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Understanding finality in blockchain

Finality in blockchain refers to the unchangeable confirmation of a transaction or a block of transactions.

In conventional financial systems, once a transaction is confirmed, it cannot be undone. Similarly, attaining finality on a blockchain network ensures that a transaction is permanent and cannot be modified after it has been added to the blockchain. For the blockchain to be secure and authentic, this concept is crucial.

Finality is attained by the blockchain networks use of consensus. Different blockchain networks employ various consensus algorithms, each with a unique method of validating transactions and ensuring finality, such as proof-of-work (PoW), proof-of-stake (PoS) or practical Byzantine fault tolerance.

Finality in blockchain can be probabilistic, economic, instant, unconditional or related to the entire state of the blockchain.

On the blockchain, there are various types of finality, each of which describes a distinct degree of certainty and irreversibility with regard to transactions and blocks. The main finality types on blockchain are as follows:

Finality is probabilistic in the majority of blockchain systems, especially those that employ PoW consensus, like Bitcoin. The likelihood of reversing a transaction diminishes exponentially when blocks are put on top of a confirmed transaction after it has been included in a block.

The economic finality concept is often associated with PoS systems. A transaction is considered final in terms of economic finality if going back on it would be financially unviable. In PoS, validators or nodes are required to provide a stake as collateral, a specific quantity of cryptocurrency. If they approve fake transactions, they run the risk of losing their stake, making it economically irrational to act maliciously.

The Ripple network offers near-instant finality, ensuring that once a transaction is recorded on the ledger, it is immediately confirmed and irreversible. Transactions are validated by 150 validators. These validators may potentially earn a spot in Ripples Unique Node List, which comprises 35 validators.

When a transaction is confirmed, it is deemed to be fully and unconditionally final. Under no circumstances is the transaction susceptible to being undone. It can be difficult to achieve unconditional finality and frequently calls for a strong degree of centralization or a unique consensus method.

In some blockchain systems, finality refers to the complete state of the blockchain, not just transactions. A state transition (a change in the blockchains state, such as a transaction or the execution of a smart contract) cannot be modified or reversed once it has been finished. For applications like smart contracts, where the accuracy of the entire application state is vital, achieving state finality is essential.

Finality in blockchain provides the necessary assurance of transaction validity and permanence, making it a foundational concept for the technologys reliability and functionality.

Finality provides a high level of security and trust in the system, which makes sure that once a transaction is confirmed, it cannot be changed or reversed. By verifying that the transaction is legitimate and logged on the blockchain, finality prevents the issue of double spending, which is where the same digital asset can be used more than once.

Double spending might occur, for instance, if someone had one Bitcoin (BTC) and attempted to transmit it in two separate transactions to two different receivers. By guaranteeing finality, blockchain technology prevents this from happening. Once a transaction is confirmed and recorded on the blockchain, the digital asset is deemed spent and cannot be used in any further transactions.

Finality is crucial in the context of smart contracts. The details of the agreement between the buyer and seller are directly embedded in smart contracts, which are self-executing code. Finality guarantees that these contracts outcomes are deterministic and unalterable.

Additionally, finality is how decentralized applications (DApps) make sure their activities are safe and trustworthy. Finality ensures that decisions and transactions made within these applications are unchangeable and irreversible. Moreover, the blockchain develops trust among the networks users and members by making transactions final. Users trust in the system is increased by knowing that transactions are irreversible.

Issues such as forking, network latency, smart contract vulnerabilities and 51% attacks prevent blockchain transactions from achieving finality.

When the blockchain splits into several paths, forking happens, producing different versions of the transaction history. The consensus method is put to the test by this divergence, which makes it challenging to establish which version is the legitimate one and delays finality.

For instance, hard forks can result from disagreements among the community or developers on protocol updates. Until the issue is settled, different factions might continue supporting PoW blockchains, resulting in a lack of finality.

Network latency, or the delay in data communication between nodes, further complicates matters. Slow network connections can cause errors in transaction order and validation by delaying the propagation of transaction information across the blockchain network.

Additionally, a smart contracts vulnerability could result in unexpected behavior, allowing bad actors to take advantage of it and reverse transactions. Similarly, an entity that has more than 50% of the networks mining power in a PoW blockchain may be able to change the history of the blockchain and reverse transactions. This undermines finality and security.

