he amount of money lost in hacks of decentralized financed (DeFi) projects more than doubled to $1.3 billion in 2021, with centralization the most common vulnerability, Certik said in its inaugural « State of DeFi Security » research report.
While the value lost climbed 160%, the amount was a smaller proportion of the total than in 2020 due to growth of the DeFi market, the security firm said in the report released on Wednesday. As a proportion of the crypto market’s capitalization, losses dropped by 17%, according to the report.
The total value locked (TVL) in DeFi protocols at the end of 2021 was $243.88 billion, up from $18.29 billion the year before, according to DefiLlama data. That means the lost funds shrank to 0.5% of TVL last year from 2.78% in 2020.
Centralization was the most common vulnerability « by far, » the security firm said. Certik found 286 discrete centralization risks through the 1,737 projects it audited, including privileged ownership. For example, some projects were drained when hackers obtained private keys that gave them complete control of smart contracts. This likely would have been avoided using multi-signature wallets or decentralized autonomous organizations (DAO) instead of one or a set of private keys.