When all-time highs = industry lows… Crypto hackers had a banner year, stealing a record $3.8B last year, Chainalysis reported. It tops the previous year's record of $3.3B. DeFi (aka decentralized finance) represented 82%+ of those losses:
- DeFined: DeFi protocols (like: Uniswap and Tornado Cash) are permissionless. They let people trade crypto directly without go-betweens like centralized exchanges.
- CeFined: Centralized finance (CeFi) is more akin to traditional finance (meet: TradFi) because activity runs through a centralized entity like a crypto exchange.
- Bridged: DeFi protocols like cross-chain bridges — which let people move assets between blockchains — were like catnip to attackers, accounting for 64% of DeFi's losses.
Not so CeFine… As numerous CeFi crypto lenders went bankrupt last year (think: BlockFi, Celsius, Genesis) and crypto exchange FTX blew up, some crypto enthusiasts pointed to DeFi as a path forward. The argument: a CEO like Sam Bankman-Fried couldn't be accused of stealing your crypto if they never touched it in the first place. But as last year’s head-turning crime #s show, DeFi’s not immune either. Case in point: last year North Korea-linked hackers stole $1.1B from DeFi protocols.
You need a solid foundation to BUIDL… crypto speak for "build." As CeFi stumbled, some crypto fans believed it could be DeFi’s time to shine. But two straight record-setting years of crypto crime suggest DeFi still has work to do if it wants to provide a path out of CeFi's rubble. One hope: DeFi's public-facing nature means investigators can follow looted crypto across blockchains — suggesting that while hackers can run, they may have trouble hiding.