As the year draws to a close, data has shed light on the performance of the Decentralized Finance (DeFi) space, revealing a notable decrease in losses attributed to exploits throughout the year.
While this figure may still seem substantial, it marks a significant decline when compared to the losses witnessed in the preceding two years. In 2022, the DeFi sector experienced a staggering $53.5 billion in losses due to exploits, marking the highest recorded losses in the history of the space.
In 2021, losses amounted to nearly $4 billion, and 2020 saw the lowest recorded losses at $157.2 million.
Record low DeFi losses in 2023
The DeFi space has seen a remarkable improvement in terms of security in 2023. According to IntoTheBlock, the year is expected to record the lowest losses due to exploits since 2020. As of now, slightly over $1 billion has been lost to various exploits within the DeFi space this year.
Throughout the year, several high-profile DeFi hacks occurred, resulting in the loss of millions of dollars. Some of the most notable incidents include exploits involving SushiSwap (SUSHI), Bonq, and SafeMoon (SFM).
SushiSwap’s April Exploit: On the 9th of April, SushiSwap fell victim to an exploit that resulted in a loss of over $3.3 million for at least one user. The exploit was caused by an approve-related bug on the RouterProcessor2 contract, leading to a temporary decline in the price of SUSHI. However, the situation was swiftly addressed, and prices normalized.
BonqDao’s February Exploit: In February, BonqDao experienced a significant smart contract exploit, resulting in an estimated theft of $120 million from its protocol. The exploit involved an Oracle hack that allowed the attacker to manipulate the price of the AllianceBlock (ALBT) token.
SafeMoon’s March Exploit: SafeMoon encountered an exploit in March where the Safemoon token liquidity pool (LP) lost nearly $9 million worth of tokens. Attackers exploited a faulty feature in the smart contracts, conducting multiple token exchanges in a single transaction, leading to the theft of billions of SFM tokens locked in an LP. Similar to SUSHI, the SFM token experienced a substantial price decline following the exploit.
DeFi Total Value Locked (TVL) trends
An analysis of the DeFi Total Value Locked (TVL) on DeFiLlama has revealed significant fluctuations in 2023. The chart indicates a decline that began towards the end of 2022, and this trend persisted for some time.
However, starting in October, a slight uptrend became noticeable, and gradual growth has continued since then. As of the time of writing, the DeFi TVL stands at approximately $51.3 billion.
As the DeFi market shows signs of recovery, it remains to be seen whether the industry will continue to fortify its defenses against exploits in the coming year.
The reduction in losses due to exploits in 2023 is a positive development, indicating that DeFi projects and platforms are taking security more seriously.
The DeFi sector has learned valuable lessons from past exploits, and ongoing efforts are being made to enhance the security of smart contracts and protocols. It is expected that continued audits, security upgrades, and greater awareness will contribute to a more secure DeFi landscape in the future.