Due to these concerns, the blockchains integrity is jeopardized, necessitating the implementation of strong consensus algorithms and effective network protocols by developers in order to reduce forking and latency problems and guarantee the timely and secure finality of transactions.

Longer confirmation periods, multiple validations and cutting-edge security algorithms, such as Algorands Pure PoS, delegated PoS (DPoS) and HoneyBadgerBFT, may help enhance blockchain finality.

One approach involves longer confirmation times, allowing for a greater number of validations before a transaction is considered final. The probability of a transactions validity being confirmed and becoming irreversible is considerably increased by lengthening the time it takes to reach consensus.

Furthermore, using the multiple confirmations technique, where transactions are checked by many nodes or validators, offers an additional layer of security, ensuring a wider consensus and lowering the possibility of mistakes or malicious attacks.

In addition, innovative consensus algorithms such as Algorands Pure PoS, DPoS and HoneyBadgerBFT have transformed the industry. Algorand uses a PoS method in conjunction with a Byzantine agreement protocol to ensure quick and irreversible finality for transactions.

By implementing a reputation-based system where a small group of trusted delegates validate transactions, DPoS increases the networks effectiveness and finality. Similarly, the HoneyBadgerBFT algorithm improves finality and security even in the presence of malevolent nodes or network delays by achieving asynchronous Byzantine consensus.

In essence, a multidisciplinary strategy that incorporates diverse consensus techniques, cutting-edge encryption and improved interoperability is necessary to achieve speedier and more reliable finality in the future.

The exposure of hybrid consensus models is one such trend. These hybrid consensus algorithms strive to increase scalability and performance while retaining strong security by combining the advantages of various consensus algorithms. Projects have been experimenting with incorporating PoS methods since they consume substantially less energy than PoW techniques and speed up confirmation times.

Additionally, there is a growing interest in advanced cryptographic methods like zero-knowledge (ZK) proofs and innovative technologies, such as sharding. Zero-knowledge proofs improve efficiency and privacy by enabling parties to validate transactions without disclosing private information. Sharding, a method for dividing the blockchain into smaller, more manageable parts, lessens the computational burden on nodes and speeds up the processing of transactions.

The development of quantum computing may render existing encryption techniques obsolete, necessitating the creation of quantum-resistant algorithms. To maintain the security and finality of transactions in the face of quantum threats, blockchain networks are actively investigating quantum-resistant cryptographic solutions.

Another area of focus is how different blockchains interact with one another. Through the use of protocols like Polkadot and Cosmos, transactions between networks can be completed quickly and seamlessly. This interoperability improves the overall effectiveness of blockchain systems, resulting in quicker and more trustworthy finality.

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What is finality in blockchain, and why does it matter? - Cointelegraph

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Opinion piece by Jonas Lundqvist, CEO at Haidrun.

Ask people about blockchain and most will associate it with Bitcoin, crypto currencies and data mining. Of course, they are not mistaken but blockchain has far wider applications across a range of industries including automotive: from protecting real-time, on-board data and helping to deliver explainable AI systems, to providing trust across complex supply chains. Global brands like Ford and BMW, for example, have already implemented blockchain within their manufacturing processes.

So, what exactly is blockchain? Blockchain is a digital transaction ledger that creates a growing list of records called blocks, which are then sealed and linked using cryptography. It is a distributed database that can efficiently record transactions between two or more parties in a permanent and verifiable way. The blockchain stores the data in blocks across multiple computers in a tamper resistant way, so that the record cannot be retrospectively altered without alerting all the users by breaking the cryptographic signature. While blockchain was originally associated with managing cryptocurrencies, the fundamental concept of the technology enables it to digitally manage any transaction.

Public v PrivateFor many automotive manufacturers, the idea of public blockchains allowing participants to have open access to the contents of the database does not sit well. So, a new generation of private blockchain is emerging where a single authority or organization ultimately retains control and no one can enter this type of network without proper authentication. Private blockchains offer most, if not all, the distributed benefits of public blockchains, whilst retention of overall control helps to improve privacy and eliminate many of the illicit activities often associated with public blockchains and crypto-currencies.

