DeFi attacks: the general picture

DeFi projects aim to create a decentralized economy without intermediaries. All value transfers occur using open source smart contracts, without third parties or closed source code. Since the beginning of 2020, over $46 billion in assets have been deposited into Ethereum DeFi protocols. By comparison, this value is larger than Barclays's capitalization with more than a century of history.

Unfortunately, shifting responsibility for financial transactions from intermediaries to code published on blockchains does not eliminate security concerns. The negligence of developers, smart contract auditors, and the growing complexity of DeFi have resulted in many DeFi hacks. In most of the attacks considered in this two-part report, protocol users incurred multi-million dollar losses.