Lossless

When <a href="https://cointelegraph.com/news/north-korean-hackers-swipe-over-100m-from-atomic-wallet-users" rel="noopener noreferrer nofollow">Atomic Wallet was drained for an estimated $100m </a>earlier this month, its developers appeared just as dumbfounded as the exploited users. Despite releasing a <a href="https://cointelegraph.com/news/atomic-wallet-hack-statement-exploit-unanswered-questions" rel="noopener noreferrer nofollow">detailed “event statement,” </a>the company had to admit that they were “not able to confirm what exactly caused the issue.” As panic set in, the <a href="https://www.coindesk.com/tech/2022/02/10/least-authority-discloses-security-risks-in-atomic-wallet/" rel="noopener noreferrer nofollow">warnings issued by Least Authority in 2021</a> about Atomic Wallet’s lax attitude to security suddenly assumed an almost prophetic quality.The story of Atomic Wallet is not unique in an industry known for its lackadaisical approach to security. Last year alone, exploits cost the Web3 ecosystem an estimated <a href="https://cointelegraph.com/news/3-9-billion-lost-in-the-cryptocurrency-market-in-2022-report" rel="noopener noreferrer nofollow">$3.9bn</a>, with decentralized finance accounting for <a href="https://assets.ctfassets.net/t3wqy70tc3bv/1ObYJk9jzWS4ExHICslYep/e2b5cee51268e47ee164c4dffbd78ad4/Immunefi_Crypto_Losses_2022_Report.pdf" rel="noopener noreferrer nofollow">over 80% of the total losses</a>. And since the financial impact of exploits is almost always permanent (the latest <a href="https://de.fi/blog/de-fi-rekt-report-over-204m-lost-in-q2-2023" rel="noopener noreferrer nofollow">DeFi Rekt Report </a>suggests a recovery rate of just 2%), there is a pressing need for more upfront security.In our latest addition to the Web3 Security series, we have compiled a list of best practices for project teams that are serious about safeguarding against exploits and want to take preventative measures before threats turn into exploits.<h3 id="strong-key-takeaways-strong">Key takeaways:</h3><ul><li>Projects should aim to reduce the attack surface by streamlining all operations and resisting the urge to hastily expand the list of features and points of access.</li><li>Regular smart contract audits are essential and should be part of an ongoing security protocol, not a one-off exercise.</li><li>Projects should shore up their defenses post-deployment with advanced exploit mitigation tools, including automated threat monitoring solutions.</li></ul><h3 id="strong-reduce-attack-surface-strong">Reduce attack surface</h3>The very first line of defense against exploits is to limit the number of possible attack vectors. Small projects often succumb to competitive pressures and rush to implement new features, forgetting that they are also inadvertently broadening their attack surface and introducing novel vulnerabilities.As the downfall of many such projects suggests, a leaner application is often preferable to one burdened with unnecessary features that only serve as marketing gimmicks. Every feature addition should be carefully assessed for both its utility and security implications. Project teams should be rigorous about cutting down on non-essential services and limiting the number of entry points available to untrusted users.Every project should learn from the experience of SushiSwap, a drama-ridden project whose new <a href="https://rekt.news/sushi-yoink-rekt/" rel="noopener noreferrer nofollow">Route Processor 2 contract</a> put all users who had approved it at risk. Although the exploit ultimately proved more of an embarrassment than an existential risk to the project, the incident demonstrated just how nonchalant some teams can be about expanding the attack surface.<h3 id="strong-audit-smart-contracts-regularly-strong">Audit smart contracts regularly</h3>Regular code reviews and audits stand as the second line of defense against potential security threats. That is because very few projects succumb to the rare zero-day exploits. Most are exploited thanks to known issues and improper implementation.The recent <a href="https://rekt.news/midas-rekt2/" rel="noopener noreferrer nofollow">attack on Midas Capital</a>, for example, exploited an already-known rounding vulnerability that affected <a href="https://rekt.news/hundred-rekt2/" rel="noopener noreferrer nofollow">Hundred Finance back in April</a>. Worse yet, the vulnerability had a simple workaround and could have easily been avoided.Midas Capital is hardly alone. Project teams commonly view smart contract audits as a one-time exercise - a check box to be ticked on launch. Yet audits are not just a badge of honor to be displayed on the website. Smart contract audits are meant to be part of an ongoing security protocol, conducted at regular intervals and after every major update. Old active code should also be screened regularly for newly discovered vulnerabilities, ensuring that products remain secure throughout their lifecycle.