Daily crypto transactions have their fair share of exhilarating highs and downright lows. Every coin has two sides, and that rings true for the blockchain space. Recent headlines paint an alarming picture of the exact risks involved.
First up to bat is the case of the CRV lending protocol, Curve Finance. It recently discontinued governance token rewards for liquidity pools affected by the July 30 Curve exploit and the July 6 Multichain exploit. The Curve emergency decentralized autonomous organization (Curve E-DAO), a selective committee of the Curve DAO governing body, went ahead to carry out this reward-cutting exercise.
As an audience, we’re left to unfold the intricacies of the plot. On July 6, over $100 million worth of cryptocurrency was suspiciously withdrawn from a collection of bridges in the Multichain protocol. The Curve team advised its users to break free from multichain assets like multiBTC, gesturing towards the potential risk to its own multibtc3CRV liquidity pool. Only eight days later, the Multichain team suggested that some mystery person – likely a hacker – had gained access to its CEO’s cloud computing account. Fast forward to July 30, and Curve Finance found itself at the receiving end of a reentrancy attack, losing over $47 million worth of crypto.
Security on the blockchain is crucial but continues to be a major issue. On July 23, payment provider Alphapo found itself $60 million poorer, supposedly due to cyber invaders gaining access to its hot wallet private keys.
Then there’s Chulalongkorn University researcher, Kanis Saengchote, who proposed the Global Systematically Important Protocol (G-SIP). This algorithm measures how DeFi protocols interact and singles out the nodes in the network with significant influence. The application of this framework, derived from its banking counterpart G-SIB, to DeFi institutions might provide the resilience needed to prevent future financial downtrends, similar to the Terra collapse.
While this dual nature might concern some, it’s the essence of the cryptocurrency space. Volatility is not a bug; it’s a feature. It breeds opportunity for high rewards but also exposes the precarious side of operating within the blockchain environment. The security breaches laid bare in this report show that while we inch towards a future built on blockchain technology, there remains significant room for reform and evolvement in the area of safety measures. The development of systems like G-SIP could be the direction that the wind of change needs to blow cybersecurity and resilience to a place of stability and dependability. It’s a tale of promise and caution intertwined onto a single thread, symbolic of the cryptosphere’s roller coaster ride.
Source: Cointelegraph