Private blockchains are permissioned where participants are known or trusted and can provide full transparency with audits, checks and balances on each and every user. With far fewer nodes needed, decisions and transactions can be supported and processed at a much higher rate and require far less processing power and energy. The automotive industry has never shied away from experimenting with and adopting new technologies and blockchain, private blockchain in particular, looks set to help shape and influence the industry over the next five years.

Supply Chain ManagementSupply chain fraud affects organizations of all sizes in all industries and can occur at any step in the process. A growing and challenging trend is the corruption of supply chain data, which can take a wide variety of forms including manipulation of provenance data, item quantity and payments information, as well as the introduction of fake and counterfeit goods into the system.

Blockchain distributed ledgers can provide the trust and confidence required to help ensure that transactions across all stages, from sourcing and purchasing to production and shipping are transparent and immutable, making the introduction of counterfeit components into the supply chain almost impossible. Moreover, blockchain can be used with other technologies like IoT and AI to manage the massive amounts of data produced daily by automotive manufacturers. For example, blockchains can encompass vehicle component bills of lading, harness quality-inspection records from the production process and store Work in Progress data for each assembly line from beginning to end.

Smart contracts, business logic that automatically executes, controls and documents legally relevant events and actions, may also be incorporated in manufacturing blockchains. For example, they can release sales orders automatically at specific stages of the production process, while contracts might be automatically granted to providers with the most inventory to protect supply chains.

Digital passports for vehicles

When it comes to the resale of a vehicle, the buyer can never be certain that the records of the car havent been falsified. However, by storing the complete history of a vehicle on a blockchain, this issue is easily resolved. It gives the user a reliable way to verify the history and provenance of a particular vehicle, as well as share relevant information about a vehicle with third parties such as insurance companies and repairers. Blockchain technology will also have a resounding effect on how we buy, sell and transfer ownership of our vehicles. A tokenized auto ownership platform could usher in a new era of provenance and ownership rights in the automotive market.

Secure PaymentCar owners may eventually be able to pay for the electricity needed to power their rechargeable vehicles using blockchain smart contracts. Consider what would happen if charging your car triggered a contract on the blockchain that withdrew the right amount of money from your bank and delivered it to the charging station. Your monthly parking fee, insurance, and any other financial activities involving your vehicle could all be affected in the same way.

Safe-Guarded Autonomous DataAs a self-driving automobile travels across the world, blockchain technology could be used to keep track of the details of the journey. This localization data might include anything from road and facility details to weather and traffic conditions. Other cars in the network may then access this data and know that it is accurate and safe and because sharing everybody elses data is the quickest way to autonomous driving, manufacturers may soon use blockchain to safely exchange all localization data. As the data is cryptographically protected, only authorized parties would be able to view it and as a consequence, blockchain will also stop any bad actors from attempting to hack the system without everyone immediately knowing about it.

Ride-sharing DecentralizedRide-hailing services like Lyft and Uber are already changing how we use and equally dont use our cars. A driver picks you up in their own car and drives you to your location with only a few swipes on an application. In the not-so-far future, blockchain combined with autonomous technology may well take ridesharing to the next level. One of the aims of blockchain is to remove intermediaries between riders and drivers while improving data security. For example, by basing payment on specified criteria and encoding them in a smart card, drivers will only get paid after delivering a rider to their destination. Instead of an arbitrary cancellation charge, if a passenger cancels, the contract may give a modest percentage of the cash to the driver to account for their time. Its possible that blockchain technology may alter the way firms like Uber function. An ecosystem-type platform may be created as a solution to remove the middlemen by shifting payment and driver or rider selection procedures to the objective, verifiable blockchain. Riders might use such a website to interact directly with drivers, evaluating individual reputations and selecting a driver based on cost, quality, and other market considerations.

Fair and Reliable Car-SharingNot only can blockchain-based solutions make sharing trips simpler but they also make sharing vehicle ownership easier. For instance, instead of everyone living in a high rise having a car or relying on other forms of transportation, they might share a fleet of ten vehicles. They could use an application to request access to a car when they wanted it, and the vehicles blockchain would track each vehicles activities while it was in use. The system would instantly settle payments on whatever terms the owners choose, and the encrypted nature of blockchain would eliminate the guessing about how long, far and fast cars are utilized, resulting in greater convenience and transparency for everyone.

