12 Major 'Non-Financial' Risks for Ethereum dApps, Study Shows

Editor's Note: This article comes fromCybtc Blockchain (ID: cybtc_com), reprinted by Odaily with authorization.

Cybtc Blockchain (ID: cybtc_com)

Cybtc Blockchain (ID: cybtc_com)

, reprinted by Odaily with authorization.

New research suggests that users of DeFi products and dApps may not be the only source of financial risk, as several "non-financial" issues are plaguing the popular crypto tool.

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Just how vulnerable are DeFi apps?

• According to a report released this week by crypto data and research firm Brave New Coin, DeFi projects are at risk due to factors such as scalability, smart contract vulnerabilities, capital restructuring, centralization and regulatory risks.

• Despite being around for several years, DeFi projects have been proliferating since mid-2020. The famous dApp Compound lending product, offering yields of up to 100% on certain trade pairs, ushered in a new era of decentralized innovations such as credit loans, trusted transactions, installment payments, and swap yields.

• But such advances come with significant risks. Xavier Meegan, author of the study, said that most DeFi applications are associated with a dozen unique risks, noting that he discovered such vulnerabilities through research rather than insight.

• Scalability risk: The risk of network congestion on Ethereum, leading to higher gas fees and transaction failures, resulting in DeFi applications not functioning as expected. DeFi protocols can also malfunction if there is too much stress on the network, leading to withdrawals, transaction suspensions and loss of funds (in worst-case scenarios) due to repeated user input or smart contracts not functioning as expected.

Smart Contract Duplication Vulnerability: A "duplicate send" can occur when a contract sends ETH before updating its internal state. Such a risk would mean that the rogue contract keeps asking for ETH before updating, which could lead to a situation where ETH (far in excess of demand) is being sent repeatedly.

Unhandled exception vulnerability: This happens when not all failed "calls" throw exceptions on Solidity (the programming language used to write smart contracts on Ethereum). This happens when there is not enough gas to perform the operation, the call stack limit is exceeded, or some unexpected system error occurs due to the user's node executing the call.

• Integer underflow/overflow vulnerability: Occurs when the wrong smart contract integer is a large value, occurs when the actual value represented by the smart contract is higher. This could lead to serious failures in DeFi applications.

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• Not just smart contracts

In addition to smart contract-based risks, Meegan identified a few other issues:

Oracle Risk: This risk occurs when the blockchain enters wrong values ​​and functions normally. By design, the blockchain is only a store of value and cannot verify the authenticity of input data, which means that smart contracts can be updated with wrong information (such as several cases this year), which may lead to widespread damage to the network. attack, and the user's funds are lost.