- Ethereum hacks accounted for over 50% of all hacks in Q1 2024.
- DeFi is the most vulnerable sector in the cryptocurrency spheres.
Ethereum, the second-largest cryptocurrency by market capitalization, has emerged as the most hacked crypto, outpacing Bitcoin by a staggering 16-fold, according to BanklessTimes.com. So far, Ethereum has seen 33 attempts compared to Bitcoin’s two.
Elizabeth Kerr from BanklessTimes commented:
BanklessTimes financial analyst, Elizabeth KerrEthereum’s expansive ecosystem, encompassing a multitude of DApps and smart contracts, provides a vast attack surface for adversaries to exploit. Additionally, Ethereum’s programmability, while a boon for innovation, can also accidentally introduce vulnerabilities if not rigorously audited and tested.
Ethereum Accounts for Over 50% of Crypto Crime Losses
Although Ethereum was the most targeted blockchain, other platforms also faced attempts and hacks. Since January, crypto hacks have cost investors up to $437 million, with Ethereum accounting for over 50% of these losses. BNB chain was targeted 14 times up to March, followed by Arbitrum with six attacks. Solana and Bitcoin appear to be the most resilient networks, with each blockchain attacked only twice so far.
Several attacks occurred during the period, but two were the most devastating. Together, they lost $144.5 million—a significant 43% loss. The Orbit Bridge attack was heartbreaking for investors, who lost $81.7 million on New Year’s Eve.
The second most significant attack occurred in January, leading to losses worth $62 million from a Munchables project. Although most of the stolen money was never recovered, $73.9 million was recovered, accounting for 22% of the stolen funds. But the best news was the general drop in fraud cases by up to 17.6% compared to a similar period in 2023.
Most of the crypto attacks in Q1 were hackings, accounting for 95%, while scams and rag pulls accounted for 4% of the losses. Hackers made away with $321.6 million in 46 attacks.
Why is Ethereum More Vulnerable?
Ethereum’s strength drives it to its vulnerabilities to hacking attempts. Ethereum’s biggest score is the prevalence of smart contracts on its blockchain. While smart contracts offer efficiency and seamless automation, they expose the blockchain to hackers. Once deployed, smart contracts are immutable, meaning any bugs or flaws in the code can be exploited without recourse unless addressed through intricate and often cumbersome processes.
Also, Ethereum leads in DApps and DeFi projects, making it lucrative for cybercriminals. The rapid proliferation of DeFi protocols, often built on Ethereum’s blockchain, has created a complex web of interdependencies, increasing the attack surface for malicious actors. From flash loan attacks to complex exploit strategies, hackers have consistently exploited vulnerabilities within these protocols, resulting in significant financial losses for users and tarnishing Ethereum’s reputation.
