Role of Rising NFT & DeFi Hacks in the Evolution of Cryptocurrency Industry

Decentralized finance, popular as DeFi, has massively revolutionized traditional finance by creating a decentralized space for users to interact with various financial elements while maintaining control over their finances and privacy.

Built on the foundations of decentralization and immutability, DeFi has now pulled in millions of users. This has caused the market to experience a growing streak that has caused DeFi to be valued at $165.10 billion. However, this decentralized finance trend comes at a cost largely caused by users’ lack of knowledge and understanding of best practices within the market.

“The popularity of the DeFi market is growing as more people are starting to understand that a smart contract can be a worthy alternative to a traditional loan or bank deposit. The amount of funds locked in DeFi reflects market adoption among private investors who are moving their money from the traditional financial system to the decentralized industry.”

Cointelegraph

Hackers – a looming threat over DeFi

On the other hand, despite being a relatively new addition to the cryptocurrency market, Non-Fungible Tokens (NFTs) have not been spared by the notorious hackers that continue to threaten projects within the cryptocurrency industry. From art to music, NFTs represent unique, unchangeable pieces of assets stored on the blockchain. NFTs popularity has artists like Beeple selling their NFT artwork at $69 million.

DeFi and NFT Hacks in 2021

According to data by AtlasVPN, in the first half of 2021, DeFi related hacks and fraud cases had caused a loss of over $600 million, a 76% of all major hacks.  Decentralized finance crypto stolen during DeFi hacks includes $266 million in Ethereum tokens, $253 million tokens on Binance Smart Chain, and $85 million in USDC from the Polygon network.

These figures surpass the 2020 total figures by 180%. During this period, numerous protocols became vulnerable to these attacks, PancakeBunny was far more affected, losing about $45 million worth of crypto assets. Others include the Yearn finance flash loan attack, EasyFi hack, PAID Network major loss, Spartan Flash Loans hack, and Uranium Finance Token migration hack.

Earlier this year, Nifty Gateway, a popular marketplace for NFT tokens, was hacked, leading to huge losses. Weeks later, a Banksy fan collector bought a ‘fake’ NFT for over $335k in an alleged hack.

SWOT analysis of Cryptocurrency Industry

While these attacks have caused a significant loss to the DeFi and NFT industries, these numbers are a small fraction compared to the massive growth experienced in the cryptocurrency market. In the last few years, the growth in the market has resulted in the creation of the cryptocurrency industry 4.0.

2021 has indeed been a big year for the cryptocurrency industry as Bitcoin, and other cryptocurrencies hit new all-time highs. The cryptocurrency industry’s worth has reached a new record high of $0.4 billion. The impact of upcoming cryptocurrencies on the financial industry has experts predicting this number to reach $1.2 billion by 2026 at a Compound Annual Growth Rate (CAGR) of 21.5%. The consolidated reality is that cryptocurrencies are no longer a simple phenomenon of the moment.

In addition to the rise in price, the cryptocurrency market has seen lower trading volatility as crypto bull runs signals help the market mature. This has been fundamental in helping increase trust among investors who now more than ever are eager to take their share of the cryptocurrency market.

Industry Specific Cryptocurrency 

Increased digitalization and immense transparency across the blockchain industry have also been an added advantage in helping to create the cryptocurrency industry 4.0. In line with this, the industry has also been leveraging other emerging technologies, including the Internet of things (IoT), Artificial intelligence (AI), and many others.

It is worth pointing out that legislation and approval of cryptocurrencies in various jurisdictions has also helped push the cryptocurrency market further. Through their central banks, some governments have also issued their Central Bank Digital Currencies (CBDC).

Adding on these advantages, the cryptocurrency market has provided users with various opportunities, including creating industry-specific cryptocurrencies. An Industry specific cryptocurrency is a digital coin created to target a particular group in the market. By having cryptocurrencies created to fit specific needs, developers and project owners have attracted new investors who were still skeptical about joining the market.  One industry, in particular, benefiting from this is the gaming industry, which has taken cryptocurrency for the gaming industry to a whole new level.

Must Read: How to Create NFT Art with Zero Coding Experience

Cryptocurrency for Gaming Industry 

Another opportunity within the crypto market will be the growing crypto gaming space that uses blockchain and cryptocurrency technologies to provide gamers with an exceptional gaming experience. In the last few years, online gaming has transformed how gamers interact through metaverses, play-to-earn, and crypto rewards, especially within the cryptocurrency industry.

As aforementioned, the DeFi and NFTs markets are also making significant contributions to the crypto industry in general. The new DeFi models combine NFT technology to overcome the traditional finance market’s shortcomings. For instance, some NFT protocols like NFT20 have gained financial utility by fractionalization and are being used as representation tokens linked to DEX-based liquidity pools.

Wrapping up

All said, over a decade later, cryptocurrencies remain a controversial conversation in different circles. This is more so due to their threats to the general market. In some cases, everything comes tumbling down.

Critics have always argued that the cryptocurrency space is in a bubble phase that will shut investors once it bursts.  In line with this, many users lack knowledge of the crypto industry because they have not taken the time to understand the ins and outs of the cryptocurrency industry. Given its complexity, many users have fallen prey to third parties like hackers and fraudsters that have perfected their acts within the market.

In addition, despite milestones in crypto legislation, consumer protection risks largely remain due to limited disclosure and oversights. Many jurisdictions are yet to embrace digital currencies by placing bans on their use.

While the extent of the adoption of cryptocurrencies is difficult to measure, a SWOT analysis of the cryptocurrency industry suggests that the cryptocurrency market is on the right track.

Reach out to QuillAudits

QuillAudits is a secure smart contract audits platform designed by QuillHash
Technologies.
It is an auditing platform that rigorously analyzes and verifies smart contracts to check for security vulnerabilities through effective manual review with static and dynamic analysis tools, gas analysers as well assimulators. Moreover, the audit process also includes extensive unit testing as well as structural analysis.
We conduct both smart contract audits and penetration tests to find potential
security vulnerabilities which might harm the platform’s integrity.

If you need any assistance in the smart contracts audit, feel free to reach out to our experts here!

To be up to date with our work, Join Our Community:-

Twitter | LinkedIn | Facebook | Telegram

Source: https://blog.quillhash.com/2021/11/19/role-of-rising-nft-defi-hacks-in-the-evolution-of-cryptocurrency-industry/