Security is the biggest challenge to DeFi’s continued growth,“ says one blockchain executive
Richard Ma, CEO and co-founder of blockchain security company Quantstamp, explained that DeFIs have the potential to change our financial ecosystem, but security remains a major challenge.
„We believe that security is very important to the growth of DeFi,“ he said today at the Unitize digital conference. Ma pointed to the various hacking into DeFi that has occurred so far in 2020, stating that $26 million of DeFi project funds have been stolen this year alone.
Fake tokens at Uniswap are trying to take advantage of the DeFi boom
The growing interest in DeFi
DeFi’s ecosystem has grown almost threefold, from $700 million in December 2019 to $2 billion today. Reflecting on this growth, Ma noted:
„This indicates a desire for an alternative financial system because as you see with COVID-19, banks are printing more and more money and the interest rates that are available in the traditional financial system are quite low. So people are looking for better options.
He specifically noted the expansion of DeFi’s Compound project and said that nearly $700 million has flown into DeFi projects to earn returns that are much higher than those offered by the traditional financial system.
Users are increasing, but only five DeFi projects account for 94% of blocked funds
But the security problems continue
According to Ma, while DeFi projects promise financial inclusion, better interest rates and reduced costs, many of them still lack security, which is a critical vulnerability for user funds.
Ma said one of the biggest vectors of attack is through unsecured lending, in which hackers temporarily inflate the value of some assets and deposit them in a lending protocol and then borrow a different asset using the manipulated price.
A DeFi platform allows unsecured lending through a new function
Since these projects are decentralized and there is no way to track and restore illegal transactions, „it is crucial to have adequate security in advance“. Aside from security audits, focusing on live security monitoring, increased transparency and insurance will be the way forward to increase Crypto Comeback Pro potential, Ma concluded.