According to the recent ‘Web3 Security Report’ by blockchain security firm Hacken, Decentralized Finance (DeFi) has seen a significant decrease in dollars lost to security incidents from 2023 to 2024. This decline is attributed to improved protocols, stronger bridges, and advanced cryptographic measures.
Centralized Finance (CeFi) Faces a Bleak Year
Conversely, Centralized Finance (CeFi) experienced a starkly different year. CeFi breaches more than doubled, with losses surging to $694 million as centralized exchanges became primary targets for access control vulnerabilities and other critical security risks.
DeFi’s Strengthened Security Measures
The report highlights the significant progress made by DeFi in terms of security. Hacken’s findings detail a stark difference between DeFi’s growth and CeFi’s struggles, providing a critical lens through which to view both spaces.
Financial Losses in DeFi Decline Dramatically
According to the report, DeFi’s financial losses declined from $787 million in 2023 to $474 million this year. Bridge-related exploits, a historical major vulnerability in DeFi, have dramatically decreased from $338 million in 2023 to just $114 million in 2024.
Multiparty Computation and Zero-Knowledge Proofs Improve Security
Despite improvements in DeFi’s security measures, challenges persist. Access control vulnerabilities accounted for nearly half of all DeFi losses, as seen in the fact that access control vulnerabilities accounted for nearly half of all DeFi losses — such as the $55 million Radiant Capital hack.
CeFi Breaches on the Rise
CeFi’s 2024 starkly contrasts the improvements seen in DeFi. CeFi’s financial losses more than doubled to $694 million, with access control exploits and notable incidents like the DMM exchange hack in the second quarter and the WazirX hack in the third quarter contributing to this surge.
Notable CeFi Hacks
The DMM exchange hack involved compromised private keys and multisignature vulnerability exploits, facilitating the theft of $305 million from the exchanges. The WazirX hack also involved a multisignature vulnerability exploit, resulting in the loss of $230 million.
Lessons to be Learned
The significant difference in financial losses between DeFi and CeFi highlights an opportunity for improvement in both industries. Dyma Budorin, co-founder and CEO of Hacken, stated that attackers exploit gaps in security setups and that it’s critical ‘to adopt stricter key management practices and automated monitoring’ systems to mitigate these risks.
Conclusion
The report’s findings provide a stark reminder of the importance of security measures in both DeFi and CeFi. As the cryptocurrency industry continues to grow, it is essential to address the vulnerabilities highlighted by this report to ensure a secure and reliable environment for users.
Financial Losses in DeFi over the Last Three Years
| Year | Financial Losses |
| — | — |
| 2023 | $787 million |
| 2024 | $474 million |
CeFi Breaches on the Rise
According to Hacken’s report, CeFi’s 2024 starkly contrasts the improvements seen in DeFi. CeFi’s financial losses more than doubled to $694 million, with access control exploits and notable incidents like the DMM exchange hack in the second quarter and the WazirX hack in the third quarter contributing to this surge.
Notable CeFi Hacks
| Incident | Losses |
| — | — |
| DMM Exchange Hack | $305 million |
| WazirX Hack | $230 million |
DeFi vs. CeFi Financial Losses over the Last Three Years
| Year | DeFi | CeFi |
| — | — | — |
| 2023 | $787 million | $333 million |
| 2024 | $474 million | $694 million |
The Risks Highlighted by the Hacken CEO
Dyma Budorin, co-founder and CEO of Hacken, stated that attackers exploit gaps in security setups and that it’s critical ‘to adopt stricter key management practices and automated monitoring’ systems to mitigate these risks.
North Korean Hackers Steal Over $1.3 Billion in Crypto Assets
According to a Dec. 19 Chainalysis report, North Korean hackers stole over $1.3 billion in crypto assets across 47 incidents this year.
Conclusion
The significant difference in financial losses between DeFi and CeFi highlights an opportunity for improvement in both industries. As the cryptocurrency industry continues to grow, it is essential to address the vulnerabilities highlighted by this report to ensure a secure and reliable environment for users.