Wormhole, a bridge between Solana and other blockchains, suffered an attack in early February 2022. In what was termed the second-largest Defi attack, the hackers stole about <a href="https://www.cryptoknowmics.com/news/wormhole-loses-320m-in-second-largest-defi-hack-ever">120,000ETH</a>, valued at over $320 million. 

Defi hacking is one of the biggest problems facing the Defi space, with projects losing millions and billions to such attacks. It is when criminals take advantage of smart contracts to steal funds. The most basic definition of hacking is when an individual looks for breaches in digital devices, exploiting the network's weaknesses. The attackers may manipulate the smart contracts into committing errors that benefit them. 

In general, hacking takes different forms, thus giving the different types of Defi hacks. Let's look at the types of these hacks and their frequency.  
<h2>Flashloan Attack</h2>
One of the major types of Defi hacks is flashloan attacks, which mainly occur on Defi lending platforms. A flashloan is a type of uncollateralized loan in Defi lending, which must be paid in the same transaction as the borrow transaction. It requires no checks or limits. 

However, hackers may try to take advantage of these flashloan attacks to benefit. In such hacks, the attacker takes a flashloan but uses various tricks so that they make a short, quick and profitable transaction. As a type of hack, flashloan attacks involve multiple applications, hence are complex to carry out.  

Today, there are many instances of Flashloan attacks in the crypto space. They include; 
<ul>
 	<li style="font-weight: 400">In May 2021,<a href="https://medium.com/amber-group/bsc-flash-loan-attack-pancakebunny-3361b6d814fd#:~:text=In%20May%202021%2C%20we%20witnessed,a%20%2445M%20financial%20loss."> Pancakebunny</a>, a BSC-based yield farming protocol, suffered eight flashloan attacks, increasing the prices of $BUNNY. The hacker earned $45 million in profits.  </li>
 	<li style="font-weight: 400">Cream finance, another lending protocol, also lost over <a href="https://therecord.media/hackers-steal-130-million-from-cream-finance-the-companys-3rd-hack-this-year/">$130 million</a> in October 2021. In February 2021, Cream Finance lost over $37.5 million in a flashloan attack. In August 2021, another flashloan attack targeting AMP token went away with $25 million. </li>
</ul>
The instances discussed above are just a few of the many cases of flashloan attacks in the Defi space. At least once every month, a flashloan attack occurs. 
<h2>Re-Entrancy Attacks</h2>
Another hacking in the Defi space is Reentrancy attacks. By definition, a reentrancy attack happens when the criminals continually hit the withdrawal function. The contract does not update the victim's balance, allowing the attacker to continually withdraw and steal funds from the victim.

Like flashloan attacks, Reentrancy attacks are also pretty common. These affect every kind of Defi project, including DEXs, lending platforms, and others. 

The 2016 DAO hack remains one of the most significant reentrancy attacks in the crypto space. But, the Defi space has seen its fair share of cases of such attacks. Among them include; 
<ul>
 	<li style="font-weight: 400">In March 2022, Hundred Finance suffered a reentrancy attack, losing $6.5 million. </li>
 	<li style="font-weight: 400">Agave Finance also lost nearly $4.5 million in reentrancy attacks. The <a href="https://therecord.media/hackers-steal-130-million-from-cream-finance-the-companys-3rd-hack-this-year/">same criminal attacked </a>both Hundred Finance and Agave. </li>
</ul>
Reentrancy attacks are also quite prevalent, occurring a couple of times per year. Like flash loans, reentrancy attacks are capable of siphoning millions from Defi networks.
<h2>Price Oracle Manipulation Attacks</h2>
In this type of attack, the hacker attacks the oracle smart contracts and manipulates them, causing severe damage. Oracle networks are protocols designed to provide real-world data in the blockchain space. Often, the oracle networks will provide weather data, price feeds, and other forms of data. 

Most oracle manipulations often target the price feeds, hence why it's called price oracle manipulation. Attackers can manipulate the Oracles to trick Defi platforms and generate high profits. 

Consider a person acquiring a loan in an ETH/BAT lending pool. They notice that the pool fetches data from a specific price oracle network. They manipulate the price feed from the oracle to acquire more BAT tokens than they were supposed to. 

The general idea is to manipulate the prices of one token to gain more rewards. The best examples of price oracle manipulation attacks include:
<ul>
 	<li style="font-weight: 400">Synthetic 2019. A price manipulation attack made away with about <a href="https://www.theblockcrypto.com/linked/28748/synthetix-suffers-oracle-attack-potentially-looting-37-million-synthetic-ether">37 million sETH</a>. </li>
 	<li style="font-weight: 400">In April 2022, Inverse Finance reported a <a href="https://www.cryptoknowmics.com/news/defi-lending-protocol-inverse-finance-hacked-for-15-6m">$15 million</a> loss owing to oracle manipulations. The attackers manipulated INV prices to get away with the funds.</li>
</ul>
Price oracle manipulations are prevalent and could occur multiple times a year. They steal millions in funds and can recur on the same platform. 
<h2>Bugs and Vulnerabilities</h2>
Hackers can also use bugs and vulnerabilities to attack a Defi project. The hacker identifies a bug or a vulnerability in the smart contracts and takes advantage of the same. 

This was the case in the wormhole attack in early February 2022. The team behind the project had noticed a vulnerability in the contract and even created a fix. However, the hackers attacked the network before the solution was deployed, leading to losses. 

Bugs may be visible in the early stages of project development or later when the size of the project starts to show up. If one hacker spots any vulnerabilities, they will attack. 
<h2>Other Types of Defi Attacks</h2>
Of course, hacking is one of the biggest problems for the Defi space. However, there are other types of Defi attacks that have been quite prevalent;
<ul>
 	<li style="font-weight: 400">Rug pulls. Rug pulls occur when the Defi project founders encourage people to invest, only for them to withdraw funds from investors' wallets. A report by Chainalysis indicates that in 2021 alone, Defi investors lost over $2.8 billion in rug pulls. </li>
 	<li style="font-weight: 400">Phishing attacks. Phishing is when attackers trick investors into willingly releasing their wallet information and stealing from them. It's different from hacking since the latter is forcefully taking such details.</li>
</ul>
<h2>Is There Hope for Slowing Down?</h2>
Most of those attacks occur more than once every month, while others occur only a few times a year. In fact, in 2021, Adrian Hetman released a monthly report of Defi hacks and attacks. The reports were titled <a href="https://www.adrianhetman.com/">Monthly Defi Blood Bath</a>. According to the reports, multiple attacks occur every month. The trend has been going on since the early days of Defi. 

But is there hope for slowing down? There is no direct answer. Often, many people will say that auditing can help end such attacks. But, most of the platforms suffering hack attacks have been audited multiple times. 

Auditing alone cannot be the solution to hacking attacks. You hear about another Defi project losing $320 million when you think it's over. 

The simple lesson is that the Defi space is still in its infancy. Expectations about its growth over the next decade are very high. Hackers will also find new ways to attack. While concluding their analysis of Defi hacks, City AM said that it could probably take another five years for Defi protocols to be stable.

Defi Hacks and their Frequencies; Is There Hope for Slowing Down

Adam is an outgoing young lad who likes adventures and discovering new things.Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.

Defi Hacks and their Frequencies; Is There Hope for Slowing Down

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