DeFi reduced financial losses by 40% between 2023 and 2024 through improved protocols, stronger bridges and advanced cryptographic methods.
Between 2023 and 2024, the decentralized finance (DeFi) industry lost 40% less money to security incidents thanks to better protocols, stronger bridges, and more advanced cryptographic methods.
According to the annual “Web3 Security Report” by blockchain security firm Hacken, these advancements coincided with a challenging year for the centralized finance (CeFi) sector.
CeFi experienced a surge in security breaches, with incidents more than doubling and financial losses rising to $694 million due to access control flaws and other vulnerabilities.
DeFi security pump
The report highlights a stark contrast between DeFi’s progress and CeFi’s growing challenges, emphasizing the risks associated with centralization. DeFi’s financial losses dropped from $787 million in 2023 to $474 million in 2024.
Notably, losses from bridge-related vulnerabilities, historically a major weak point for DeFi, decreased from $338 million to $114 million over the same period.
Despite advancements such as multiparty computing and zero-knowledge proofs, DeFi still faces issues, particularly with access control vulnerabilities, which accounted for nearly half of all losses. These include the $55 million Radiant Capital attack in 2024.
In contrast, CeFi’s financial losses more than doubled, largely due to key incidents like the DMM exchange attack in Q2 and the WazirX hack in Q3.
These breaches exploited vulnerabilities in multisignature systems and private key management, resulting in thefts of $305 million and $230 million, respectively.
CeFi breaches on the rise
Hacken CEO Dyma Budorin described CeFi’s “critical gaps” in operational security, including poor key management and weak multisignature setups. He emphasized the need for stricter key management practices and automated monitoring to mitigate risks.
The report also draws attention to broader threats in the crypto sector. A December 19 report from Chainalysis revealed that North Korean hackers stole over $1.3 billion in cryptocurrency across 47 incidents in 2024, underscoring the persistent risks highlighted by Hacken.
The disparity in financial losses between DeFi and CeFi underscores the need for continued growth and security improvements in both sectors.