Fleet ManagementAutonomous vehicles present another strong case for blockchain technology. Here, the technology can be utilized for building platforms that allow self-driving cars to communicate and share data with all vehicles in a fleet. The cars will be able to log information about their daily activities, such as daily usage, completed routes, technical issues and other problems. With blockchain, such platforms can be made to suit the needs of both commercial and private fleets. In addition, with a little help from smart contracts and IoT, self-driving cars can become capable of recharging their batteries at designated stations during downtime.

Vehicle InsuranceAlong with smart contracts for issuing insurance cover, blockchain can also automate the process of submitting an insurance claim and store real-time mileage information, driver behavior data (where permitted), and other key facts.

Self-Driving Car ApplicationsSelf-driving cars are set to begin a massive takeover throughout the auto industry. Already, manufacturers such as Tesla Motors offer self-driving cars to their customers. While this technology is still new, most consider this the future of the auto industry. A blockchain-based system could allow self-driving cars to exchange information with each other. Even more interesting is that your car could be rewarded for its contributions to the larger self-driving car blockchain.

Current implementations of blockchain in the Automotive IndustryFour of the worlds biggest automakers have joined with other technologically advanced companies to integrate blockchain technology, within the comfort of your car. Ford, BMW, Renault and General Motors have expressed their commitment to explore blockchain technology by extending their support to the Mobility Open Blockchain Initiative (MOBI).

Ford has launched a blockchain pilot to ensure ethical sourcing of cobalt. By tracking the supply chain of cobalt on the blockchain, Ford hopes to ensure that companies are not using child-minded cobalt in lithium-ion batteries.

Volkswagen is also working towards a blockchain initiative that should prevent speedometer fraud that is widespread in the automotive industry. Making sure that dishonest car sellers cannot manipulate speedometers to produce deceptive mileage values, will help the buyers to save money.

Hyundai is also exploring the use of blockchain technology and cloud-based AI, by creating a new supply chain financing ecosystem. The project aims to automate manual processes, reduce cost and improve lead times all to enhance the customer experience.

The automotive industry has always been at the forefront of technical innovation, with vehicle manufacturers constantly looking for new ways to utilize cutting-edge technologies to their advantage. It is clear that blockchain in the automotive industry has the potential to bring significant benefits by improving supply chain processes, introducing tamper-proof record-keeping, streamlining production and supporting other innovative technologies and trends. Blockchain technology could well take the evolution of the automotive industry even further. Watch this space.

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Industry Voices: What can Blockchain do for the Automotive Industry? - Ward's Auto

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[Co-author: Diana Milton]

Following one of the most turbulent years in crypto history, 2023, in contrast, unfolded as a year of reprieve, including from crypto threats. According to a July 12, 2023, report from blockchain analytics firm Chainalysis, in the first half of 2023, cryptocurrency transactional inflows to known illicit entities are down 65 percent compared with the same period in 2022.[1] Similarly, crypto inflows to risky entities are down 42 percent.[2] Meanwhile, according to Chainalysis, crypto inflows to legitimate services were down just 28 percent from the same period in 2022.[3] This data appears to indicate that while the overall crypto market experienced a downturn in the first half of 2023, the downturn may have been more severe for crypto threat actors. Despite this, certain illicit finance activities pose an increasing threat. The most notable of these have come in the form of ransomware, hacks, scams and threats from the North Korea-affiliated Lazarus Group.

