Decentralized finance (DeFi) in collaboration with cryptocurrency technology offers similar financial freedoms. They both remove banks and financial institutions' control over finances and financial services.
DeFi allows users to hold on to their money in a digital wallet instead of a bank. It also allows the transfer of funds in a matter of seconds without the fear of financial charges they might have faced if they had used other financial companies. All these can be done by anybody anywhere; all a person needs is an access device and an internet connection.
However, this financial freedom has led to the invitation of hackers' attempts to manipulate cryptocurrency security measures totaling billions.
The following are some centralized exchange companies that faced the biggest DeFi hacks in 2021:
This centralized company lost over $225 million in a matter of minutes. Private keys to their two hot wallets that held their Ethereum based assets and the other containing Binance Smart Chain coins were stolen.
A DeFi service, Tornado cash, made the stolen assets laundering easy for the hackers and hard for the BitMart Company to trace the assets. BitMart had to endure the expenses of compensating their users' finances.
Through a DeFi procedure, Badger Dao was hacked, and $120 million was stolen in different cryptocurrencies. The hackers used a DeFi protocol to spam users requesting additional withdrawal permissions where funds were withdrawn into the hacker's address.
Hackers used a DeFi protocol contract used by MonoX Finance and stole $31 million of liquidity pool assets. The hackers found a way to trick their DeFi protocol's swap contract to raise the price of Monox native token( MONO); later on, they used the heightened token and bought assets worth $31 million from the liquidity pool.
Crypto is becoming a market where investors and moneylending institutions want to invest their money. The only way to ensure that investors keep entrusting their money in crypto is to put up reliable security measures. As much as there is always a risk when investing in any business, let it not be that cryptocurrency has few benefits compared to losing.
Crypto business owners should know that any business requires having a meaningful and trustworthy relationship with their investors. However, this relationship in centralized companies like those mentioned above was at some point disrupted, and some investors might have pulled out due to the fear of losing their funds again without a refund.
The crypto market may be affected negatively if the hacker situation is not dealt with in a few years. The Crypto market may still be growing despite being hacked severally at the moment, but the more the hackers get access to your investors' money, the more you have to deal with the expenses of refunding. This will eventually leave you broke and unable to continue with your business. If not, your investors will continue losing faith in you. Eventually, the crypto market will have no one interested in investing in projects that end up losing your money to hackers.