<h3 id="strong-utilize-advanced-exploit-mitigation-tools-strong">Utilize advanced exploit mitigation tools</h3>Post-deployment security is another area that is frequently brushed aside within the Web3 landscape. Teams often take Web2 security measures - like antivirus software, firewalls, VPNs, and Zero Trust Network Access - for granted. Yet, when it comes to their Web3 projects, a single layer of security is considered sufficient. This discrepancy underscores a critical need for a reevaluation as we venture further into the Web3 era.Increased attention to post-deployment security is one of the hallmarks of a maturing project. In a competitive environment where every exploit could lead to token price implosion, teams would be well served by taking full advantage of the available exploit mitigation tools. That is why Lossless has developed an automated threat monitoring system with firewall-like capabilities.<a href="https://aegis.lossless.io/" rel="noopener noreferrer nofollow">Aegis</a>, our flagship product, utilizes predictive analytics to provide projects with an additional layer of on-chain security without the need for integration. The system continuously scans all mined block transactions to identify suspicious patterns, triggering real-time alerts and user notifications.Code integration enables more advanced firewall-like protection and blacklisting features, including automatically halting flash-loan attacks and preventing known malicious actors from interacting with your smart contract. Most recently Aegis <a href="https://twitter.com/losslessdefi/status/1674718322758221828?s&#61;20" rel="noopener noreferrer nofollow">detected a fraudulent scheme using fake rewards for LensProtocol</a>. Earlier this month, Aegis also <a href="https://twitter.com/losslessdefi/status/1666369943506415617?s&#61;20" rel="noopener noreferrer nofollow">predicted a $27,000 flash loan exploit on Compounder Finance</a> minutes before it was executed.Since the market still lacks such security tools, every project that signs up gains a competitive advantage. Nevertheless, the staggering financial losses due to exploits are already putting more pressure on the Web3 industry to adopt tougher security measures as standard practice. As the sector evolves further, project teams will need to prioritize their post-deployment security to safeguard users, maintain their reputations, and protect their financial interests.<h3 id="strong-em-about-lossless-em-strong">About Lossless</h3>Lossless is a trendsetter in Web3 security architecture. Our solutions empower projects to protect their communities from smart contract exploits and the associated financial loss.The Lossless protocol wraps ERC-20 standard tokens in an additional layer of transactional security, providing project creators with a fail-safe against malicious exploits. Transactions flagged as malicious are frozen and can be reverted subject to an investigation.Aegis, our latest flagship product, also offers automated threat monitoring and firewall-like features. Project teams can utilize its real-time alerts and zero-integration monitoring capabilities to identify possible threats before they turn into exploits.<a href="https://lossless.io/" rel="noopener noreferrer nofollow">Lossless.io</a> | <a href="https://twitter.com/losslessdefi" rel="noopener noreferrer nofollow">Twitter</a> | <a href="https://t.me/losslesscash" rel="noopener noreferrer nofollow">Telegram</a> | <a href="https://losslesscash.medium.com/" rel="noopener noreferrer nofollow">Medium</a> | <a href="https://discord.gg/qN4zaYb3ux" rel="noopener noreferrer nofollow">Discord</a> | <a href="https://github.com/Lossless-Cash" rel="noopener noreferrer nofollow">GitHub</a>

Web3 Security: Best Practices and Recommendations

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