Security is a necessary and, some might argue, fundamental measure that is prevalent in all aspects of life. From workplace safety codes to insurance policies, and from security systems to robust regulations, a lot is done to prevent disasters before they strike, or at the very least, mitigate some of the damage caused.
Of course, not all events can be foreseen, hence why we do not live in a perfect world void of catastrophes. Indeed, misfortune can sometimes strike due to accidents, oversights, or unforeseen circumstances, which may cause us to take a step back and reevaluate the measures intended to prevent such events from occurring.
That being said, there is never a reason not to be diligent in ensuring the security and stability of any given system, in spite of the chaotic and unpredictable nature of the universe in which we live. On the contrary, given the circumstances we find ourselves in, it is of the utmost importance to develop the very best defensive strategies that can be justified within reason.
Is Web3 Still a Wild West?
In the absence of proper regulation, affected industries may find themselves in a bit of a tricky situation. On one hand, there’s nothing holding back innovation and creativity, but on the other, there’s little to no standardization process and accountability to instill a level of safety for all parties involved.
Indeed, throughout the decade or so of Web3’s development, we’ve witnessed countless hacks pillage the scene and exploit vulnerabilities that, in most cases, should not have been there. From the infamous DAO hack to the more recent Ronin bridge exploit, the sheer scale and frequency of these events should have, by now, set a clear precedent for a conscientious approach to security, and yet… these occurrences continue.
This October, in particular, was aptly referred to as ‘Hacktober’ due to the numerous exploits that took place in the blockchain space. One such case was a DeFi platform on Solana called Mango Markets which fell victim to a whopping $117 million hack through a price manipulation tactic involving the native token. Fortunately, the hacker agreed to return some of the funds in the end and kept $47 million as a bug bounty.
But it’s not just small projects that have fallen victim to such attempts, as Binance Smart Chain, one of the biggest networks in the world, was hacked in October as well. Around $570 million were stolen via an attack on a cross-chain bridge that allowed the exploiter to create new BNB tokens and transfer them to other protocols. Validators, however, proceeded to halt the chain for a while until an update was released and the hacker’s funds were successfully frozen.
As if October wasn’t bad enough, November was kicked off with Deribit, one of the biggest exchanges for crypto options and derivatives, falling victim to a $28 million hack. This happened due to a compromised hot wallet which forced the exchange to halt withdrawals to assess their security, before proceeding to resume as normal. Fortunately, the exchange had other measures in place for such an event, and users’ funds remained unaffected.
Reflecting on Today’s Reality
It is easy to look back in retrospect and point at what could and should have been done differently, but that should not be conflated with understanding how these events come to be, as doing so thoroughly is an essential component to avoiding similar situations in the future.
As a DeFi protocol aspiring to release innovative dApps such as Sentient and Cerebral, every such event adds to the weight on our shoulders that we carry through milestone after milestone. These constant reminders of imperfection and danger push us toward becoming our very best when it comes to the security and integrity of our code, and we intend on cutting no corners in that regard. We’ve been audited by one of the best security firms in this industry, and would rather take our time in laying the foundation for Precog Finance brick by brick than rush through and risk building something great upon shaky and questionable groundwork.
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