Security threats, especially AI-driven attacks, hinder Wall Street's shift to blockchain technology, as traditional banks face challenges in asset transfers.
Major financial institutions are poised to transfer trillions in assets to blockchain technology over the next decade, but rampant security threats are hindering this transition. According to Ronghui Gu, CEO of CertiK, the financial sector is grappling with a surge in AI-driven attacks that specifically target vulnerabilities in decentralized finance (DeFi) systems.
Gu highlighted that April was particularly devastating for DeFi, with 27 out of 30 days witnessing hacks, marking it as the worst month in four years. This alarming trend poses a significant barrier for traditional banks as they consider moving assets onto blockchain platforms.
In an interview, Gu stated, "Currently, more institutions are exploring the possibility of moving assets on-chain. They envision that, in a decade, multiple trillions — potentially tens of trillions — of dollars could be transitioned to blockchain platforms." However, the fear of frequent hacks, which include vulnerabilities in smart contracts and cross-chain bridges, remains a significant deterrent for cautious investors.
High-profile incidents, such as the $1.46 billion hack of Bybit and substantial losses incurred by Drift Protocol and Kelp Dao, underscore the risks involved. In April alone, North Korean hackers exploited vulnerabilities leading to nearly $600 million in losses across two lending pools. Data from DefiLlama also indicated that over $1.1 billion was lost to DeFi hacks in the past year, reflecting the extensive impact of these security breaches on the ecosystem.
Gu pointed out that hackers are increasingly targeting protocols with large total value locked (TVL), incentivizing them to invest significantly in their attacks. For instance, attackers can spend around $10,000 to $20,000 on advanced vulnerability scans, while defenders often face strict budget constraints. This imbalance creates an environment where malicious entities can continually search for weaknesses, outpacing the efforts of security teams.
As AI continues to enhance the speed and effectiveness of exploits, Gu warns that the trend seen in April may persist, posing ongoing challenges for the financial industry's cautious approach to blockchain adoption.
