As the cryptocurrency realm expands with groundbreaking innovations, it simultaneously grapples with an uptick in security vulnerabilities, posing substantial financial risks. The Shiba Ecosystem stands resilient and prepared, especially in safeguarding its newly unveiled layer-2 scalability solution, Shibarium.
The BIG Picture:
A recent deep dive by blockchain security services company Hacken throws a spotlight on this year’s security challenges: layer-2 solution attacks, access control breaches, and the infamous rug pull, among others. The report paints a concerning picture: nearly 500 hacks across blockchain networks in 2023, with BNB Smartchain and Ethereum at the forefront of these incidents.
The Breakdown:
But it’s not just the big players feeling the heat. Networks like Arbitrum, Polygon, and Avalanche also navigated through their share of security storms.
Emerging Threats in 2024
Layer 2 Ascendancy: For this year, the report underlined that the introduction and growth of Layer 2 networks mark a critical period of experimentation that might lead to an increase in security incidents caused by the surge in the number of transfers of risk-seeking liquidity from Ethereum to these innovative blockchain alternatives. The potential surge in new protocols and liquidity in the upcoming bull run could trigger an increase in security incidents compared to the numbers in the previous year.
Expert’s Note: “Layer-2 blockchains are playing an increasingly important role in this industry. Although part of its security relies on the Ethereum mainnet, we should consider that they can create new and unique vectors of attacks,” Hacken senior blockchain researcher Edgar Pavlovski told The Shib.
“Last year, Arbitrum has been hit by 30 attacks, including 3 Oracle manipulations. It is a disproportionately large amount of attacks that can be attributed to the fact that it is the leader among L2 solutions, and there is more hype and liquidity that can be exploited than on other networks. It is also a reminder of how important it is to use multiple data sources and robust Oracle solutions,” the researcher added.
Looking Beyond: As the crypto realm braces for a potential bull run, the influx of new protocols and liquidity might spell an uptick in security incidents. The Shiba Ecosystem’s Shibarium stands as a testament to the community’s resilience, preparing to navigate through these challenges with a vigilant eye.
The Shib talked to Kaal Dhairya, the top developer of the Shiba Ecosystem and the authority for everything related to tech.
“In tackling the escalating security concerns within the cryptocurrency landscape, we’re embedding Fully Homomorphic Encryption (FHE) into our framework, ensuring enhanced data privacy and security,” Kaal, as he is fondly called within the community, said. “FHE allows for processing on encrypted data, keeping sensitive details secure, and enabling a quantum-proof encryption model. Quantum-proof encryption is resilient against the advanced computational power of quantum computers, which are capable of breaking conventional cryptographic defenses, thus providing a robust safeguard for the future.”
The top dev also shared several measures the team has set in place to fortify its defenses and protect its users.
“Furthermore, our approach incorporates Self-Sovereign Identity (SSI), empowering users with full control over their personal data. SSI enables individuals to own, manage, and share their identity without relying on third-party intermediaries, enhancing privacy and security. This system, coupled with Reputation and Karma metrics, builds a trustworthy community by promoting accountability,” Kaal added.
“By integrating these technologies, we aim to create a secure, user-empowered, and future-proof cryptocurrency ecosystem, where privacy, trust, and resilience against both current and emerging threats are paramount,” the Shiba Inu top dev said.
The Rug Pull Phenomenon: While individually less impactful, rug pulls are increasingly becoming a significant threat within the cryptocurrency domain. The report also points to a potential increase in rug pulls on networks like Solana, notably illustrated by the creation of approximately 100,000 new tokens in December 2023.
Token Factories – A Double-Edged Trend: The exponential rise in token creation, primarily driven by the remarkable success of cryptocurrencies like $BONK and other meme coins, has regrettably evolved into a fertile ground for pump-and-dump schemes. The concerning trend according to the blockchain security firm, paved the way for certain creators to introduce more than 300 tokens each day, strategically exploiting the initial spikes in value before promptly transitioning to the next token.
Front-End Attacks Gain Traction: This year might see a significant increase in front-end attacks that demand less intricate Web3 knowledge, including injecting malicious code or redirecting tokens to attackers’ wallets through compromised websites or decentralized applications (dApps).
