Decentralized Finance Security Incident Review and Analysis

In 2022, blockchain security incidents occurred frequently, involving amounts as high as 4.3 billion USD. This article will analyze eight typical cases in detail, most of which had losses exceeding 100 million USD, reflecting the main security risks in the Decentralized Finance field.

Ronin Bridge Incident

In March 2022, the sidechain Ronin Network of Axie Infinity was hacked, resulting in a loss of approximately $590 million in crypto assets. The attackers used social engineering techniques to obtain information from internal employees, ultimately gaining control of multiple validation nodes. This reflects a weak employee security awareness and vulnerabilities in the internal security system.

Wormhole Incident

The Wormhole cross-chain bridge was attacked due to a code vulnerability, resulting in a loss of approximately 120,000 ETH. The issue was caused by the use of deprecated functions, reminding developers to update their codebase in a timely manner and use the latest stable versions.

Nomad Bridge Incident

The Nomad cross-chain bridge was attacked due to initialization setting issues, resulting in a loss of approximately $190 million. The attacker could repeatedly execute valid transactions to extract funds. This highlights the double-edged sword effect of open-source code in DeFi projects and the impact of automated arbitrage bots.

Beanstalk Incident

The algorithmic stablecoin project Beanstalk suffered a flash loan attack, resulting in a loss of approximately $182 million. The attack exploited a loophole in the proposal mechanism, allowing malicious actions to be executed immediately after the vote was passed. This reflects the potential risks of decentralized governance mechanisms.

Wintermute Incident

Market maker Wintermute suffered a loss of approximately $160 million due to the use of a vulnerable address generation tool, which led to the compromise of their private keys. This reminds us to carefully assess the security when using external tools.

Harmony Bridge Incident

Harmony's Horizon cross-chain bridge has suffered losses exceeding $100 million, suspected to be due to a private key leak. This once again highlights the importance of key management.

Ankr Incident

The Ankr project suffered a loss of approximately 15 million dollars due to internal personnel misconduct leading to the control of the contract. This exposed the deficiencies in the project's internal permission management and security auditing.

Mango Markets Incident

The decentralized exchange Mango Markets suffered a price manipulation attack of approximately $115 million. The attackers exploited tokens with insufficient liquidity to manipulate prices, exposing vulnerabilities in the oracle and risk control mechanisms.

These cases reflect the hidden dangers in DeFi projects regarding code security, key management, permission control, governance mechanisms, and more. Project teams need to enhance security awareness and improve internal control processes; users should carefully assess project risks and protect asset security.