Web3 Projects Have Reportedly Lost More Than $2 Billion To Hacks In 2022

Web3 project has estimated a total loss of up to $2 billion within the first six months of 2022, a new report has shown. These losses have reportedly been as a result of hacks and exploitations. Reports say these figures are more than figures from the last year 2021. This report is research presented by blockchain auditing and security company CertiK. The firm released its quarterly Web3 security report covering Q2 of this year. The report depicts a really sobering impression of a cryptocurrency space still plagued by hacks, scams, and phishing schemes  while also revealing relatively new threats like flash loan attacks rapidly on the rise.

Blockchain auditing and security company, CertiK puts majors focus on relatively new threats, which were created with the invention of flash loans. This particular class of threat is a decentralized finance mechanism that allows borrowers to have access to extremely large amounts of cryptocurrency within a short period of time. According to The Verge, if used maliciously, flash loans can be used to manipulate the value of a certain token on exchanges or buy up all of the governance tokens in a project and vote to withdraw all of the funds. In April, Beanstalk witnessed this type of threat.

According to CertiK’s report, in Q2 2022 a total of $308 million was recorded lost across 27 flash loan attacks — an enormous increase compared to $14 million lost to flash loans in Q1 of the same year. Moving on, CertiK reports that phishing attacks have also witnessed an increase from 106 in Q1 to 290 by the end of Q2 of the year 2022. Discord was the vector for the vast majority of phishing attempts, a signal of its continuing popularity as the social network of choice for the cryptocurrency and NFT scene, despite ongoing security concerns.

On a more positive note, the cryptocurrency space witnessed less of the so-called “rug pulls.” This practice is one where the founders of a project halt development and abscond with the funds. This practice has however become less common, though funds lost to this still run in tens of millions of dollars. CertiK reported that a total of $37.46 million was lost in Q2 of this year to rug pulls, a decrease of about 16.5 per cent when compared to figures from the previous quarter, though the report attributes much of this decrease to the current winter sweeping the crypto space, which is not encouraging to less experienced investors who are likely to be fooled by scam projects.