Ransomware

According to Chainalysis, ransomware-related crypto transactions are on track to increase by the end of 2023, with approximately $175.8 million more in cryptocurrency extorted through ransomware by mid-2023 as compared with the same period in 2022.[4] Data from Chainalysis further indicates that as of June 2023, at least $449.1 million was stolen through ransomware activities.[5] If this trend continues, more will have been extorted from victims in 2023 than in all years other than 2021, where the high was reported at $939.9 million.[6] Publicly available data indicates that bitcoin continues to be the cryptocurrency of choice for ransomware payments.[7]

Although reports indicate a significant downturn in ransomware revenue between 2021 and 2022, data suggests that this may be due to victims increasing unwillingness to pay ransomware attackers rather than an actual decline in the number of ransomware attacks.[8] The reason behind the unwillingness could be the legal risks of entertaining, working with and paying ransomware attackers, or the changing outlook of cyber insurance firms.[9]

DeFi Hacks

Decentralized Finance (DeFi) services continue to be vulnerable to attack because of their semi-autonomous nature. Typically, to implement a patch or security fix, a DeFi service that is controlled by a decentralized autonomous organization (DAO) has to achieve consensus (agreement among the DAO token holders) to do so. This can prevent regular security updates from being implemented in advance due to delays reaching agreement among DAO token holders. These and other DeFi vulnerabilities continue to result in successful bridge hacks, where smart contracts[10] holding millions of dollars worth of users cryptocurrency are exploited before users can complete the cross-chain activity the bridges support.

For example, on July 30, 2023, hackers exploited a vulnerability in a popular smart contract-oriented Ethereum Virtual Machine language that prohibited the correct execution of the reentrancy guard, which would normally lock contracts to prevent multiple functions from being executed simultaneously.[11] This failure to execute the reentrancy guard allowed attackers to repeatedly call smart contracts before initial execution was complete. The attack resulted in an estimated loss of more than $50 million among the impacted DeFi exchanges. The effects of a reentrancy attack could ultimately result in an attacker draining a DeFi pool of all of its funds.[12]

In another recent DeFi hack, on August 18, 2023, decentralized credit market Exactly Protocol, which operates on the Optimism network, reportedly suffered a $12 million bridge exploit. According to reports, the hacker exploited a contract on Ethereum, transferred deposits to Optimism and then bridged the stolen funds back to Ethereum.[13] Just three days earlier, on August 15, 2023, decentralized exchange RocketSwap was reportedly hacked to the tune of 471 ETH worth approximately $866,000. According to reports, the exploit occurred due to a private key compromise from online servers.[14] And most recently, on September 24, 2023, a DeFi cross-chain trading network suffered a hack valued at $200 million. The hack was reportedly enabled by the networks reliance on a centralized database, which exposed it to a single point of failure.[15]

Hacks of Centralized Exchanges

Crypto hackers also continue to target centralized exchanges. According to a July 2023 press release from the U.S. Department of Justice (DOJ), a centralized exchange was compromised when one of its smart contracts was exploited, allowing the threat actor to insert fake pricing data and fraudulently cause the smart contract to generate approximately $9 million of inflated fees. These fees were then laundered through token swaps, bridging, anonymized cryptocurrency and overseas cryptocurrency exchanges.[16] More recently, on September 25, 2023, the HTX cryptocurrency exchange reportedly suffered a hack of 500 ETH, for a loss of approximately $8 million.[17]

Scams

Traditionally, revenue generated by scams far outpaces other cryptocurrency-related crime. This year, however, reports indicate that total scam revenue for the year has plummeted by 77 percent.[18] The frequency of impersonation scams, however, appears to have increased by 49 percent since 2022, indicating that more people have fallen victim to this type of scam even though the total revenue generated by the scams appears to have decreased.[19] These scams can look like fraudulent social media posts promising a token giveaway on a well-known projects social media account. Followers of the reputable account jump at the token only to be left hanging because, upon receipt of investor funds, the scammers fail to deliver the promised cryptocurrency.[20]

With heightened conversations and news coverage circulating around cryptocurrency, more people seek a seat at the table but in so doing risk falling victim to scams if they lack sufficient understanding of the crypto economy. Fraudulent transactions and scams thrive in that paradigm. For example, in March 2023, the U.S. Securities and Exchange Commission (SEC) shut down BKCoin Management LLC, the Miami-based investment adviser, in connection with a four-year-long crypto asset fraud scheme, through which BKCoin collected approximately $100 million from at least 55 investors. BKCoin represented that the investors money would be used to trade crypto assets and that the profits of such investments would be managed in separate accounts and private funds, when in reality investor funds were commingled and the money was used for personal gain and Ponzi-like payments.[21]

