On-Chain Analysis‘ CEO warns of critical security weaknesses in decentralized finance (DeFi) space.
In a interview with the Financial Times (FT) published Tuesday November 4, Jonathan Levin said the rapid growth of these cryptocurrency platforms, operating on blockchains and without intermediaries like banks, had left their clients’ assets vulnerable to attacks.
If you’re a company “developing protocol in your mother’s basement,” you may not have a security manager “from GCHQ,” Levin said, referring to the Government Communications Headquartersthe British intelligence and security organization.
“Everyone in blockchain finance is only focused on (increasing value in the sector), rather than the security that is actually locked into these platforms,” he added.
The FT notes that DeFi protocols hold more than $140 billion in crypto assets globally, according to the data provider. ChallengeLlama. Some of the biggest platforms have seen their popularity skyrocket this year as investors look for new ways to generate money from their crypto tokens, like lend themadds the report.
However, security is becoming a major concern amid increasing crypto hacks. For example, more than $100 million was channeled of the DeFi protocol Pendulum on Monday (November 3). The company said it had suffered an “exploit” and was conducting a “thorough investigation.”
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As cryptocurrency prices hit record highs this year due to President Donald Trump’s decision pro-digital administrationLevin told the FT he was concerned that the security of DeFi platforms “hasn’t really been considered by people who are raising a little bit of venture capital money”.
“When I look at these protocols that have had great success, there is potential points of vulnerability for people like the DPRK to come here,” he added, referring to North Korea.
PYMNTS spoke with Levin earlier this year about maturation of blockchain technologyas well as the increase in its use in traditional finance.
“Banks are in a state where they view blockchains as public infrastructure that they need to build on,” Levin, who is also co-founder of Chainalysis, told PYMNTS’ Karen Webster.
He emphasized stablecoin adoption as one of the most significant changes in the use of blockchain, at least since the inception of Chainalysis. This monumental shift has seen hundreds of billions of dollars flowing between blockchains while being held by traditional financial institutions like banks or US treasuries.
“When we started the business in 2014, it wasn’t a concept yet,” he said. “Cryptocurrency only meant blockchains with native cryptocurrency tokens. Today, people put all types of financial instruments on the blockchain, including the US dollar.
