.
The goal of ASTRA is to bring trust to the DeFi market and reassure all participants that their investment is protected against scams and traps. One revolutionary ASTRA feature is the provision of a legal layer in the protocol. Parties involved in a transaction both enter into a smart contract with ASTRA embedded. In the event of a party attempting to deceitfully withdraw funds, the legal layer provides a route to retrieving funds that would have already been lost without the incorporated ASTRA mechanism. With ASTRA, DeFi will become shielded from fraudulent activity, allowing the market space to experience the significant returns that attracts so many but removing the risk of unexpected loss.