One specific type of cryptocurrency scam that presents a growing threat is known as Pig Butchering. On September 8, 2023, the U.S. Financial Crimes Enforcement Network (FinCEN) published a FinCEN Alert (Alert) titled Prevalent Virtual Currency Investment Scam Commonly Known as Pig Butchering.[22] According to the Alert, The victims in this situation are referred to as pigs by the scammers who leverage fictitious identities, the guise of potential relationships, and elaborate storylines to fatten up the victim into believing they are in trusted partnerships then refer to butchering or slaughtering the victim after victim assets are stolen, causing the victims financial and emotional harm. The Alert notes that the butchering phase often involves convincing the victims to invest in virtual currency. According to the Alert, pig butchering scams are largely perpetrated by criminal organizations based in Southeast Asia who use victims of labor trafficking to conduct outreach to millions of unsuspecting individuals around the world, resulting in billions of dollars in losses to U.S. victims. The Alert explains the pig butchering scam methodology and provides a list of 15 red flag indicators to assist in identifying and reporting related suspicious activity.

Lazarus Group

The Lazarus Group, a cybercrime group run by the government of North Korea, has executed at least four separate multimillion-dollar cryptocurrency hacks since June of this year, according to the U.S. Federal Bureau of Investigation (FBI).[23] Three of the four most recent exploits involved centralized crypto service providers instead of DeFi. [24] The most recent of these incidents included a $41 million hack of an online casino and betting platform[25] and a $55 million hack of CoinEx, a centralized cryptocurrency exchange.[26] This indicates a tactical shift by the threat group, which in 2022 reportedly focused on targeting decentralized services.[27] A report recently released by a leading digital asset compliance and risk management company attributes to North Korea the theft of over $2 billion worth of cryptocurrency over the past five years and almost $200 million in 2023 alone accounting for over 20 percent of all stolen cryptocurrency this year.[28]

How to Stay Safe in a Digital World

Companies can help prevent their services from being hacked by implementing comprehensive security protocols, searching for vulnerabilities and disclosing them among their network, and ensuring that software and hardware are consistently updated. Additionally, maintaining awareness of what flaws are being exploited can provide developers a road map for implementing more sophisticated security measures. For instance, in 2022 and thus far in 2023, smart contract hacking has resulted in several DeFi services being exploited. Improving smart contract auditing and development standards may go a long way toward preventing future hacks. Another important protective mechanism is educating workplace staff and employees about the risks associated with social engineering, so they are informed and prepared to avoid falling victim to phishing, smishing or other types of social engineering hacks that could result in the loss of cryptocurrency to hacks, scams and other attacks by threat actors.

[1] Chainalysis, Crypto Crime Mid-year Update, Chainalysis: Crime (July 12, 2023), https://www.chainalysis.com/blog/crypto-crime-midyear-2023-update-ransomware-scams.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Gary Peters, Use of Cryptocurrency in Ransomware Attacks, Available Data, and National Security Concerns, United States Senate Committee on Homeland Security & Governmental Affairs (2022), at 2, https://www.hsgac.senate.gov/wp-content/uploads/imo/media/doc/HSGAC%20Majority%20Cryptocurrency%20Ransomware%20Report_Executive%20Summary.pdf; Jareth, Is ransomware driving up the price of Bitcoin?, Emsisoft Blog (Sept. 3, 2019), https://www.emsisoft.com/en/blog/33977/is-ransomware-driving-up-the-price-of-bitcoin/#:~:text=Bitcoin%20accounted%20for%20about%2098,part%20of%20the%20ransomware%20model.

[8] 2023 Crypto Crime Report, Chainalysis (Feb. 2023),at 33, https://go.chainalysis.com/rs/503-FAP-074/images/Crypto_Crime_Report_2023.pdf.

[9] Id, at 34.

[10] Smart contracts are digital contracts stored on a blockchain that are automatically executed when predetermined terms and conditions are met. See What are smart contracts on blockchain?, IBM, https://www.ibm.com/topics/smart-contracts; see also Introduction to Smart Contracts, Ethereum Foundation, https://ethereum.org/en/developers/docs/smart-contracts/ (a smart contract is [] a program that runs on the Ethereum blockchain. Its a collection of code (its functions) and data (its state) that reside at a specific address on the Ethereum blockchain.).

