Disclaimer: The Industry Talks section features insights from players in the crypto industry and is not part of the editorial content of Cryptonews.com.
2022 was a terrible start for the decentralized financial industry. The DeFi protocol is still popular, but the number of exploits and thefts continues to grow. Narek Gevorgyan, CEO and founder of Coinstats, expects significant improvements in this area over the next few years.
DeFi exploits still govern Supreme
Today, the decentralized financial industry has a Total Value Locked (TVL) of over US $ 235 billion. This is well above the US $ 110 billion recorded a year ago. But unfortunately, every story always has a second side. Despite TVL’s overall growth, the number of exploits affecting decentralized financial protocols, products, and services is also skyrocketing.
The first two months of 2022 culminated in a variety of hacks, losing hundreds of millions of dollars. Some robbers are smaller than others (Tinyman lost US $ 3 million and Lympo was exploited for US $ 18.7 million), but there are much larger numbers. For example, Qubit Finance has lost US $ 80 million. Wormhole Lost US $ 326 million. In the last few weeks, we have exploited Ronin Bridge for US $ 600 million and used Beanstalk Farms. hack As a result, a loss of US $ 180 million served as a good “example”.
Narek Govergyan, CEO of CoinStats, commented:
“There are two major issues with DeFi: security and user interface. The best people in the world are working on these. I think the community is strong enough to work on them in the next few years. “
It’s not uncommon to anticipate growing pain in terms of security, but these losses are cumulative. It is imperative to consider that 2021 has worsened. Over 50 recorded DeFi hacks and exploits.. Last year, more than US $ 10 billion was lost due to these security incidents. Still, despite its negative records, overall interest in decentralized finance has not diminished.
Closing the rank is essential
One of all these positive caveats is how every security incident can serve as a viable lesson for better outcomes in the future. It also emphasizes projects that go through a code audit before making the service accessible to the general public. Not all projects are audited, but companies such as CertiK, Coinspect, Diligence, Hacken and PeckShield continue to move the industry forward.
It is imperative that the decentralized financial community close its ranks and promote better security. If people don’t speak up and provide ideas and suggestions, nothing happens. The decentralized nature of these protocols makes it easy for community members to suggest improvements and suggestions. All thoughts and opinions are important.
The weights of Narek Gevorgyan are:
“This reminds us of the early days of Facebook, where people were abusing user data through a very simple Facebook app. We are confident that the industry will eventually mature from this exploitable stage. The DeFi insurance protocol helps mitigate the effects of hacks and exploits and increase confidence in DeFi spaces. “
Gevorgyan offers another interesting point: DeFi insurance. Various service providers guarantee up to a certain amount of money trapped in the DeFi protocol. It’s good to be insured, but it shouldn’t be the only failsafe. The protocol requires a backup pool of funds in case things go wrong. As history has shown, exploit hacking can always occur at unexpected times.
DeFi industry trucks along
Despite the setbacks of 2021 and early 2022, DeFi hasn’t stopped. Its locked total value fluctuates considerably, mainly due to the bearish market conditions of crypto assets. Changing the value of Ethereum or Solana will affect the TVL of the entire DeFi protocol built on that chain. The key point is that looking at long-term growth shows that diversified finance is very robust.
Narek Govergyan, CEO of CoinStats, adds:
“The more we look at the adoption of DeFi, the more we see that hackers are trying to exploit this or its protocol. This happens even in the early stages of the Internet and is complete as long as the industry is strong enough not to be blocked by such an event. Is normal. “”
So far, the industry has not been thwarted by exploits, hacks, or theft. Instead, all incidents put a negative spotlight on DeFi, but it still paves the way for broader development and adoption. Overall, the decentralized financial industry still has strong momentum. Things should be very interesting when these twists and growing pains are put on the bed.