Code Exploits
Note: Data in this section last updated September 12th, 2022
Like any piece of software, smart contracts with poorly written code have significant vulnerabilities. This is common across the cryptocurrency sphere and the DeFi, NFT, DAO, Smart Contract and Web3 spaces have all suffered exploits.
Projects lost hundreds of millions to hacks in 2021. Notable exploits include:
Notable Hacks in 2021
This is not a new phenomenon and hacks have plagued the space since inception. Indeed, one of the first Bitcoin exchanges known as Mt. Gox – which handled 70% of all Bitcoin transactions at the time – was hacked in 2014 and 750K BTC were stolen (worth over $16 billion today – September 12th, 2022).
In addition, the first DAO, known simply as “The DAO”, was also the victim of an exploit. The project launched in 2016 and raised $150 million worth of Ether. Less than three months after launching, it was hacked, causing the project to lose $60 million.
The DAO hack caused controversy on many levels in the space. Notably, there was a debate on whether or not to reverse the transaction. Doing so would effectively return the funds, but also go against the spirit of decentralization and set a poor precedent.
Voters ultimately decided to reverse the attack, “forking” Ethereum blockchain into:
Ethereum: The version that restores the funds lost in the attack to their original addresses. This is the chain that most people use today
Ethereum Classic: The original chain that preserves the hack. Classic is much less popular and trades at approximately 2% of the value of ETH
Although the funds were restored, the hacker did not lose out entirely, as he or she still retains possession of Ethereum Classic coins which are now worth over $100 million.
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