How Crypto Security Improved Despite $412 Million in Losses

Immunefi has published its quarterly report on losses in the crypto sector. Although $412 million was lost to hacking and fraud, the overall security situation is improving.

Decentralized finance (DeFi) has often been targeted, but centralized finance (CeFi) has seen far greater losses, highlighting the importance of self-regulation.

Crypto security today

Immunefi, the bug bounty platform for blockchain, released a comprehensive report on crypto losses in Q3 2024. The report says that just under $413 million has been lost from the Web 3 ecosystem, and a staggering amount on top of that. However, ImmuneFi also estimates that roughly $90 billion is locked up in the industry overall, making bankruptcy incredibly easy.

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Indeed, the security situation is improving by a wide margin. According to the previous report, Q2 saw a loss of 572 million dollarsAnd Q3 last year saw over $685 million.

In one year, this has decreased by almost 40%. Over 99% of losses are directly attributable to hacking, and fraud is on the decline.

As it turns out, one of the biggest hacks in the Immunefi survey happened just days before the report. BingX lost $52 million to the hack in less than a week, representing 12 percent of the total amount lost to hacking. Leaving aside the Wazirx hack in July, the 32 other events suffered a 32 percent loss.

Growing stability

In other words, Q3 losses are more likely to be this high. Fraud has decreased by over 86% year over year, and it is clear that the state of crypto security is improving in many ways. For example, more than half of the on-chain losses came from Ethereum and BNB, and many of the biggest losers of the past year are not represented at all.

“We're seeing an increasing number of incidents targeting DeFi, while SeFi has fewer incidents but often with far worse consequences, with hundreds of millions of stolen funds per exploit. In CeFi, the biggest infrastructure issue is private key management, which is important for self-maintenance of crypto assets but is not typically exposed to security audits,” said Eminefi CEO Mitchell Amador.

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Amador got to the heart of the matter. DeFi losses are down nearly 80%, but CeFi losses are up 66%.

A few massive exchange hacks represent the lion's share of successful hacks, although more DeFi hacks are being attempted. This is similar to Immunefi's previous statements that infrastructure weaknesses are a real weak point for crypto projects. For these reasons, self-management is more important than ever.