Uncertainty and DeFi
Operating within DeFi comes with unpredictability as well as opportunity. Some of the incredible benefits of the underlying technology also present challenges that need to be addressed.
The market is evolving rapidly and malicious actors have been able to anonymously exploit weaknesses in protocols to take vast amounts of money from unsuspecting individuals. Often there is no route to justice for those affected.
With its rise in popularity in early 2020, the news that often accompanies DeFi is that of hacks and exploits. In 2020, 17 major DeFi scams took place that resulted in the loss of $154 million. By the end of July 2021, DeFi hacks made up 76% of crypto-related exploits and DeFi-related fraud made up 54% of major crypto fraud, up from just 3% in 2020. The recent headlines of a $600 million attack on Poly Network is a prime example of opportunistic hackers extracting what they can — likely making it the largest cyber-heist in crypto history.
This most recent attack comes as losses from theft, hacks and fraud related to decentralised finance (DeFi) hit an all-time high. Such headlines will not go unnoticed. They act as a signal of uncertainty to potential investors in the sector as well as motivate law enforcement and financial authorities to intervene within the market.
Just one week before, Yield optimisation platform, Popsicle Finance, was also a target, with hackers successfully drawing off around $20 million of Ethereum from the Sorbetto Fragola liquidity manager. This attack was bigger than all previous Decentralized Finance hacks in July combined. It appears that the inherent risks were too much to protect against in this case, with Popsicle Finance appearing to taking all the essential safeguarding steps having supported two different audits on the platform’s smart contracts — both revealing no concerns. The very complex administration of the hack was later revealed to have taken advantage of a comparatively simple bug in the start contract code.
Astra is the decentralized legal designed to protect all participants from such criminal attempts. Astra will bring trust to the DeFi market and reassure all users that their investments are wholly protected. Should a party attempt to maliciously withdraw or siphon off a project’s funds, our patented protocol provides a route for funds to be retrieved. Our decentralized dispute resolution service quickly and cost-effectively resolves issues as soon as they arise, without the need to take the problem off-chain, With protection from Astra, DeFi and crypto-assets are ready for institutional adoption.