Web3 projects have lost more than $2 billion to hacks and flash loans this year

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Web3 projects have lost more than 2 billion to
hacks and flash loans this year
A new report from CertiK flags major losses and a
growing threat from flash loan attacks.
Image credits Illustration by Alex Castro / The
Verge In the first six months of 2022, Web3
projects have lost more than 2 billion to hacks
and exploits more than all of 2021
combined. Thats according to research from
blockchain auditing and security company CertiK,
which on Thursday released its quarterly
Web3 security report covering Q2 of this year.
The report paints a sobering
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picture of a cryptocurrency space still plagued
by hacks, scams, and phishing schemes while also
facing relatively new threats like flash loan
attacks. CertiK puts particular focus on this
last category of threat, which has been created
by the invention of flash loans a decentralized
finance mechanism that lets borrowers access
extremely large amounts of cryptocurrency for
very short periods of time. If used maliciously,
flash loans can be used to manipulate the value
of a certain token on exchanges or buy up all of
the governance tokens in a project and vote to
withdraw all of the funds, as happened to
Beanstalk in April. In total, CertiKs report
claims that a total of 308 million was lost
across 27 flash loan attacks in Q2 2022 an
enormous increase compared to just 14 million
lost to flash loans in Q1. What Is a Flash Loan
Attack?
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A flash loan attack is an abuse of the smart
contract security of a particular platform in
which an attacker usually borrows a lot of funds
that dont require collateral. They then
manipulate the price of a crypto asset on one
exchange and quickly resell it on another
one. 10 Biggest flash loan attacks of quarter
2nd half of 2022
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Phishing attacks also increased in frequency
between Q1 and Q2 of this year, with CertiK
recording 290 in the most recent quarter compared
with 106 in the first three months of the year.
Discord was the vector for the vast majority of
phishing attempts, a signal of its continuing
popularity as the social network of choice for
the cryptocurrency and NFT scene, despite
ongoing security concerns. In slightly more
positive news, so-called rug pulls where
the founders of a project halt development and
abscond with the funds are becoming less
common, though tens of millions of dollars were
still lost in this way. CertiK found that a
total of 37.46 million was lost to rug pulls in
Q2 of this year, down 16.5 percent from the
previous
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quarter, though the report attributes much of
this decrease to the current crypto winter,
which may be driving away the less experienced
investors who are likely to be fooled by scam
projects. Credits/HELP Corin Faife
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