DeFi losses fell 40% in 2024 as security measures tighten, while CeFi breaches hit $694 million.
Dollar losses due to security breaches in decentralized finance (DeFi) are expected to drop 40% from 2023 to 2024, thanks to improved protocols, stronger bridges, and additional measures.
The rise in DeFi security measures comes on the heels of a bleak year for centralized fiat currencies (CeFi), according to blockchain security firm Hacken’s annual “Web3 Security Report.”
CeFi has suffered more than two breaches, with losses rising to $694 million as centralized exchanges are the focus of access control vulnerabilities and other security issues.
The report’s findings highlight significant differences between DeFi’s progress and CeFi’s struggles, providing a valuable perspective to examine both sectors and highlighting the weakness of integration.
DeFi Security Pump
The 2024 Hacken report predicts that DeFi losses will drop significantly in 2024, from $787 million in 2023 to $474 million this year.
The report said that bridge-related vulnerabilities were the largest breach in DeFi history, with losses falling from $338 million in 2023 to $114 million in 2024.
Despite some advances in DeFi, such as multi-party operations and non-knowledge tokens, challenges remain, with access control vulnerabilities accounting for nearly half of all DeFi losses, such as the $55 million Radiant Capital hack.
CeFi breaches are on the rise
CeFi’s performance in 2024 contrasts with the rise of DeFi, with financial losses exceeding $694 million in 2023, according to a Hacken report.
The increase in breaches was primarily due to governance vulnerabilities and major incidents such as the DMM exchange hack in Q2 and the WazirX hack in Q3. The hack, which involved leaking private keys and exploiting a multi-signature vulnerability, cost $305 million and $230 million, respectively.
Dyma Budorin, founder and CEO of Hacken, told Cointelegraph that the report’s findings reveal “significant gaps” in the security of CeFi operations, due to “poor private key management, weak multi-signature setup, and poor governance.”
Lessons to be learned
The significant difference in financial losses in the DeFi and CeFi sectors highlights ways to improve both industries.
Budolin said that attackers exploit vulnerabilities in security areas, making it important to implement key management procedures and automated monitoring systems to mitigate these risks.
The problems identified by Director Hacken are evident in North American hackers who have stolen more than $1.3 billion in crypto assets in 47 incidents this year, according to a December 19 report by Chainalysis.
