Peckshield’s Annual Crypto Security Report states that in 2024, $3.01 billion worth of digital assets were stolen. According to the report’s findings, losses were distributed almost evenly between decentralized finance (defi) and centralized finance (cefi), indicating that defi platforms had better security. For comparison, around 70% of the $2.6 billion lost in 2023 and 80% of the $3.6 billion lost in 2022 were attributable to defi platforms.
The data shows that big heists like the $305 million DMM Crypto breach are important contributors to the increase in cefi-related losses in 2024, even though losses for the cefi and defi platforms seem to be about the same. According to critics, this shows that defi platforms have not yet adequately addressed the risks posed by cybercrime.
The creation and use of artificial intelligence (AI)-powered technologies, however, might give decentralized finance the advantage against hackers and scammers, according to several defi supporters who spoke to Bitcoin.com News. Indeed, according to DWF Labs partner Lingling Jiang, a new category called decentralized finance driven by AI (DEFAI) is expected to emerge in 2025. Jiang gave the following explanation for why AI-related tools are likely to be successful where others failed:
AI and machine learning are becoming game-changers for identifying threats – imagine having smart systems that can spot suspicious activity in smart contracts before anything goes wrong.
According to the DWF Labs partner, the solutions that are soon to be implemented go beyond just “patching holes” and instead focus on creating a new generation of defi protocols where “security is woven into every transaction.”
AI-related solutions “will provide early warning of potential attacks before they can be fully exploited,” agrees Luke Xie, co-founder and CEO of Satlayer. According to Xie, AI security solutions will enable consumers to steer clear of obvious rug pulls and honeypots.
Global Regulators to Intensify Collaboration
The CEO of Satlayer contends that while the developing solutions are unlikely to lessen the combative nature of the defi market, they do provide consumers the capacity to recognize and steer clear of the most blatant frauds.
In the meanwhile, a number of specialists contacted by Bitcoin.com News concurred that ongoing stories of enormous defi losses may lead regulators to change their strategy. According to Gianluca Sacco, COO of the cryptocurrency exchange VALR, this development may include more international regulatory cooperation. But according to Sacco, such cooperation may result in laws that conflict with the privacy advantages that draw users to defi protocols.
It’s unclear whether the implementation of KYC measures in DeFi will be practicable or broadly adopted given the decentralised nature of this industry and ability for developers to create protocols while remaining entirely anonymous and thereby not being directly beholden to any regulator.
Sacco expects heightened regulatory collaboration as well as close regulatory examination of stablecoins, which raises concerns about the assets supporting them.
GRVT CEO and co-founder Hong Yea also anticipates regulatory cooperation. He named a few important authorities that are likely to look for collaboration with other jurisdictions: the Bermuda Monetary Authority, the Abu Dhabi Global Market (ADGM), and the Virtual Assets Regulatory Authority (VARA). According to Yea, he also anticipates further cooperation between defi and conventional finance, or Tradfi.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter
About us:
The Mainstream formerly known as CIO News is the premier platform dedicated to delivering the latest news, updates, and insights from the CIO industry. As a trusted source in the technology and IT sector, we provide a comprehensive resource for executives and professionals seeking to stay informed and ahead of the curve. With a focus on cutting-edge developments and trends, The Mainstream formerly known as CIO News serves as your go-to destination for staying abreast of the rapidly evolving landscape of technology and IT. Founded in June 2020, The Mainstream formerly known as CIO News has rapidly evolved with ambitious growth plans to expand globally, targeting markets in the Middle East & Africa, ASEAN, USA, and the UK
