Although most individuals see potential in the crypto market, they can attest that some aspects of the sector need to be removed. One of the reasons why traders are avoiding the market is because of scams and hacks. Even though the decentralized finance market offers traders a vast array of investment and profit options, some individuals steal from other traders. The decentralized finance sector has lost more than $10 billion to hackers and fraudsters, according to research by Elliptic, a risk management business.

TVL exceeds $250 billion in DeFi protocols

Traders can use decentralized finance to conduct activities like trading, lending, and borrowing without the requirement for a financial institution. The protocols give traders smart contracts with which they can communicate to carry out their actions. According to a previous report by analytics firm DeFi Llama, the digital asset market is worth around $250 billion. The most astonishing element about the number is that it was just under $1 billion in June.

The increase in the figure has been linked to the sector’s enormous locking of cash and the growth in the price of protocol native tokens. Another issue is that the DeFi industry has increasingly moved away from Ethereum and toward other networks. As a result, blockchains like Solana and Binance Smart Chain give hackers easier access to money.

Breakdown of the elliptic report

According to the Elliptic research, most emerging protocols do not complete their due diligence in security before launching. It further stated that because crypto transactions are irreversible, the protocols will not recover their assets if they are stolen. The two reasons listed above are the primary reasons why hackers target them rather than building protocols.

According to the paper, the authors of the protocols are sometimes to blame because they are aware of the back doors through which hackers might gain access. It is noted that most of the time, they choose to leave it open to take funds for themselves. According to Elliptic research, decentralized applications have lost a total of $2 billion in the last two years. The other $10 billion loss is due to the poor performance of tokens and the industry’s hacking efforts. Although it is impossible to specify why the tokens are in such bad shape, the report claims that it is primarily due to traders quitting the market.

Ethereum protocols are responsible for the loss of $8.6 billion in the last two years. MakerDAO, Uniswap, and Synthetix are the platforms that have contributed the most to the loss. Protocols on the Binance Smart Chain were responsible for the remaining $2.5 billion loss. According to the Elliptic research, traders should also be aware of lending platforms, which allow them to lend and borrow assets. Finally, Elliptic advises traders to exercise caution and believes that future laws will minimize the number of hacks and frauds in the industry.

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