Page 134 - Cyber Defense eMagazine March 2024

The Importance of Robust Cybersecurity

The DeFi ecosystem is becoming increasingly popular — mainstream, even. Experts believe more than
275 million people in the United States will use digital wallets by 2026. After all, most members of Gen
X, millennials and Gen Z already use them.

Threat actors gain new targets as people adopt distributed ledger technology and head to DeFi platforms.
Naturally, the impending popularity surge highlights the importance of a strong cybersecurity posture.
Unless administrators and developers work toward a solution soon, they’ll likely experience an uptick in
attacks.

Common Cybersecurity Challenges of DeFi

While distributed ledger technology is safe from many common cyberthreats, it faces new, unique
cybersecurity challenges.

Oracle Attacks
Oracles are third-party services connecting the blockchain to external systems, enabling them to execute
code based on real-world inputs like market trends and exchange rates. In an oracle attack, a threat actor
exploits their vulnerabilities to make smart contracts behave unexpectedly.

Smart Contract Vulnerabilities

Smart contracts are self-executing codes that automate certain aspects of DeFi. They trigger when
predetermined conditions are met. Typically, they are essential to security and transparency. However,
since they often contain vulnerabilities and bugs, threat actors trick them into repeatedly performing
malicious actions.

Reentry Attacks

A reentry attack relies on a specific vulnerability. When a threat actor deposits and pulls out currency,
they trick the smart contract into thinking nothing has been withdrawn. It repeatedly triggers the function,
continuously draining an account until nothing is left.

Cyber Defense eMagazine – March 2024 Edition 134
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