As the blockchain-based Web3 investment gains traction, security loopholes become apparent with several unfortunate occasions that signal vulnerabilities and areas that need improvement. Unfortunately, the Web3 space is in no shortage of bad actors, malign practices and hacking attempts. Some of these events manage to cause damage and loss of funds.
The security and safety issues of Web3, DAOs, and blockchain, in general, should be an open discussion meant to make us all better. In this article, we will look at some of the attacks and security problems that have been recently encountered in the Web3 domain and try to understand how to avoid such events in the future.
The Risks of On-Chain Investment
In recent years, some of the most prestigious DAOs (decentralized autonomous organizations), DeFi projects and metaverse platforms fell victim to attacks and security issues:
- The Axie Infinity hack from 2 months ago caused $620 million in damages. After an incredible rise in popularity in the last couple of years, the platform reached a level where it was making $15 million profit a day, with a lot more money being stored and circulated in the network. This attracted what apparently seems to be a North Korean outfit that exploited the Ronin blockchain through a spyware and managed to walk away with more than half a billion dollars in funds.
- Earlier this year, the fiat stablecoin protocol Beanstalk Farms got drained of $182 million in crypto. It seems the hackers exploited some issues in the DeFi project’s governance system and after walking away with the funds, BEAN — the project’s stablecoin, collapsed to almost zero value.
As a matter of fact, in the first half of 2022 various hacks caused a total of over $2 billion in damages, more than the entire previous year. This alone requires our full awareness and understanding of how the Web3 space can get better and more secure.
Improving Security in Web3
The enthusiasm around Web3 and DeFi projects is sometimes bigger than the caution required for this environment. A lot of projects are being launched and with the hype created around them, people are flooding in, regardless of the profile and implications of each project.
But Web3 investment is no child play and security should be at the forefront of our advancement. Safety should not be the goal, it should be the baseline on which everything else is built.
Unique.vc is a platform that has put security at the core of its development, with the aim of offering a safe platform for Web3 investment. The Solana-based entity comes with several strong points that make it a secure environment for investing:
- Solana-Based — Unique.vc is based on the Solana blockchain — a global, distributed network designed to scale natively, without sacrificing decentralization or security to support billions of users and devices. Solana’s PoH (Proof-of-History) consensus model provides an advantage due to its ability to protect against front-running attacks since transactions are ordered based on the time of creation rather than transaction fees.
- Security Audit — Unique.vc has gone through a complex security audit conducted by Zokyo — a project that built, ran and secured some of the largest cryptocurrency companies to date. Zokyo has earned bounties from several Fortune 200 companies including (Uber, Paypal, Facebook, LinkedIn).
- MultiSig Wallet Security — The MultiSig wallets solve one of the most crucial concerns for crypto owners — security. It allows multiple co-payers to sign a transaction for sending funds from a MultiSig wallet, thereby enhancing its security so that no single entity can run away with the funds.
- Transparency — On the Unique.vc platform, funds are deposited and secured on-chain. They are used based on the outcome of proposals for which the voting process is also on-chain encrypted for maximum transparency and security.
Investing with Confidence
Today we are witnessing a so-called paradox in the blockchain space. We know how many benefits it brings to investment, decentralized finance, NFTs and crypto trading. But this new financial dimension is not immune to attacks and bad actors.
It helps to understand why these security issues arise in the first place. For instance — the famous hack of The DAO organization occurred due to vulnerabilities in the source code of the platform. The organization was acting independently and despite its success, it turned out that the code base was not immaculate.
Other unfortunate events spring from human error, misjudgment or ill intentions. Again, within projects that act on their own, without a bigger security frame that can guarantee safety.
On other occasions, we’ve seen various organizations fall victim as they just weren’t prepared to operate at a certain level. Being able to offer a secure investment environment implies much more than just setting up a DAO and pooling funds together. From security audits, to innovative technology and operating on a secure platform, safety in the Web3 realm is a never-ending pursuit.
Web3 offers any individual the means and opportunity to invest and trade on their own. But doing so exposes us to a series of risks that just can not be mitigated by a single individual. For venturing into the on-chain space, smart investors should choose the right partners and platforms that offer an extra layer of safety among other benefits.
If you want to start investing in crypto and NFTs, a good way to do so is to join or start an investment club on the Unique.vc dApp. On this platform, you will be acting within a safe environment and have several other tools to leverage to your advantage. Web3 investment can rise to its potential indeed when you choose your steps accordingly.