Total Investor Losses in DeFi Sector Amounted to Over $59 Billion in 4 Years

Analysts from IntoTheBlock have published a detailed report on the current state of risks and security in the decentralized finance (DeFi) sector. According to data as of August 2024, total losses due to hacks, attacks, and other issues amounted to $59.12 billion. The 148 incidents that occurred this year were also taken into account.

Analysts shared detailed statistics. The losses throughout history amounted to more than 25% of the total funds locked (TVL) in DeFi protocols. The most high-profile event was the collapse of the algorithmic stablecoin TerraUSD (UST). It caused panic and a sharp decline in crypto markets, worsening the situation in a bearish environment.

A significant portion of the total losses are due to the Terra incident, which caused massive disruption to the industry. Without that $40 billion collapse, the total is significantly lower, highlighting the impact of a single protocol failure on the entire ecosystem.

An analysis of annual losses shows that 2022 was the most destructive year for the DeFi sector. Losses, which reached $53.58 billion, were mainly due to the collapse of Terra. However, 2023 saw a significant decrease in losses.

These figures show that the cryptocurrency industry is gradually growing, and developers are paying more attention to protocol security, learning to adapt to new challenges. However, unaudited protocols remain a significant problem for the entire sector, having led to losses of $4.59 billion in 55 incidents.

The role of audits in ensuring the security of DeFi protocols is becoming increasingly clear. Despite the active participation of companies like CertiK and PeckShield, unaudited protocols account for a large share and are the most frequently hacked. This highlights the need for a more thorough approach to security in the DeFi sector.