In July, the DeFi sector experienced significant losses totaling $389.82 million, attributed to hacks and exploits in platforms such as Arcadia Finance, Curve Finance, Multichain, and others. This pushed the overall cumulative losses in the DeFi space to surpass $77 billion. Among the attacks, Ethereum suffered the most, losing $350 million across 36 incidents. Notably, Multichain faced the most severe single-case loss of $231 million due to an access control exploit.
Various types of exploits were employed by criminals, including access control issues that resulted in losses of $287 million across three major cases. Rug pull was the most common type of attack, with 38 reported cases but lower losses of $36 million, in a report by Todayq News on April 4, 2023, the BNB chain was found as one of the most common targets for attackers. Reentrancy attacks, although less frequent (six cases), led to significant losses of $58 million.
Tokens were the primary target, with 39 cases of attacks leading to losses totaling $35.9 million. Borrowing and lending protocols were targeted once, resulting in a loss of $3.4 million. The Bridge category suffered the most, with a loss of $241 million from two incidents.
The most severe exploit in July was the Multichain incident, where $231.1 million was lost due to access control issues. Other notable exploits included the Vyper Compiler which recently occurred on July 30, 2023, with around $70 million in losses from a reentrancy attack, and the BALD Token, which lost $23.1 million due to a token rug pull.
July marked the peak of DeFi losses for 2023, with nearly $1 billion lost in total for the year. This was $73 million more than the previous highest month, which was March. Recovery of exploited funds in July was disappointingly low, with only $7 million recouped from the significant losses. This continues the trend of low recovery rates seen in recent months.
The Terra collapse still holds the dubious distinction of being the worst incident, with losses ten times greater than the second-place Africrypt rug pull, which saw $3.8 billion lost in 2021.
The rise of these exploitation activities has caused fear among investors, who are unsure about how to proceed following these incidents. To mitigate such activities, primarily prevalent on Ethereum, a report by Todayq News on July 5, 2023, introduced ERC 7265 as an innovative protocol designed to revolutionize how DeFi platforms manage potential security breaches and safeguard user assets. This newly proposed ERC 7265 standard incorporates a vital component that acts as a safeguard integrated into the smart contracts of DeFi protocols.