According to a quarterly web3 report compiled by CertiK, a blockchain security company, on-chain data shows that more than $300 million worth of digital assets were lost to cryptocurrency exploits and hacks during the second quarter of 2023.
A look into CertiK's report reveals a total of 212 security incidents reported in the quarter in cases wherein malicious individuals managed to drain a total amount of $313,566,528 from Web3 protocols.
Compared to 2022 Q2, hacks and exploits resulted in a loss of over $745 million, representing a 58% decrease in the commutative funds lost during the reported period.
Although the amount lost during the second quarter of 2023 was relatively lower than in 2022, our observation shows an increase in the value lost specifically as a result of exit scams.
Exit scams accounted for about $70 million during the reported quarter.
Likewise, Q2 witnessed a decrease in losses as a result of Oracle manipulation attacks and flash loans.
Meanwhile, the first quarter saw a total of 52 oracle manipulation attacks, which resulted in losses of approximately $222 million. However, the Euler Finance hack accounted for over 85% of these losses.
Furthermore, in Q2, there were 54 flashes along with oracle manipulation attacks that resulted in losses of approximately $23 million. The incident marked an 89% decline in losses when compared to the first quarter. Oracle manipulation attacks include exploiting vulnerabilities in the price oracles necessary for decentralized applications (DApps) and smart contracts.
Oracles give external data, like asset prices or market information, to blockchain-based applications. Data fed into the oracle is manipulated by attackers to deceive smart contracts and DApps, resulting in fraudulent activities such as price manipulation, front-running, and the wrong execution of financial transactions.
On the other hand, a Flash loan attack is a type of DeFi attack where individuals take out a flash loan (a type of uncollateralized lending) from a lending protocol and use it in conjunction with various types of gimmickry to manipulate the market in their favor.
Among the blockchains CertiK's report highlighted, BNB Chain had the highest number of incidents (119, resulting in losses of about $70,711,385; Ethereum ranked second, with over 55 incidents resulting in hackers obtaining more than $65,999,953.
The fast growth of the Web3 ecosystem has introduced immense opportunities and innovation to the cryptocurrency industry.
However, as the web3 ecosystem widens, so do the risks associated with it. Investors and stakeholders alike need to be vigilant of fraudulent activities in the space. Hackers capitalized on a vulnerability in the system, enabling them to drain huge amounts of money.
So there's a need for crypto owners to ensure that all loopholes are closed, leaving no chance for hackers to find their way in.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.