🧨Big people lost a million dollars in a second: Secrets of smart contract vulnerabilities and how to protect yourself
In the world of cryptocurrencies, a person's life can change overnight. But not always for the better. Many investors lost their money due to vulnerabilities in the 'smart contracts' that are used in decentralized finance (DeFi) projects without even realizing how it happened.
In this article, we will reveal:
What are smart contracts?
How do vulnerabilities and hacks occur?
The most prominent incidents that shook the crypto community
How to protect yourself as a user or investor?
🔹 What are smart contracts?
Smart contracts are digital programs stored on blockchain networks, and they execute automatically when certain conditions are met. For example: If you send a currency to a specific address, it unlocks a token or issues a reward, and so on.
But these contracts are not 'smart' in the human sense, they are just 'automated', executing what is written in them literally — without any flexibility or human review.
🔹 How do vulnerabilities occur?
Smart contract vulnerabilities occur due to:
Programming errors (Bugs)
Weakness in internal logic (Logic Flaws)
Time or price manipulation attacks (Oracle Manipulation)
Reentrancy Attack
Not using protective tools like require() or modifiers in Solidity language
These vulnerabilities are exploited by professional hackers, who analyze the project's source code, and then execute precise attacks that enable them to steal users' funds or disrupt the project's functions.
🔥 The most famous incidents in the history of crypto:
1. The DAO Hack (2016)
More than $60 million was stolen from Ethereum due to a 'reentrancy' vulnerability.
This was the beginning of the split of Ethereum into ETH and ETC.
2. Poly Network Hack (2021)
$611 million was stolen, then later returned.
The reason: Weakness in smart contract permissions.
3. Ronin Bridge Hack (2022)
$625 million was stolen from the Axie Infinity network.
The exploitation occurred through multiple signature keys, but the smart contract was not secured enough.
🛡️ How to protect yourself as an investor or user?
1. Read contract reviews and security audits
Do not enter any project without ensuring that its smart contract has been audited by firms like CertiK or PeckShield.
2. Start with small amounts
Do not invest large amounts directly, especially in new or unknown projects.
3. Understand the project before investing
Does it have real use? Is the team known? Is the code open source?
4. Monitor security notifications and alerts
Use tools like DeFiLlama or TokenSniffer to monitor any unusual changes.
5. Avoid suspicious links
Many phishing attempts occur through fake sites claiming to be affiliated with famous projects.
💡Smart contracts have revolutionized the finance world, but they are not free of risks. If you are not vigilant, you may find yourself — as happened to thousands of others — a victim of a hack without even understanding how it happened.
Make sure to educate yourself, and always be fully aware of how the systems you deal with work. In the world of crypto, knowledge is not just power but protection.
