The Web3 world is under attack. This is the only conclusion that can be drawn from the recent Cyvers Web3 Security Report, which paints a sobering picture of cybersecurity in crypto today.
In the first half of this year alone, crypto losses from cybercrime reached an eye-watering $1.38 billion, with Q2 witnessing $629.68m in losses across 49 incidents. Worryingly, the figures were an increase on the same period last year, highlighting the need for solutions that foil criminals’ increasingly sophisticated schemes.
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One of the most significant attacks occurred this May, when Japanese crypto exchange DMM Bitcoin fell victim to a hack resulting in a $305m loss. This case, along with numerous other smart contract exploits and centralized exchange (CEX) hacks, indicates the lengths hackers and fraudsters are willing to go to plunder platforms, protocols, and wallets. So, what’s the answer?
Cryptography: The Foundation Stone of Blockchain
In the face of such mounting threats, the answer could lie in the foundation of blockchain technology: cryptography.
Derived from the Greek terms Kryptos (hidden) and Graphein (to write), cryptography is both an art and a science, a discipline that secures communication in the presence of adversaries. While considered a foundation stone of blockchain—used as it is to secure transactions, control the creation of new units, and ensure data integrity—there is a troubling lack of cryptographic uniformity in the industry’s multitudinous protocols and applications.
This is unfortunate since the proper implementation of cryptography would almost certainly reduce the number of hacks and exploits plaguing Web3.
Don’t Just Trust, Better Verify
Pera is a project that fundamentally understands the pressing need for greater cryptography in Web3. Formerly known as dWallet Network, this Zero Trust interoperability platform allows protocols to operate across all blockchains while preserving users’ self-custody. In effect, Pera assuages users’ concerns by assuring them that their assets are never compromised—even when interacting with multiple networks.
This guarantee is achieved through Zero Trust Protocols (ZTPs), which operate without requiring users to trust third parties – unlike traditional cross-chain solutions. With another pillar of Pera’s suite, the dWallet, developers can spin up their own ZTPs wherein user participation is cryptographically required in every signature generated.
As far as cryptography is concerned, Pera utilizes 2PC-MPC to maintain Zero Trust across networks. This form of multi-party computation enables what Pera calls “the first noncollusive and massively decentralized signing mechanism in Web3.”
While the ‘nested’ MPC structure for signature generation requires user and network participation, the network part needs a ⅔ consensus between hundreds or thousands of validators. What 2PC-MPC enables is cryptographic proof of user participation, a breakthrough signing mechanism that enhances the security of users interacting with staking protocols, lending dApps, and more.
Another notable project that has been working to repel cybercriminals is Lit Protocol. A decentralized key management network, Lit Protocol employs cutting-edge cryptography (TSS, SEV), sealed confidential hardware, and peer-to-peer networking to securely generate and manage non-custodial keys and execute private, immutable programs. Web3 devs can leverage Lit to build ‘uncapturable’ apps, protocols, and AI agents with decentralized signing, encryption, and blind compute capabilities.
The Path Forward
The innovations developed by the aforementioned projects and others like them showcase cryptography’s ability to address the myriad security challenges posed by cybercriminals. However, these advancements must be more widely adopted for the ecosystem to truly benefit.
The alarming statistics cited at the top of this article should motivate an attitudinal sea change in security, a reckoning that pushes builders to explore solutions capable of repairing the industry’s damaged reputation. Of course, the true challenge lies in ensuring such solutions are embraced more widely, lest the 2025 stats make for even worse reading.