Common DeFi vulnerabilities from 2021
Security audits for DeFi projects are in high demand. Having your code audited is now a common criteria used by consumers to determine if they should engage with a project or not.
CertiK is one of the well-known blockchain security audit firms. I took a look at their report "The State of DeFi Security 2021" this morning. I thought I'd share some insights.
Centralization issues accounted for about 16% of their findings. These are security vulnerabilities introduced at the design stage, meaning that they can't be solved by "fixing" code. They're usually a result of contract developers including functions that give them some control over some aspect of the system.
Centralization issues lead to vulnerability to attacks we were familiar with before web3, such as the theft of private keys.
Controls to compensate this kind of design decision include protecting privileged action with a timelock, using a multi-sig wallet, and delegating the authority to a DAO.
Timelocks delay privileged actions to give operators time to react to unexpected events. Assigning privileged roles to a multi-sig wallet reduces the risk that a private key compromise endangers the whole project. And delegating authority to a DAO distributes that authority over a group.
The report identifies 4 more commonly identified vulnerabilities:
- Lack of event emission
- Unlocked compiler version
- Lack of proper input validation
- Reliance on third-party dependencies
You can read the full report on CertiK's website.
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