For DeFi’s security woes, is centralization even an option?
Decentralized Finance [DeFi] has been a hotspot for a lot of innovation in the recent past. However, the DeFi ecosystem has had to endure quite a few attacks lately, and issues pertaining to its security vulnerabilities still loom large. This also leads to the question of whether its decentralized nature has made it even more difficult for it to rid itself of bugs and security vulnerabilities, within contracts, and the platform in general.
During a recent episode of the Unchained podcast, Dan Guido, Co-founder and CEO of Trail of Bits, and Taylor Monahan, Founder and CEO of MyCrypto, highlighted the growing number of hacks in DeFi and the need for better security measures. Within DeFi, several vulnerabilities have come to the fore over the past few months. Guido highlighted the challenges faced, commenting,
“A common thing in the defy space is there is a lot of risk around composability, which is I think the word we’ve settled on to describe all these emergent behaviors and potential interactions between things that happen on-chain and the security risks that come from them.”
Earlier in the year, the bZx attack involving the manipulation of an oracle that led to the extraction of over 2400 ETH or $640k, something that, in turn, sparked a lot of debate within the community.
Monahan noted that one of the biggest vulnerabilities centers around bad code in the DeFi space. She argued,
“Right now, the biggest threat is like we are writing bad code. We are creating insecure systems and so in the short term, I would prioritize centralization and security over decentralization. “
Decentralization represents a spectrum, according to Monahan, and in the short-term, increased centralization may be beneficial for the ecosystem as it tries to combat the challenges pertaining to its security infrastructure. Monahan added,
“I love what it [decentralization] empowers, but in the short term, we’re never going to be able to get there if, um, if every single contract is the doubt and it just blows up and everyone loses their money.”
While many continue to view the cryptocurrency landscape as an arena burdened with risk, DeFi’s recent attacks seem to further these narratives. In 2020 alone, DeFi has seen attacks on bZx, dForce, and lendf.me, developments may not be very inspiring for potential investors and may be a barrier to the world of decentralized finance.