The Code Is Key: Solutions for Overcoming DeFi Security Breaches

Published on by Cointele | Published on

While the sector has been applauded for bringing about innovative digital finance solutions from lending to payments, progress has been overshadowed by high profile security breaches.

Adhering to these security guidelines will ensure that DeFi solutions will be better equipped to offer users a more instant, safe and secure network than traditional banking services.

New DeFi market opportunities overshadowed by security threatsWhen governments enforced lockdowns to prevent the spread of the coronavirus, the mainstream financial and banking system buckled under the enormous weight of souring loans and the need to process fiscal stimulus payments.

Despite promising applications for the technology, critics of DeFi solutions assume that security concerns will continue to overshadow the growth and mainstream adoption of peer-to-peer financial networks.

DeFi lessons from the dForce hackThe DeFi community celebrated a host of breakthroughs in 2019, including sizable investment rounds, such as Andreessen Horowitz's $15-million investment in MakerDAO, and big names, such as ConsenSys entering the DeFi ecosystem with a new product suite, dubbed Codefi.

This lack of due diligence meant dForce relied on using unoriginal code copied from Compound, a leading player in the DeFi lending market; it had little to no security checks or audits; and there were no emergency stop processes in place for smart contracts.

Having been rocked by the dForce hack, can the DeFi community better prepare itself for security threats in the future? By prioritizing security audits and best practice in coding and due diligence, the DeFi industry can once again be reckoned with as a serious force in providing real and tangible digital finance solutions to a global audience without boundary restrictions.

DeFi security solutionsA full external security audit, original coding and a testnet launch to ensure the functionality of security measures are only some of the essential steps that should be prioritized to protect users and provide enhanced security on DeFi networks.

The final stage of the internal security audit should include a bug bounty program: an invitation to community members that rewards them for identifying any security breaches or vulnerabilities.

Security solutions provide a promising future for DeFiBorrowers and lenders across the globe have been demanding more financial solutions and alternatives in managing their wealth.