Hats Finance Incentivizing White Hat Hackers with NFTs to Secure The DeFi Space

Sujit  |  Sep 23, 2021

Blockchain technology lies at a crossroads. To one side lies mass adoption, profits, and increased innovation for the system. On the other side lies stringent regulation, blacklisting, and maybe even the eventual death of the blockchain. Depending on how a lot of things over the next decade go, either road could be possible.

For many, the blockchain is a welcome revelation. It is a digital messiah, sent to rejuvenate an aging financial system but to many others, it is unsure footing. While some are tentatively beginning to welcome the idea of it, the amount of risk it represents is well worth some thought. As with any financial decision, it should be treated with a certain level of seriousness. Despite the potential it holds for investors, some things make the decision to join crypto a very difficult one.

Primary among these concerns making adoption an uphill battle is the prevalence of hackers in the system. Any digital network will overtime develop loopholes that could be exploited. However, the decentralization of crypto coupled with its relative newness makes it a tough sell to prospective investors in the face of potential million-dollar losses.

Hats.finance Has An Innovative Solution To The Blockchain Problem by rewarding NFTs

Crypto security protocol, Hats.finance, has found what could potentially be a plug to the hole. Rather than spending millions on security experts and tech gurus, they have chosen a more direct approach. A combination of lucrative bug bounties and NFT rewards from prominent artists could make reporting exploits more rewarding than taking advantage of them.

Hats will have stakeholders, community members, and the project itself contribute to rewards which it will keep locked in a ‘vault’. For any hacker successful in discovering a weakness in the network and reporting it, the vault's rewards will be theirs, pending approval by the Hats committee. 

It might seem straightforward in a way, but on closer observation, one begins to see the benefits of such a plan. For new projects making their way onto the blockchain, a substantial enough loss to hackers could cripple the entire system, voiding their credibility and all but signaling the nail in their coffin. Adding their coin to the vault means they can leverage its value against the value of a discovered hack. Should they be able to offer significant enough rewards, they could potentially make the combined worth of the vault along with the NFT worth more than the exploit

NFTs have been known to go for a mind-boggling amount once they become attached to big stories or big names. A story about a hacker returning a huge amount of money in exchange for an NFT could make it more rewarding than the hack itself. It essentially becomes a game of leveraging potential rewards against the present gain. 

The vaulted token rewards could also become substantial over time. Hackers stealing enough of a token could dump the price substantially leaving them with significantly less than they started with. In contrast to this, securing the network for the future could cause that token to grow substantially with time, and with their rewards, coming out of the vault of that project, they could gain quite a lot.

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