Opinion: The Curve Finance attack exposes DeFi’s fragility

Written by Mel Gelderman

Posted on August 3rd, 2023

Mel Gelderman reflects on a multi-million dollar attack on Curve Finance, commenting on how the incident exposes the risks of using DeFi today.

The token community was up in arms last weekend after another big attack hit the DeFi ecosystem. Curve Finance was exploited thanks to a glitch in the Vyper programming language, and hackers made off with an estimated $50 million. Multi-million dollar DeFi attacks are common, but this one was significant as Curve is seen as an ecosystem mainstay. If Curve can get hit, what does that say about DeFi’s safety? 

Curve attack causes DeFi meltdown

As with many big DeFi hacks, this incident wreaked havoc across the ecosystem. Curve’s CRV token plummeted, sparking fears that lending protocols could be lumped with bad debt. Some stablecoins temporarily lost their pegs. Some users made tidy profits from arbitraging CRV’s price, as well as high block rewards paid by bots looking to frontrun pending attacks. Many described it as a “dark day” for DeFi. 

“Token projects like Bitcoin and Ethereum are seen as risky, but DeFi is even riskier.” 

Above all, this case exposes the risks of DeFi. This is an experimental space where things can and do go wrong. Sadly, DeFi is not yet safe for regular users. The broader token space is young, and DeFi is still in its very early stages. Many people regard more established token projects like Bitcoin and Ethereum as risky, but DeFi is even riskier territory. This is an important consideration to make when exploring the token economy. 

A bright future? 🔮

But I should point out that I’m extremely confident in DeFi’s future. I believe that decentralised finance offers many improvements over the current system, and it could create a more open alternative that benefits millions of people. But I think it’s going to be a long journey. 

“I’m extremely confident in DeFi’s future, but it’s going to be a long journey.”

At token.com, we support the vision for a globally adopted DeFi ecosystem. We’re big Ethereum advocates and list many key DeFi projects. While DeFi is still in its infancy, we think the world needs accessible solutions like token.com to learn about it. In the future, I’m hopeful of a world where DeFi is safer and anyone can use it. We’ll still be here when that day arrives. Until then, token.com will stay committed to helping new adopters explore the ecosystem as it evolves. 

Learn more about token.com here

Please note: Investing in cryptoassets is risky. Due to the volatile nature of the cryptocurrency market, investors run the risk of losing their funds when they make an investment. Returns from cryptoasset investing are not guaranteed, therefore users should always be aware of the risks.