According to a report from London-based firm Elliptic, about $10.5 billion worth of user funds has been stolen in cases of fraud and theft on DeFi products.
DeFi platforms have become increasingly popular in recent years, but the platforms are not regulated. The “total value locked” (TVL), a measure of the liquidity of DeFi services, increased by a factor of nearly 500, from $500 million in November 2019 to just over $247 billion today.
The overall losses caused by DeFi theft and fraud have totaled $12 billion so far in 2021. In addition, the report suggests that in the past two years, $2 billion has been stolen directly from decentralized applications.
An additional $10 billion in losses are due to declining token value because of fraud or theft, which results in decreased consumer confidence in the products.
The vast majority of losses from the last two years, $8.6 billion, have come from products on the Ethereum blockchain.
“The DeFi ecosystem is an incredibly exciting and fast-moving space, with financial services innovation happening at light speed,” said Tom Robinson, chief scientist at Elliptic.
“Many are startups with relatively immature cybersecurity, and the irreversible nature of crypto transactions makes it very challenging to recover these funds. Unfortunately, this has made them tempting targets for attackers ranging from lone hackers to nation-states.”
Earlier in 2021, DeFi platform Poly Network lost more than $600 million in what was, at the time, the biggest cryptocurrency theft of all time. Poly Network later announced that all the funds except $33 million worth of the digital coin Tether have been transferred back.
By Bibhu Pattnaik
© 2021 The Epoch Times. The Epoch Times does not provide investment advice. All rights reserved.