$5 billion; the total amount lost as a result of DeFi hacks and exploits is that much. With approximately $700M lost to a succession of attacks that included Mango, Moola, Bond, and Binance Bridge, October 2022 will go down in history as the worst month ever. The frequency or size of DeFi's exploits, which have started to occur on a weekly basis, can't be compared to those of centralized crypto platforms, despite the fact that they too have security concerns.
Decentralized banking protocol creators have worked to address the attack methods used in the majority of hacks. Nevertheless, despite their best efforts, smart contracts still carry some risk, no matter how well they are vetted. Since it is impossible to stop every potential attack angle, the industry must accept that money will occasionally be stolen through fraud.
Following the Mango markets breach, one idea for strengthening DeFi protocols has gained traction. It's a daring attempt to encourage greater protocol security while providing compensation for consumers hacked, created by the EOS Network Foundation, the company responsible for creating the EOS blockchain.
Security as a Service from DeFi
According to Yves La Rose, CEO of the EOS Network Foundation, two solutions—Yield+ and Recover+—are being used in conjunction with one another. He explains:
“Yield+ is a rewards program to help incentivize more liquidity, grow TVL, and offer sustainable earning opportunities on $EOS. Recover+ offers solutions to recover hacked funds and ensure #EOS users are protected.”
Although these two problems may initially appear to be unrelated, they are linked because users' trust in the security of the protocols is a requirement for liquidity to increase. While this is going on, dApp developers need a reason to prioritize security rather than just deploying code and hope it works.
Two Proposals That Complement Each Other
The goal of Yield+ is to increase the likelihood that dApp developers will receive compensation and that EOS users will gain a yield on the network. 13 procedures have started utilizing Yield+ so far, with a total TVL of roughly $17 million. These projects receive 625,000 EOS per quarter, which is then transferred to consumers. Projects must adhere to stringent requirements, which include enhancing their security and confirming the team members' identities, in order to qualify for the program.
The next product is Recover+, which has been referred to as a "emergency reaction." In essence, it is used when SHTF and a hack take place. In these situations, projects included in the program can respond swiftly by putting up a plan for how to address the consequences and restore the users' health to the greatest extent possible.
Recover+ has so far attracted 19 projects with a TVL of $47M. EOS users will be hopeful that it continues to be secure since there have been no security incidents so yet. Could Recover+ or a similar solution be made available on additional DeFi networks? Users of DeFi will be open to everything that can be tolerated if the spate of hacking that began in October continues at the same rate.
