Decentralized Finance Security Review: Analysis of Major Events in 2022

In 2022, the Web3 industry encountered several major security incidents, with total losses amounting to $4.3 billion. This article will provide a detailed analysis of eight typical cases, most of which involve losses of over $100 million.

Ronin Bridge Incident

In March 2022, the Axie Infinity sidechain Ronin Network was hacked, resulting in a loss of 173,600 ETH and 25.5 million USD, with a total value of approximately 590 million USD. Reports indicate that the hackers obtained employee information through social engineering, thereby gaining control of multiple validation nodes and ultimately executing the attack. This revealed deficiencies in the project's employee security awareness and internal security systems.

Wormhole Incident

The Wormhole cross-chain bridge was exploited by hackers to mint approximately 120,000 ETH due to a signature verification vulnerability in the Solana end contract. This was mainly caused by the use of some deprecated functions, and developers are advised to always use the latest versions of tools and libraries to avoid similar issues.

Nomad Bridge Incident

The Nomad cross-chain bridge suffered a loss of approximately $190 million due to initialization setting issues, which allowed attackers to construct arbitrary messages to extract funds. This case reveals the project's negligence in initialization and parameter settings, while also highlighting the security challenges faced by open-source projects.

Beanstalk Incident

The algorithmic stablecoin project Beanstalk was attacked via a flash loan, resulting in a loss of approximately $182 million. The attacker exploited a vulnerability in the project's governance mechanism to obtain a large amount of voting power through a flash loan, directly executing malicious proposals. This reflects that improperly designed decentralized governance mechanisms may pose serious security risks.

Wintermute Incident

Market maker Wintermute suffered a loss of over $160 million due to the use of a vulnerable address generation tool that led to the compromise of private keys. This serves as a reminder to exercise caution when using open-source tools and to conduct thorough security assessments.

Harmony Bridge Incident

The Horizon cross-chain bridge of Harmony was attacked, resulting in losses exceeding $100 million. Reports suggest it may have been carried out by a North Korean hacker group, highlighting the vulnerabilities of cross-chain bridges once again.

Ankr Incident

The Ankr project suffered financial losses due to internal personnel misconduct. This exposes serious issues in the project's permission management, key custody, and other areas, reflecting the importance of the internal security system.

Mango Incident

The decentralized trading platform Mango has suffered a market manipulation attack, resulting in losses of approximately $115 million. The attackers exploited vulnerabilities in the platform's design to profit by manipulating the prices of low market cap tokens. This serves as a reminder for project teams to comprehensively consider various extreme scenarios and improve risk control mechanisms.