The entire Web 3.0 was valued at $934 billion in 2022. This hallowed fortune has attracted many hackers and scammers over the past year. In all, an estimated $3.95 billion was stolen last year. This month of January, it’s an opportunity to take stock of hacks and frauds in Web3.0 in 2022, a top 10 and an analysis of the lessons that emerge from them.
Source: Immunefi, a major player against hackers
In this article, we will cite Immunefi’s excellent report released in January 2023. Immunefi is a key player in the cybersecurity and cryptocurrency universe. It is a bug bounty platform for Web 3.0 gamers. The bug bounty concept allows companies to fix flaws in their applications by rewarding users who report violations. Concretely, Immunefi is an intermediary between Web3 companies (who want to guarantee the security of their code and their protocols) and ethical hackers (who seek to identify security holes for a fee if they find any). In just two years, Immunefi says it paid $60 million to ethical hackers and prevented more than $25 billion from hacking. By the way, here’s a great article to learn more about crypto hacks, bug bounties, and Immunefi.
$135 million in available rewards.
$60 million in bonuses.
$25 billion in user funds saved.
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General overhaul of the year 2022
In 2022 there are 168 cases of fraud and hacking successful or semi-successful. In total, these 168 cases represent $3.95 billion stolen from Web 3.0. Good news ! Indeed, this figure represents a 51% drop from the $8.09 billion stolen in 2021. Furthermore, of all of 2022, the fourth quarter was the worst with 1.62 billion losses in 55 accidents. So the The fourth quarter accounts for 41% of the total losses for 2022. Most of the stolen amount comes from two specific projects: FTX of course and BNB Chain. Thus, together, they account for 1.22 billion losses.
Top 10 losses in 2022
- FTX: $650 million
- Ronin Network: $625 million
- BNB chain: $570 million
- Wormhole: $326 million
- Nomad Bridge: $190 million
- Beanstalk: $182 million
- Wintersuits: $100 million
- Harmony: $100 million
- Mango Markets: $100 million
- Mirror Protocols: $90 million
Therefore, with this Top10, we see that in 2022 the industry has suffered some of the biggest attacks of its existence. Moreover, the top five hacks of the year accounted for 59.8% of total losses and a total of $2.36 billion.
Who is most targeted by these hacks and scams?
In terms of industry, DeFi (decentralized finance) is more a victim of these hacks and frauds than CeFi. Indeed, in 2022, DeFi accounts for 80.5% of total losses, compared to 19.5% for the CeFi. DeFi suffered losses of $3.18 billion in 2022, an increase of 56% from 2021. As for CeFi, it lost $0.77 billion, an increase of 87% from 2022.
In terms of blockchains, BNB Chain and Ethereum were the two most targeted chains in 2022. In fact, BNB Chain suffered the most attacks with 65 incidents (up from 43 in 2021). This represents 36% of the total attacks on all blockchains in 2022. As for the Ethereum blockchain, it has suffered 49 attacks (up from 45 in 2021). This equates to 27% of total attacks across all blockchains in 2022.
How are the funds stolen?
In 2022, hacks clearly remain the predominant cause losses due to fraud, swindling and shootings. Carpet pulls refer to a malicious ploy in cryptocurrencies where the developers of a project disappear with investor funds. Finally, fraud is responsible for only 4.4% of total losses in 2022. Hacking makes up 95.6%.
How much money could be recovered?
Additionally, in 2022, $205 million could be fortunately recovered from stolen funds during 12 special cases. While impressive, this amount represents just 5.2% of total losses in 2022.
In 2023, more steps need to be taken to assure the many skeptics that they can invest in cryptocurrencies without fearing their funds will be lost. The cryptocurrency industry faces a large trust deficit. Indeed, the observation is clear and without appeal. And, notably, the scams and hacks have as much to do with it as the FTX and Three Arrows debacles. So, to fix this problem, users will need to be provided with more security against the threat of scams and hacks. This will require better tools and software anti scam, more elaborate cybersecurity systems, stricter regulation to test the reliability and financial soundness of a project and more internal and external audits (see the article on the failure of the entire chain of custody that caused the FTX disaster) . Furthermore, in another issue, we also did an article on crypto fundraising in 2022: Review, top 10, trends and lessons.
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Student who worked in a tech unicorn and investment funds. I am passionate about entrepreneurship and business. My articles deal with cryptocurrencies and associated technologies with an eye. Indeed, I am convinced that cryptocurrencies, the blockchain, NFTs and the metaverse are revolutionizing many sectors and offering unprecedented opportunities.