According to a report published today by blockchain security firm Hacken, decentralized finance (DeFi) protocols witnessed a steep decline in exploits in 2024, while centralized finance (CeFi) platforms more than doubled their losses due to security breaches.

DeFi Platforms Show Better Security Mechanisms

In its annual “Web3 Security Report,” Hacken outlined the general trends in the cryptocurrency industry with regard to scams and security infrastructure. The report notes that total losses arising from security failure in 2024 stood at $2.91 billion.

DeFi protocols accounted for $474 million in losses this year, a 40% decline from $787 million in 2023. This sharp drop reflects the growing adoption of advanced security techniques, such as zero-knowledge cryptography and multi-party computation, across the DeFi ecosystem.

One key factor contributing to the reduction in DeFi exploits was the sharp decline in cross-chain bridge hacks. Losses from these attacks have consistently fallen – from $1.89 billion in 2022 to $338 million in 2023, and finally to $114 million in 2024.

In contrast, CeFi platforms, including cryptocurrency exchanges, reported $694 million in losses in 2024, more than double the $339 million recorded in 2023. CeFi accounted for nearly one-third of all crypto-related incidents, highlighting persistent vulnerabilities in centralized systems.

Gaming and metaverse projects were another major target in 2024, responsible for nearly 20% of all crypto-related hacks, with $389 million in losses. The largest gaming/metaverse breach of the year was the PlayDapp exploit in Q1 2024, which resulted in a $290 million loss.

Phishing scams also remained a significant concern, causing more than $600 million in losses this year. These scams highlight increasingly sophisticated social engineering tactics in the Web3 space.

In November, the sector faced a $129 million address poisoning attack. For context, address poisoning phishing involves attackers sending small transactions from an address that closely resembles one the victim has interacted with, tricking them into mistakenly sending funds to the fraudulent address in future transactions.

Memecoins And Rugpulls Continue To Prey On Users

While memecoins were all the rage for the majority of 2024 – particularly on the Solana (SOL) blockchain due to its low transaction costs – a significant proportion of them preyed on investors through presale scams and celebrity-endorsed rug pulls.

One notable example is the Hawk Tuah memecoin, launched by viral influencer Hailey Welch, popularly known as “Hawk Tuah Girl”. The coin’s value plummeted 95% shortly after launch, sparking severe backlash from the wider Web3 community. 

The rise in memecoin-related scams also underscores the need for greater investor education, particularly when engaging with such speculative assets. At press time, Bitcoin (BTC) trades at $98,921, up 5.8% in the past 24 hours.

U.S.-based spot Bitcoin ETFs have witnessed a sharp reversal in inflows, shedding more than $1.5 billion over a four-day outflow streak.

This marks the longest outflow streak since Donald Trump’s re-election, which provided a much-needed boost for the market.

On December 24, spot Bitcoin ETFs recorded a total daily net outflow of $338 million, according to data from SoSoValue.

BlackRock’s IBIT Lead in Terms of Outflows

Among the 12 funds, BlackRock’s IBIT led the day’s losses at -$188 million, followed by Fidelity’s FBTC at -$83.16 million and ARK Invest’s ARKB at -$75.02 million.

Bitwise’s BITB was the sole fund to record a positive daily inflow of $8.50 million, while Grayscale’s GBTC, VanEck’s HODL, Valkyrie’s BRRR, and WisdomTree’s BTCW remained flat with no notable inflows or outflows.

Despite the net outflows, total assets held across all Bitcoin ETFs stood at $107.53 billion, supported by a day of strong price performance, with funds reporting daily gains of up to +6.48%.

The four-day streak has dragged cumulative net inflows down to $35.68 billion as of December 24.

The total net assets held by spot Bitcoin ETFs dropped to $107.53 billion, retreating from their December 16 peak of $121.7 billion.

Over this period, the funds saw their highest-ever single-day outflow of $680 million on December 19.

It is worth noting that spot Ethereum ETFs recorded a net inflow of $130.76 million on December 23, bringing the cumulative total net inflows to $2.46 billion.

Total net assets across Ethereum ETFs reached $12.05 billion, representing 2.94% of Ethereum’s market cap. The total value traded for the day stood at $494.25 million.

Among the notable performances, BlackRock’s ETHA led the market with a daily net inflow of $89.51 million, pushing its total net assets to $3.51 billion.

Fidelity’s FETH also recorded a strong inflow of $46.37 million, raising its total net assets to $1.46 billion.

Conversely, Grayscale’s ETH faced a daily outflow of $6.09 million, though its total net assets remained at $1.61 billion.

The data for spot Ethereum ETF flows on December 24 is not yet available.

Digital Asset Investment Products Saw $308M Inflows Last Week

Digital asset investment products experienced net inflows of $308 million last week, though this figure conceals a significant single-day outflow of $576 million on December 19.

The week ended with a total outflow of $1 billion over its final two days, triggered largely by market reactions to the Federal Reserve’s hawkish dot plot announcement.

These movements led to a $17.7 billion reduction in total assets under management (AuM) for digital asset ETPs, marking a 0.37% decline in AuM, according to a report from CoinShares.

While concerning, this outflow is modest compared to the largest single-day outflow of 2.3% in mid-2022, which followed an FOMC interest rate hike.

Bitcoin saw resilience with net inflows of $375 million for the week, while multi-asset investment products bore the brunt of the losses, shedding $121 million.

Ethereum continued its streak with $51 million in inflows, offset by Solana’s $8.7 million outflows.

Altcoins such as XRP, Horizen, and Polkadot saw smaller but notable inflows.

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