Crime across DeFi Platforms Surged to $10.5B in 2021
Brian Njuguna Nov 19, 2021 03:45
Crime has grown at an alarming rate in the decentralized finance (DeFi) industry by hitting $10.5 billion so far this year.
The decentralised finance (DeFi) sector continues to take the world by storm, having scaled the heights to become a billion-dollar industry worth $86 billion, according to market insight provider DeFi Pulse.
Nevertheless, blockchain analytic firm Elliptic noted that crime has grown at an alarming rate in this industry by hitting $10.5 billion so far this year.
Per the announcement:
“Bugs in code and design flaws allow criminals to target DeFi sites. Deep pools of liquidity permit criminals to launder proceeds of crime while leaving few traces. Scams are also common.”
Crime across DeFi platforms has been rampant in 2021 because users have lost more than $12 billion since 2020.
According to Elliptic’s co-founder Tom Robinson:
“Decentralized apps are designed to be trustless in that they eliminate any third-party control of users’ funds. But you must still trust that the creators of the protocol have not made a coding or design mistake that could lead to a loss of funds.”
Many DeFi platforms emphasise that they have been beefing up security by maintaining passwords and keys and hiring external firms to check vulnerabilities.
DeFi enables users to save, borrow, and lend mainly in cryptocurrencies without an intermediary because it is founded on blockchain-based smart contracts that fulfil financial functions on the foundation of the underlying code.
According to a study by blockchain analytic firm Chainalysis, the United States had the highest DeFi adoption rate, followed by Vietnam, Thailand, China, and the United Kingdom.
Some experts expect this industry to enjoy more growth in the coming years. For instance, Matthew Roszak, a veteran crypto investor, stated that the DeFi sector would become an $800 billion industry thanks to increasing mainstream crypto adoption, the global chase for yield, and increased inflation.
Meanwhile, Victims of the BitConnect Ponzi Scheme, which siphoned more than $2 billion, are set to benefit from the liquidation of crypto assets worth $57 million.
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