Crypto Custodian Fireblocks Now Offer DeFi Protection Tools for Institutions

On Wednesday, April 24, Fireblocks, a cryptocurrency custodian, unveiled two new products designed to improve DeFi protection and security for institutional players in the decentralized finance market. dApp protection and transaction simulation tools are designed to protect institutions from fraudsters, phishing sites, and compromised decentralized applications (dApps).

These products provide rigorous review of dApps on 40+ blockchains, using WalletConnect, Fireblocks’ browser extension, and MetaMask Institutional. This initiative by Fireblocks aims to mitigate the risks associated with entering into suspicious smart contracts and strengthen the overall security of DeFi transactions for institutional users.

According to Fireblocks, DeFi protection has never been more critical

Since December last year, Galaxy and FlowDesk have been beta testing two new products recently launched to improve the security of decentralized applications (dApps) on more than 40 blockchains. These apps are now able to use Fireblocks APIs, including WalletConnect and MetaMask Institutional, to perform security checks on dApps. Fireblocks highlighted the crucial need for proactive security measures in the rapidly growing DeFi sector in a blog post published on Wednesday.

The expansion of the DeFi sector in recent years has been accompanied by an increase in funds lost to hacks and scams, as criminals design more sophisticated smart contract tools to defraud users of their digital assets. Chainalysis data indicates that the amount stolen in DeFi hacks increased from $3.1 billion in 2022 to $1.1 billion in 2023. Despite this drop, CertiK data shows a resurgence in thefts, with losses amounting to $500 million in the first quarter of 2024 alone, due to a resurgence in theft. by phishing websites, dApp takeovers and supply chain attacks.

Fireblocks DeFi Protection Tool Provides Real-Time Threat Detection Alerts

The complex and often opaque nature of contract calls in the DeFi sector requires users to have access to automated tools to detect malicious or deceptive smart contracts before committing. Although a few Fireblocks customers have their own internal Web3 security teams, the majority do not have the resources to employ cybersecurity experts to effectively manage these challenges.

To address these challenges, Fireblocks introduced a dApp and DeFi protection tool that offers real-time threat detection alerts. This tool warns users before they interact with phishing websites or potentially compromised decentralized applications. Additionally, Fireblocks provides transaction simulation functionality, which previews the estimated change in a user’s token balance resulting from a smart contract interaction before the transaction is executed.

Source: Fireblocks blog

Andrew Taubman, Deputy Director of Operations at Fireblocks, highlighted the importance of these tools, stating that deploying on-chain trading strategies introduces new security considerations. He noted that Fireblocks’ dApp protection and transaction simulation features are critical to staying ahead of evolving on-chain threats and ensuring transparency in the transaction approval process.

The DeFi sector is experiencing significant growth, with the total value locked in DeFi protocols increasing from $54 billion in early 2024 to $94 billion today, according to DeFiLlama. This increase highlights the growing enthusiasm in the broader crypto markets.

Additionally, during a webinar in March, experts from Chainalysis raised concerns about potential security threats. They suggested that hackers could increasingly use artificial intelligence and large language models (LLM) to identify vulnerabilities in smart contracts, which could lead to more DeFi-related crimes.

Experts say new crypto users shouldn’t rush into DeFi

Growing concerns about security in the cryptocurrency space have not dampened overall user growth, with a report from Crypto.com indicating that the number of cryptocurrency users jumped to around 580 million in December 2023, an increase of increase of 34% since January 2023. year. Despite the prevalence of hacks, crypto security experts guide new entrants on how to navigate this market safely.

Luciano Ciattaglia, chief services officer at cybersecurity firm Hacken, advises newcomers to initially avoid decentralized finance (DeFi) and decentralized exchanges (DEX). He highlights that the majority of digital asset holders rely on centralized exchanges and wallets, which he considers a safer starting point due to their established trust and reliability in managing user funds . Ciattaglia also emphasizes the importance of choosing platforms with a strong security history and solid availability of funds.

Echoing Ciattaglia’s advice, Ronghui Gu, co-founder of CertiK, also recommends new investors prioritize safety by opting for reputable exchanges and wallets. Gu advocates the adoption of hardware wallets, which provide enhanced security by storing private keys offline, reducing the risk of hacking attempts online. It highlights the importance of new users learning about key aspects of crypto security, such as secure private key management, using strong passwords, and enabling multi-factor authentication on all crypto-related accounts.

Additionally, Gu warns newcomers about the risks of sharing personal information online and advises being vigilant. phishing scams. Its recommendations aim to strengthen the security framework for individuals venturing into the digital asset space, ensuring that they are well prepared to protect their investments against potential threats.

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