Are White-Hat Hackers becoming a part of DeFi protocols?

Sahana Kiran
Source – Pixabay

The crypto-verse started out as a decentralized industry. However, with time, the need for centralization grew stronger and decentralization was not a necessity for various projects. Some parts of the industry wanted to uphold the ethos of the industry. As a result, the DeFi space made its debut. The DeFi space gave the world what banks did but in a decentralized manner. One more aspect that came along with DeFi was hacking. While it initially started out to pocket easy money, now hackers seemed to be doing it for a whole other reason.

A lot of times, platforms lose out millions of dollars after these hacks. However, white hackers or ethical hackers make sure to keep some for themselves and give out the rest of the funds to the compromised protocol. Similarly, Crema Finance, a Solana-based liquidity platform managed to get lucky after its hacker decided to return stolen funds.

Crema Finance was the victim of an attack earlier this month that cost them $9.6 million. However, the company was able to identify the hacker’s address by using the original gas supplier. The business has been negotiating with the hacker to restore the funds ever since this revelation. After much deliberation, Crema was able to secure the majority of its funds, and the hacker chose to retain $1.6 million as a white hat reward.

The hacker went on to return 6,064 ETH and 23,967 SOL worth about $8 million. A compensation plan is expected to follow as the funds have been returned. In addition to this, Crema revealed that it would resume its functions following the audit.

Will hackers get away with attacks if DeFi doesn’t go mainstream?

After this news broke out, the community pointed out how lucky Crema Finance was to recover its lost funds. Recently, when Harmony fell prey to a $100 million hack, the hacker refused to accept the bounty of $1 million and return the funds. While the disparity between the funds involved in the hack was high, the return of the funds was pertinent.

Harmony’s hack was rather dainty compared to that of Poly Network. The cross-chain protocol was hit with a $610 million attack. The hacker managed to bank on a vulnerability found during the movement of smart contracts between blockchains on Poly Network. However, most of the funds were returned and an individual who claimed to be the hacker said he/she/they did it for fun.

The hacker wanted to expose the vulnerability before any other hacker or insiders did so.

A few other white hackers went on to alert DeFi platforms directly in case of loopholes in their software. Just last month, a hacker reached out to Aurora a network built on NEAR Protocol about a vulnerability. This could have potentially caused a loss of $200 million. However, the white hacker received $6 million in reward for aiding in averting the hack. Crypto bridge Wormhole also paid $10 million to an ethical hacker as well.

While this method seemed to be a more “ethical” approach to discovering vulnerabilities, hacking platforms could cause chaos in the market.

Additionally, it should also be noted that such hacks and immoral ones are likely to persist. Despite the increase in the demand for DeFi services, the industry is yet to go mainstream. Until then, DeFi investors should hope that if any hack occurs on their invested protocol, it is at the courtesy of a white hat hacker.