Recently, one of the decentralized finance (DeFi) lending protocols was attacked, losing over $8 million due to a faulty code in its smart contracts. The flawed code allowed an attacker to duplicate assets, and increase their balance of the platform's interest-bearing tokens. This was not the first time. The firm was attacked on the same year two separate occasions losing $945,000.
Since then the larger crypto community who are yet to invest in yield farming opportunities has been cautious and holding themselves back in using DeFi protocols. This concern was also voiced out by the community in a survey conducted by ARPA in Jul 2020. When asked the reason for not using DeFi products, 52% of the participants mentioned that they are concerned about the security guarantee of these protocols.
DeFi developers therefore should consider working continuously with auditors (and run multiple audits) to minimize security risks in their deployed smart contracts. It's comforting to see some of the upcoming DeFi teams make security audits as their top priority. APY.Finance is one such team.
Building a next-generation yield aggregator which not only looks for the greatest and largest yield farming opportunities but also optimizes gas fees for their users, APY.Finance is launching its product in phases. At each phase of the project, the team is running audits (internal and by reputed external security firms) before launch.
For their first phase of launch i.e. Liquidity mining, APY.Finance has run its code audit from an external firm - HalbornSecurity. Upon verification, the team at Halborn found that "the smart contract code follows high-quality coding standards" and "does not contain any obvious exploitation vectors". The overall risk score was rated "Low".
Summary:
Today only 1% of crypto traders use DeFi. Source: ARPA survey. If decentralized finance is truly going to scale to the masses, the community needs such assurances and transparency (like APY.Finance did) to build trust, thereby encouraging mass participation in DeFi projects.
Hello @ashkharoo
Using DeFi not only requires trust, but also makes the processes more reliable and easier to understand for most people, even for those who don't have extensive knowledge about cryptocurrency.
The other thing is the cost, and the amount that needs to be used to make it profitable.
But, the most important thing is the security aspect, which you have mentioned very well.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thanks @josevas217. You gave me tips for my next post. Will cover it in the coming post.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit