As 2023 comes to a close, the decentralized finance (DeFi) market is once again assessing the damage from hacks and exploits. According to a recent report from IntoTheBlock, it’s not nearly as bad this year as it has been, with losses down from a whopping $53.5 billion in 2022 to just $1 billion this year. But is “just” $1 billion really an acceptable annual loss for a burgeoning industry struggling to break out into the mainstream? The answer, unequivocally, is no. Yearly losses of $1 billion would be a concern even for a traditional financial sector. For DeFi, which is only beginning to recover after an annus horribilis in 2022, this represents an unacceptable level of risk for all but the most thick-skinned investors. DeFi isn’t a multi-trillion-dollar industry. Its total value locked (TVL) has barely cleared the $50 billion mark — still more than 70% below the all-time high of $180 billion at the height of the bull market in November 2021. That year, IntoTheBlock reported total losses from DeFi exploits of around $4 billion. In this context, a fall to $1 billion no longer seems quite so positive. As a percentage of TVL, the hacks that occurred this year represents a narrow drop from 2.2% in 2021 to around 2% in 2023. If we look at data from other sources, the trend is even more concerning. Research from Immunefi found a 59.9% quarter-on-quarter increase in crypto losses in Q3 2023, with DeFi accounting for a staggering 96.7% of the $685.5 million total. This is up from 80.5% of total crypto losses that Immunefi attributed to DeFi in 2022. So, far from becoming more secure, DeFi appears to be turning into the problem child of the crypto industry when it comes to fraud risk.
Full opinion : While the total losses from exploits fell to $1 billion from $54 billion the year prior, this is still an unacceptable threat to users.
