DeFi – Fastest Growing Industry
Not even bad global economic conditions can do much in curtailing the growth of the decentralized finance (DeFi) industry.
In the past two years alone, the total value locked (TVL) in global DeFi projects has increased from $10 Billion to $40 Billion above.
Within these two years, prior to the crypto winter season, the global TVL in the DeFi project had even gone past $180 Billion.
In 2021, almost $10 Million was siphoned off alone by the hackers from DeFi’s TVL. This year too, the loss caused by the hands of hackers had since doubled.
Lack of Adequate Resources
‘Inadequate features’ in the DeFi protocols are perhaps the main reason why DeFi protocols are breached and exploited.
This is so because there is a huge lack of adequate and improved programming languages pertaining to smart contracts.
Asset-focused features need to be provided by programming languages that will allow smart contracts to be more user-friendly, efficient, transparent, and secure. Resultantly, the DeFi industry can effectively and seamlessly merge into the mainstream system.
Existing Programming Languages Not-Asset Focused
Apart from asset-focused DeFi programming languages, auditing codes too have been found missing by experts. Experts noted that 9 out of 10 biggest DeFi hacks in history were of those protocols which were unaudited.
As regards programming languages, one of the major problems is of ‘solidity of asset’ in smart contracts which is totally non-existent.
In the current setup of the DeFi programming language, an asset exists as a ‘variable number’. This is irrespective of the nature of the asset whether it be a digital token or an NFT.
What Needs To Be Done
These variables respond in accordance with their exclusive validations and security standards defined by the developers. It is these security standards that determine how the variable will respond and react to the change.
For instance, if the standards are flawed or inadequate then instances such as double spending, unauthorized access/drainage, etc. occur.
To avoid such instances, re-defining of standards and inclusion of adequate resources in the DeFi programming languages is necessary.
Mistakes Happen
Considering the exponential growth of DeFi, it is unlikely to presume that smart contacts become non-complex any sooner. Humans make mistakes and bugs too can happen often.
For instance, a DeFi protocol called ‘Compound’ was exploited in September last year and the perpetrators got away with $80 Million. The reason for exploit found to be a very common mistake that any person can easily make.
It was noted that hackers fooled users into using an address with ‘> =’ while the correct address was without the ‘=’ sign.
Way Forward
Hence, the security of DeFi protocols lies absolutely in the hands of the developers. They would need to make sure that the asset responds in accordance with and in line with its default nature and intended purpose.
This can only be achieved by improving DeFi protocols in terms of security standards through adequate programming languages.
Fixing these problems can prove to be very beneficial for the entire cryptocurrency industry. These protocols can offer more security and convenience to the users going forward.
This would have very positive outcomes for the entire crypto industry in the long term. More users will be finding their way to the crypto-verse with the industry having so much to offer them.
