2023 sees 75% decline in Web3 scams

The first quarter of 2023 showed a substantial slowdown in the number of Web3 scams and hacks, according to a recent report released by Blockchain Security Alliance and blockchain firm, Beosin.

According to the data from Beosin EagleEye platform, total losses from hacks, phishing scams, and rug pulls in Web3 reached $655.61million in the first half of 2023.

Categorising the total losses, there were 108 attacks which resulted in a total loss of approximately $471.43m. Phishing scams, on the other hand, accounted for a total loss of approximately $108m, whereas 110 rug pulls got away with approximately $75.87m.

However, there was a significant 75% decrease in losses as compared to last year. In H1 2022, the total loss from attacks was approximately $1.91billion, and in H2 2022, it was about $1.69bn before dropping to $471m in H1 2023.

The biggest attack of the year was on Euler Finance, which suffered a loss of $197m on 13 March. However, on 4 April, Euler Labs retrieved the entire amount back as the attacker returned all stolen funds after successful negotiations.

This is followed by Atomic Wallet, where users’ wallet funds were stolen. With estimated losses of at least $67m, the funds were laundered by the hackers through the Sinbad mixer.

In terms of the project types, DeFi sector took the lead, being the target of a total of 85 security incidents. The total loss suffered here stood at $292m, representing 62% of the total loss.

The report also noted that DeFi projects experienced the highest frequency of attacks and the highest amount of losses compared to other project types.

Ethereum ranked first among all blockchain platforms, with 75.6% of the loss, totalling approximately $356m. The second was the BNB Chain as 53.7% of all security incidents happened on this chain.

The report attributed a couple of reasons for this declining trend of hacker attacks. These include: the gradual improvement of global regulatory systems, increased law enforcement efforts, improved security awareness among projects, the sanctioning of Tornado Cash, and enhancements in anti-money laundering (AML) technology and procedures.

On the flip side, there has been a rising frequency of phishing scams targeting ordinary users. The report also called attention to smart contract security vulnerabilities as these were the most frequent and financially impactful attack type in the first half of 2023.