Ethereum Leads with $487 Million in Rug Pull Loses, Followed by Polygon
TL; DR
There were 464 security incidents with total losses of $2.5 million in 2023.
Ethereum and Polygon recorded the highest number of crypto incidents.
Crypto investors should use crypto exchanges when investing in new projects to avoid rugpulls.
Introduction
The immutable and open nature of DeFi makes it vulnerable to losses arising from unauthorized access to digital assets like cryptocurrency. As a result, every year many DeFi platforms lose millions of dollars from malicious actors like hackers and scammers. However, various DeFi protocols are susceptible to different attacks. Today, we discuss crypto losses that different DeFi projects incurred during 2023.
Read also: Apply This Trick to Stay Away From Copying Losses!
$2.5 Lost in Crypto Crimes in 2023
A recent SlowMist.pdf “SlowMist”) report revealed that there were a total of 464 crypto incidents that resulted in a loss of more than $2.5 million in 2023. The Ethereum network had the highest number of security breaches and other crypto crime incidents, accounting to about 70% of the total.
The Ethereum losses were mostly a result of crypto hacks and rugpulls that totalled more than $487 million. On the other hand, Polygon had the second highest number of incidents amounting to $123 million. The main causes of Polygon’s losses were crypto scams and hacks.
It’s not surprising that the Ethereum eco recorded the highest number of crypto rugpulls and other crimes. The reason is that it has an extensive eco and high profile crypto projects.
Notably, the largest crypto crime on Ethereum was on the cross-chain platform Multichain where there was a loss of $230 million. However, despite these security incidents the ETH price and Polygon price (Matic) remained competitive. Both ETH and Matic were bullish for the greater part of 2023.
Based on these figures there was a 34% decrease in the number of crypto security breaches in 2023 as compared to 2022. In 2022 there were more than 300 incidents with a total loss of more than $3.8 billion.
The decrease in crypto incidents was a result of improved security s for DeFi protocols and an increase in community awareness about crypto crimes and safety measures.
Apart from Ethereum and Polygon, Binance Smart Chain (BNB) recorded several crypto scams and other security incidents. Crypto scams comprised the highest number of incidents on the BNB chain. There were 113 security incidents with a total loss of about $110.12 million.
DeFi was the Greatest Crypto Crime Target in 2023
Of all the affected project types, DeFi was the greatest target during 2023 with over 230 crypto incidents. The following graph shows the distribution of crypto crimes among the major crypto sectors.
Distribution of crypto crimes in 2023 - SlowMist
As The Graph indicates, DeFi and crypto exchanges had the highest incidences of crypto crimes. According to SlowMist, the crypto crime losses on DeFi constituted 60.7% of all the incidents. Crypto exchanges were the second most affected institutions.
Popular methods of Attack
Rugpulls: Data on SlowMist.pdf “SlowMist”) shows that there were 117 rug pull incidents with total losses that exceed $83 million. Base eco incurred the most loss that amounted to over $32.5 million. BNB Chain had the second highest numbers of rugpulls with over $23.05 million in losses.
Usually, project developers orchestrate rugpulls which come in different forms including inflating prices and withdrawing liquidity. At times, they create projects, fund them and invite many people to invest in them. Once there is much liquidity they close the projects and disappear with the funds.
Flash-loan Attacks: In 2023, flash-loan crypto crimes led to the loss of over $275 million in 36 cases. Often the attackers capitalized on uncollateralized loans in lending DeFi protocols. In such cases, they use the borrowed funds to exploit platform vulnerabilities and manipulate prices.
Access Control Exploits: In this case, the attackers take advantage of weaknesses on how the s grant access rights and permissions. Certain vulnerabilities enable attackers to gain unauthorized access to digital assets that exist on the platforms. In total, there were 29 cases of access control exploits that resulted in losses amounting to $852 million.
Major Security Breaches in 2023
Earlier on, we pointed out that in 2023 there were a total of 464 recorded crypto incidents. Let’s briefly look at some of the biggest exploits of the year.
Mixin Database Attack: Mixin Network’s, a cloud service provider, was attacked on 23 September leading to a loss of assets worth more than $200 million.
Euler Finance: On 13 March attackers exploited Euler Finance and stole assets worth more than $197 million. The bad actors accessed flash-loans and triggered liquidation functions by donating the digital assets to a reserve address.
Poloniex Exchange: On 10 November hackers stole crypto assets worth around $130 million. According to SlowMist, based on the fast and professional manner the attack was carried out, it could be the work of the Lazarus Group.
Other attacks: The other crypto projects that incurred much losses due to crypto crimes are BonqDAO (a non-custodial lending platform), HEX, HECO Bridge, Atomic Wallet, Curve Finance and Orbit Chain.
Summary: There were 464 reported crypto incidents in 2023. Most of these incidents occurred on DeFi and crypto exchanges. Due to improvement in security of DeFi protocols there was a 34% decrease in crypto crime incidents in 2023 compared to 2022. Ethereum, Polygon and BNB Chain witnessed the greatest losses due to the attacks.
Read also: What is A Rug Pull in Cryptocurrency
How to Protect Yourself from Rugpulls and Hacks
The best means to protect yourself from rugpulls and hacks is to carry out your crypto activities like trading on crypto exchanges. This is because exchanges verify projects that list their tokens there.
If you want to invest in crypto start-ups you can also do that on cryptocurrency exchanges. As an example, Gate.io lists verified start-ups on its Startup page. With these emerging crypto projects there is no chance of rugpulls.
Conclusion
There were 464 security incidents in 2023, a decrease of about 34% from 2022. The greatest losses occurred on the Ethereum and Polygon networks. Most attackers targeted DeFi and exchanges due to the number of activities that take place there. The best way to avoid rugpulls and crypto hacks is to carry out various transactions on cryptocurrency exchanges.
