This content was originally published in June 2024, and has since been updated for publication for December 2024.
The rise in hacking incidents has prompted many cryptocurrency companies to implement bounty programs as an immediate response. While these programs have recouped millions in stolen assets, they often act as temporary fixes that don't tackle underlying systemic issues.
For instance, WarHaven DeFi's offer of a $15,500 bounty for the recovery of stolen assets back in June 2024, detailed in an on-chain message exemplifies the typical publicity of such programs. This, along with the $81 million Orbit Chain hack and the $60 million Curve Finance theft, illustrates how bounties can inadvertently encourage risk-taking by making hacking seem lucrative.
Bounty programs are often reactive, initiated after breaches and potentially sustain a cycle of hacking followed by compensation, undermining market trust. Management issues can arise, with platforms sometimes under-compensating or downplaying vulnerabilities to protect their interests.
In contrast, platforms like Immunefi proactively offer up to $10 million for pre-hack vulnerability discoveries. For example, in June 2022, Aurora, an Ethereum scalability service, paid $6 million to a researcher who identified a critical flaw that could have caused over $200 million in losses.
Hackers might perceive these bounties as a way to profit from their illicit activities, knowing they can negotiate a return of the stolen assets for a reward, thereby reducing their risk of getting caught.
To genuinely fortify security, the cryptocurrency sector must embrace a more holistic strategy, including:
Proactive Security Audits: Conducting regular, detailed audits to spot and address vulnerabilities before they are exploited.
Enhanced Monitoring Systems: Implementing continuous surveillance of network activity to promptly detect and react to unusual actions.
Development of Secure Practices: Promoting best practices in coding and system design to integrate robust security measures from the start.
Shifting towards more proactive, preventive security measures is essential for creating a safer ecosystem that effectively prevents attacks and protects both user assets and industry integrity.
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