When Web3 was created, it was intended to be an internet disruption driven by blockchain. However, because Web3 is still a young technology, conversations concerning its actual capabilities and place in our daily lives are sometimes hampered by a mist of presumptions.
Given the potential of a public blockchain-based decentralized internet, a full switch to Web3 would necessitate careful consideration of a number of considerations. As tools and apps hosted over blockchains become more commonplace in a Web3-powered future, security is one of the most important qualities among the rest.
Smart contract vulnerabilities
Hackers target the project's smart contracts' vulnerabilities while the blockchains that host Web3 applications remain impermeable to attackers. Decentralized finance (DeFi) platforms are increasingly the target of smart contract assaults; according to a recent report, $1.6 billion worth of cryptocurrencies were taken in just the first quarter of 2022.
DeFi, despite being a part of the Web3 spectrum, represents the ecosystem's biggest risk. Web3 business owners must therefore divert their marketing funds to the creation of the core infrastructure.
As has been observed throughout the year, flaws that enable hackers to siphon off substantial sums of money result in temporary losses for the investors and may indirectly lead to the collapse of connected ecosystems.
Bad actors within the system may defraud the project and its investors in addition to external hacks. To prevent internal assaults, fail-safe procedures with restricted access for employees are needed.
On August 14, Velodrome Finance's trading and liquidity AMM (automated market maker) recovered $350,000 from one of its team members, Gabagool. A $350,000 portion of one of Velodrome's expensive wallets was stolen. A subsequent internal inquiry led to the identification of the assailant, enabling the business to reclaim the full haul.
Crypto investors have been obliged to realign their investments with ecosystems that reflect safety as a result of the bear market that has lasted more than six months and many hacks. Web3 business owners must therefore take steps to guarantee the long-term viability of their products.
Implementing bug bounty programs is one technique to reduce the risks of an attack. Whitehat hackers are drawn to bug bounties because they are looking for vulnerabilities from a hacker's perspective. Developers receive compensation for identifying and resolving legitimate bugs in the system.
Entrepreneurs must also create multisig wallets to store money while avoiding centralized control of the wallets. When these steps are taken throughout the system, the decentralization and protection from planned assaults are increased.