The world of Decentralized Finance (DeFi) has grown from $4 billion at the beginning of 2018 to nearly $100 billion less than four years later. But as with any growing financial sector, there will be those who try to find ways to exploit, cheat and flat-out steal from it.
In August of this year, there were two major attacks. PolyNetwork had nearly $600 million in assets stolen in the first week, and CREAM Finance had $19mm of ETH and AMP stolen in a flash loan attack just a couple weeks later. This is a problem that isn’t getting better; it’s getting worse. According to a report from crypto-intelligence firm CipherTrace, DeFi hacks are approaching $400mm so far in 2021. This is nearly three times the money lost in 2020.
Fortunately, as the black hats become more and more prevalent, the white hats seem to be getting better and better at their jobs. Lossless (LSS) was instrumental in recovering a huge portion of the funds lost in the CREAM attack, and promised a mitigation tool that developers could integrate into their tokens to halt fraudulent transactions and recover stolen funds.
And now, that tool is here. Lossless has introduced the first DeFi hack mitigation tool for token creators.
Lossless protocol freezes fraudulent transactions, based on a set of fraud identification parameters and returns stolen funds back to the owner’s account.
For creators, it’s as simple as integrating the Lossless protocol into their token code by using the Lossless protected ERC20 token. As with anything built on blockchain, it’s community based. Once the hack is spotted, anyone can freeze a transaction by staking LSS tokens. The Lossless team then determines if the hack was genuine, and (if so), begins taking steps to reverse the transaction and pursue the hack…and the first to report the hack is rewarded.
As the DeFi community continues to grow, the incentive for blockchain transparency expands right along with it. Now, not only is there incentive to participate in a decentralized market, there’s incentive in the community to develop faster hack-spotting software.
Let the black hats beware; there’s a bounty on their heads.