The cryptocurrency and blockchain landscape is rapidly changing, with new businesses popping up every day. While most of these projects are innovative and potentially game-changing, some have been designed to merely take advantage of the hype around cryptocurrencies by exploiting user ignorance.
The “annual report” is a document that outlines the financial state of a company, and the “annual report 2021″ was released in January 2019. The document includes information about 602 projects that got rekt in 2021, with a total loss of $2.2 billion.
In the realm of cryptocurrencies, there are four basic methods to “get REKT” (short for “suffer large financial loss due to shady behavior”).
- A project that abruptly disappears with investors’ money either during or after going online is known as an exit scam.
- Investors are drawn into weak contracts by a honeypot, which contains secret traps that lock their funds.
- An exploit assault takes use of holes in operating systems, networks, and applications.
- A flash loan attack is obtaining a flash loan from a lending protocol (a kind of uncollateralized lending) and then manipulating the market to your advantage.
Analysis of REKT’s footprint till 2021
Footprint Analytics estimates that more than 600 projects will get REKT in 2021. A total of $2.2 billion worth of fund losses were reported for one-third of these.
Around 450 more projects were compromised in 2021 compared to 2020, which resulted in a 10x increase in financial losses. The results after analyzing the data are as follows.
Footprint Analytics: Yearly REKT Number & Fund
Finding 1: The Most Common Crypto Scams Were Exit Scams and Honeypots
Footprint Analytics: Comparison of Yearly Number of REKT by Type
In 2021, exit scams and honeypots were 50% and 30% of all frauds, respectively. The proportion of honeypots has grown by 16% over the previous year.
Footprint Analytics: Distribution of REKT by Type, Yearly Comparison
Footprint Analysis: Monthly Exit Scams by Chain
Between August and September, the majority of exit scams occurred, mostly on BSC and Polygon.
Monthly Honeypot Footprint Analysis by Chain
In terms of honeypots, September was the worst month, particularly on BSC, accounting for almost to 70% of this form of fraud.
Finding 2: BSC attacks accounted for 53% of REKT attacks.
In comparison to the previous year, there were 319 more assaults against BSC. Additionally, Polygon, a brand-new blockchain in 2021, took 12% of the hit.
Number of REKT by Chain in 2020 and 2021, according to Footprint Analytics
Honeypots and exit scams were the two main assault kinds on BSC. It is important to note that the former had a significant increase in August, most likely as a result of the rapid expansion of BSC’s project numbers and the accrued funding for these projects. This will be discussed more in the text.
Footprint Analytics: REKT by BSC Type, Number
Finding 3: Ethereum Saw 67 Percent of All Lost Money
Despite the fact that BSC was the target of the majority of assaults, Ethereum suffered greater financial losses due to exploit and flash loan attacks. Compared to 2020, the amount of money lost increased by 500%.
Footprint Analytics: Fund Lost Amount by Chain & Type in 2020
Footprint Analytics: Fund Lost Amount by Chain & Type in 2021
The list of assaults by amount lost is as follows:
From the aforementioned assaults, 50% of the victims lost $10K to $1M in cash, while another 35% lost between $1M and $50M.
Poly Network was the worst impacted, losing $602 million as a result of an August attack. Cream Finance, which suffered a $130 million loss, was the greatest victim of flash loans.
Attacks Costing More Than 50M, According to Footprint Analytics
Why Did Attacks and Scams Increase in 2021?
The exponential expansion of blockchain DApps is one cause of the rise in assaults. There are now 977 DeFi protocols spread throughout 86 chains.
Footprint Analytics: TVL of All DeFi Protocols
Footprint Analytics: Number of DeFi Protocols
Another factor is that more and more hackers are becoming aware of the growing TVL of blockchain and cryptocurrency initiatives.
What Attempted Were the Most at BSC?
The majority of BSC’s projects, which is a Layer 2 chain to Ethereum, were created by just forking Ethereum protocols. Many of them lack significant innovation, long-term development strategies, or a comprehension of the fundamental logic behind the code.
These elements leave the projects open to hackers, who may quickly find weaknesses in a protocol. It is time for them to launch assaults once the TVL amassed on comparable projects reaches a critical mass.
Additionally, BSC’s cheap petrol prices make carrying out assaults much more practical.
Footprint Analytics: TVL of BSC in 2021
Footprint Analytics: TVL of BSC in 2021
Considerations on Not Getting REKT
More and more individuals joined the cryptocurrency world in 2021.
Some purchased a few tokens, while others made investments in DeFi enterprises, while yet others purchased NFTs or even moved in next door to metaverse superstars. The widespread use of this technology leads to an increase in assaults, frauds, and hacks.
DeFi developers should consequently put greater emphasis on safety awareness, including using expert auditing teams and doing logic tests on code to rule out any vulnerabilities.
Due diligence from investors will need to increase as the booming blockchain business draws more undesirable actors. When you first begin, be cautious of:
- crazy incentives for some projects.
- suspicious links from strangers in direct messaging, search engine results, or group conversations. The most crucial piece of advice for avoiding phishing scams is to never give out your private key or seed.
- Obtaining enormous returns for your tokens using airdrops.
Being cool and logical is the only way to avoid getting REKT.
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Author and Date: [email protected] on January13, 2022
Overview of REKT data as of 2021.
Part of our Year in Review series is this article.
Footprint Analytics: What is it?
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