Centralization vulnerabilities are the primary reason for DeFi attacks

Research says that DeFi may not be
Research says that DeFi may not be "decentralized" enough since attackers used centralized weak spots to rob users of billions in 2021.

According to research by blockchain security company CertiK, decentralized finance (DeFi) may not be “decentralized” enough since attackers used centralized weak spots to rob users of billions of dollars in 2021.

CertiK researchers noted that the centralization vulnerabilities were the most prominent attack vector within DeFi in a recent analysis on the status of security in decentralized finance 2021. In 2021, the blockchain security firm reported 44 DeFi attacks with a total loss of $1.3 billion. If we compare it with the previous year, this is a $500 million gain.

“This underscores the importance of decentralization and highlights the fact that many projects still have work to do to reach this goal,” CertiK stated, by further adding, “Centralization is contradictory to the DeFi ethos and creates substantial security threats.” It added that dedicated hackers and insider threats alike can take advantage of single points of failure.

Ellipitc’s research found that the value lost due to DeFi breaches and related frauds exceeded $12 billion in 2021, demonstrating significant discrepancies in how exploits are recognized and handled. However, the majority of studies on the subject appear to agree that security exploits aimed at DeFi projects have increased dramatically.

DeFi exploits peaked in 2021, but relatively?

Despite the fact that DeFi’s serious exploits have tarnished cryptocurrency markets in the eyes of traditional investors and legacy financial systems, CertiK found a piece of good news: losses in 2021 accounted for only 0.05 percent of the total market capitalization of crypto, down 17% from the previous year.

According to CoinGecko data, the crypto market peaked at $3 trillion in November 2021, after starting the year below $800 billion. Crypto’s total value locked (TVL) increased from less than $20 billion at the start of 2021 to a record high of roughly $260 billion in December, thanks in large part to DeFi. In October 2021, TVL in DeFi crossed the $205 mark.