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Web3 Lost Nearly $4 Billion To Fraudsters Last Year – Will Things Improve in 2023

In the last year, the cryptocurrency sector saw a reduction in losses due to illicit activities, with digital assets worth about $4 Billion being compromised. This represents a drop of over 50% when compared to the staggering $8 billion theft in 2021.

Immunefi’s recent study, a prominent platform offering bug bounty and security solutions for Web3 networks, highlighted that in 2022, losses amounted to nearly $3.9 billion. Shockingly, five major breaches made up $2.361 billion of these losses, representing 59.8% of the total amount.

When breaking down the sources of these breaches, hacking overshadowed other types of misdeeds. Specifically, hackers pilfered in excess of $3.7 billion, which is over 95% of the year’s total crypto losses. Frauds, scams, and dubious schemes, commonly referred to as “rug pulls,” made up a mere 4.4% of the year’s losses. The report further states:

In 2022, the decentralized finance (DeFi) sector was the primary victim of successful cyber exploits, accounting for a whopping 80.5% of total losses, compared to centralized finance (CeFi) at just 19.5%. Throughout the year, DeFi faced a staggering loss of approximately $3.18 billion across 155 separate incidents. This signifies a significant hike of 56.2% from 2021, where DeFi was hit with losses of around $2.036 billion from 107 events.

In summary, 2022 stands out as an especially tumultuous year for the digital currency landscape. A series of setbacks rocked both decentralized finance (DeFi) and centralized finance (CeFi) ecosystems. Notably, the Terra/LUNA network faced a meltdown in May, and the renowned crypto exchange FTX met a dramatic downfall in early November.

When analyzing blockchain vulnerabilities, Binance’s native blockchain, BNB Chain, and Ethereum emerged as the primary targets in 2022. They experienced 65 and 49 incidents respectively. Combined, they bore the brunt of a significant 63.3% of all blockchain-related attacks. Following closely, the Solana blockchain, backed by FTX, became the third most targeted, with 12 breaches making up 6.7% of the year’s total incidents.

While 2022 saw significant losses in the crypto realm, there was a silver lining with some of the stolen assets being recovered. According to the report, “$204,157,000 were retrieved from illicit activities in 12 distinct events, which, though it may sound substantial, only amounts to 5.2% of the entire losses for the year.”

The year witnessed some monumental crypto breaches. Topping the list was the hack on Axie Infinity’s Ronin blockchain, where culprits escaped with Ethereum and USDC valued around $625 million. Other notable breaches include Wormhole’s loss of $326 million, Nomad’s $190 million, BNB Chain’s hefty $570 million, and FTX’s staggering $650 million. Together, these breaches made up 60% of the total losses for 2022.

Amid these unsettling figures, Mitchell Amador, the chief executive of Immunefi, underscored the need for more stringent security protocols in the Web3 domain. Commenting on the state of affairs, he remarked:

“The enormity of the 2022 losses underscores a pivotal message: we must place security at the forefront and adopt strong, consistent protective measures as we step into 2023. Recognizing and rectifying vulnerabilities proactively not only shields the community but also cultivates confidence in the domain.”

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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