Security is a key feature because, in a Web3-powered universe, tools and applications hosted over blockchains become mainstream. Web3 was created to disrupt the current internet state. As a new technology, there are many assumptions that cloud discussions about Web3’s true capabilities and role in our daily lives.
A complete transition to Web3 will require careful consideration of many factors, especially when considering the promise of a decentralized internet that uses public blockchains. Security is the most important feature. Tools and applications hosted on the blockchains will be mainstream in a Web3-powered universe.
The Web3 applications’ blockchains are invulnerable to hackers, but hackers attack the smart contracts. Hackers are targeting the vulnerabilities in smart contracts in Decentralized Finance (DeFi) platforms. A recent study revealed that around $1.6 Billion in cryptocurrencies was stolen during the first quarter 2022.
DeFi, although it is only a subset within the Web3 spectrum of services, it still reflects the greatest vulnerability in the ecosystem. Web3 entrepreneurs must redirect their marketing budgets to the core system development.
As we have seen, vulnerabilities that allow hackers access to large amounts of assets can result in permanent losses for investors and could cause an indirect collapse related ecosystems.
Bad actors in the system could also be used to deceive investors and the project. Internal attacks can be avoided by using fail-safe mechanisms that restrict access to employees.
August 14th, trading and liquidity automated market maker Velodrome Finance reclaimed $350,000 from Gabagool, one of its team members . A high-worth Velodrome wallet was taken from the bank and drained of $350,000 The company was able to recover all the loot after an internal investigation revealed the identity of the attacker.
Web3 is a powerful tool. Crypto investors have had to rebalance their investments in order to avoid the bear market and numerous hacks. Web3 entrepreneurs must take steps to ensure their offering’s long-term success.
Bug bounty programs are one way to reduce the risk of being attacked. Bug bounty programs attract hackers who are willing to look at vulnerabilities from the hacker’s point of view. For finding and fixing bugs in the system, developers are financially compensated.
Entrepreneurs must also set up multisig wallets to store funds and avoid central control. These measures are implemented throughout the system to reflect greater decentralization, and protection against orchestrated attacks.