Antifragile Finance: How Hacks Make DeFi Stronger - DeFriday #9

This week, THORChain, a newer blockchain working to improve cross-chain transfers, was hacked for 14,000 ETH or $28,000,000. 

To anyone outside of the crypto world, that probably sounds like a catastrophic failure that should scare people off of using THOR, or maybe off of crypto entirely. After all, when was the last time your bank was hacked for $28,000,000? 

But to people in the crypto world, these hacks are perceived very differently. In a strange way, they usually end up being a good thing, because they uncover some underlying issue with the protocol that once fixed can make it stronger. 

The etiquette around managing hacks and exploits is a crucially important, and impressive, part of crypto and DeFi culture. It blends extreme ownership, radical transparency, accountability, and remote collaboration into a completely different way of handling catastrophic failures than we’re used to seeing in the traditional financial or business worlds. 

Let’s explore how exploits happen in crypto, and how they make the ecosystem stronger. 

DeFi Hacks vs. Web2 Hacks

You’ll occasionally hear stories in the traditional finance or business world of a company getting hacked. If Crypto and DeFi are “Web3,” these are “Web2” hacks. 

Usually, the hacks involve someone getting access to the company’s database and getting a huge list of customer email addresses and passwords or credit cards.