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Web3 Projects Face Substantial $2.02 Billion Losses In 2023 Due To Security Breaches

The escalating risks to the security of web3 have become significant concerns for the future of this decentralized internet paradigm. Beyond the financial implications, the losses incurred from hacking attempts on web3 and smart contracts have cast doubts on the dependability of this emerging technology. 

Globally, the perception of web3 as the next phase in the internet and crypto revolution remains, offering users a decentralized, persistent, and secure online experience through technologies such as blockchain and smart contracts.

$2.02 Billion Total Losses In Web3

Reports from Beosin reveal that in 2023, the total losses incurred by Web3 amounted to a staggering $2.02 billion. Major attacks accounted for $1.397 billion from 191 incidents, rug pulls resulted in losses of $388 million from 267 cases, and phishing scams contributed to $238 million in losses.

A noteworthy statistic is that 68% of the 191 attacks targeted decentralized finance (DeFi) projects, leading to the highest losses of $408 million, making up 29.2% of the total.

Compared to 2022, 2023 witnessed a diversification of attack types, integrating Web2 tactics such as database compromise, supply chain attacks, third-party service provider attacks, man-in-the-middle attacks, DNS attacks, and front-end attacks.

In a shift from the previous year, 2023 showed increased blockchain diversity, fueled by private key compromises in various Centralized Exchanges (CEX) incidents. The top five chains by losses were Ethereum, Mixin Kernel, HECO Chain, BNB Chain, and Tron. BNB Chain led in terms of attack incidents, followed by Ethereum, Arbitrum, Polygon, with Optimism and Avalanche tying for the fifth spot.

$723 Million Remained In Hacker’s Address

Interestingly, 51.8% of the total stolen funds, approximately $723 million, remained in hacker addresses. Hackers employed sophisticated money laundering methods, utilizing cross-chain transfers and dispersing funds across multiple addresses, presenting challenges for investigations by both project teams and regulators.

In 2023, there were 267 Web3 rug pulls, resulting in losses of approximately $388 million, marking a decrease of 8.7% from 2022.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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