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The founder of the Curve Finance protocol, Mikhail Egorov, stated that the primary reason for the hacks of DeFi projects continues to be centralized points of failure within decentralized systems.
The increase in incidents within the decentralized finance (DeFi) sector undermines trust in the technology and hinders its widespread adoption, Egorov emphasized. He pointed out that even projects claiming full decentralization often rely on specific infrastructure components that become vulnerable links. He cited the example of the Aave protocol, where issues arose due to third-party infrastructure.
“Due to the hack of the LayerZero bridge, which facilitates cross-chain transfers, the asset rsETH was affected, ultimately blocking the withdrawal of funds for regular Aave users,” Egorov reminded.
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The head of Curve believes that to mitigate risks, it is essential to minimize single points of failure during the design phase of protocols. In cases where reliance on specific infrastructure is unavoidable, he suggested employing trust-dividing mechanisms among multiple participants. Additionally, Egorov advocated for the establishment of industry security standards and the sharing of best practices among project teams.
“The Ethereum Foundation and Solana Foundation should take the initiative in creating unified principles and recommendations. It is crucial to involve project teams, auditors, and risk assessment groups in this effort,” he stated.
Despite the pursuit of complete decentralization, Egorov noted that the industry should adopt lessons from the traditional financial sector regarding the protection of critical infrastructure. In his view, only a shift towards systemic threat prevention at the ecosystem level will enable DeFi to secure a pivotal role in the global financial system.
Previously, analysts from Memento Research reported that April was the worst month in the history of decentralized finance in terms of losses. According to their estimates, losses in the sector have reached $795 million since the beginning of the year.