[11] Ana Paula Pereira, Breaking: Curve Finance pools exploited by over $47M due to reentrancy vulnerability, Cointelegraph (July 30, 2023), https://cointelegraph.com/news/curve-finance-pools-exploited-over-24-reentrancy-vulnerability.

[12] Id.

[13] Oliver Knight, Crypto Lender Exactly Hit by $12M Bridge Exploit, CoinDesk (Aug. 18, 2023), https://www.coindesk.com/business/2023/08/18/crypto-lender-exactly-hit-by-12m-bridge-exploit/.

[14] Nivesh Rustgi, Meme Coin Base DEX RocketSwap Hit by $866K Exploit, Decrypt (Aug. 15, 2023), https://decrypt.co/152519/meme-coin-base-dex-rocketswap-hit-866k-exploit.

[15] Sam Reynolds, Mixin Network Losses Nearly $200M in Hack, CoinDesk (Sept. 25, 2023), https://www.coindesk.com/tech/2023/09/25/mixin-network-losses-nearly-200m-in-hack/.

[16] Former Security Engineer For International Technology Company Arrested For Defrauding Decentralized Cryptocurrency Exchange, US Attorneys Office S.D.NY (July 11, 2023), https://www.justice.gov/usao-sdny/pr/former-security-engineer-international-technology-company-arrested-defrauding.

[17] Oliver Knight, Crypto Exchange HTX Lost $8M of Ether Due to a Hack, Justin Sun Says, CoinDesk (Sept. 25, 2023), https://www.coindesk.com/business/2023/09/25/crypto-exchange-htx-lost-8m-of-ether-due-to-a-hack-justin-sun-says/.

[18] Crypto Crime Mid-year Update.

[19] Id.

[20] Brayden Lindrea, Blockchain Capitals X account hacked to promote token claim scam, Cointelegraph (Aug. 9, 2023), https://cointelegraph.com/news/blockchain-capital-x-twitter-hacked-promoting-token-claim-scam.

[21] SEC Files Emergency Action Against Miami Investment Adviser BKCoin and Principal Kevin Kang for Orchestrating $100 Million Crypto Fraud Scheme, U.S. S.E.C. (Mar. 6, 2023), https://www.sec.gov/news/press-release/2023-45?utm_medium=email&utm_source=govdelivery.

[22] FinCEN Alert on Prevalent Virtual Currency Investment Scam Commonly Known as Pig Butchering, U.S. Financial Crimes Enforcement Network, FIN-2023-Alert0005 (Sept. 8, 2023), at 1, https://www.fincen.gov/sites/default/files/shared/FinCEN_Alert_Pig_Butchering_FINAL_508c.pdf.

[23] FBI Identifies Cryptocurrency Funds Stolen by DPRK, FBI (Aug. 22, 2023), https://www.fbi.gov/news/press-releases/fbi-identifies-cryptocurrency-funds-stolen-by-dprk.

[24] FBI Identifies Lazarus Group Cyber Actors as Responsible for Theft of $41 Million from Stake.com, FBI (Sept. 6, 2023), https://www.fbi.gov/news/press-releases/fbi-identifies-lazarus-group-cyber-actors-as-responsible-for-theft-of-41-million-from-stakecom.

[25] Id.

[26] Ezra Reguerra, North Koreas Lazarus Group responsible for $55M CoinEx hack: Report, Cointelegraph (Sept. 13, 2023), https://cointelegraph.com/news/coinex-north-korea-s-lazarus-group-responsible-for-55-m-coin-ex-hack-report.

[27] Elliptic Research, How the Lazarus Group is stepping up crypto hacks and changing its tactics, Elliptic (Sept. 15, 2023), https://www.elliptic.co/blog/how-the-lazarus-group-is-stepping-up-crypto-hacks-and-changing-its-tactics.

[28] Inside North Koreas Crypto Heists: $200M in Crypto Stolen in 2023; Over $2B in the Last Five Years, TRM (Aug. 18, 2023), https://www.trmlabs.com/post/inside-north-koreas-crypto-heists.

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DSIR Deeper Dive: 2023 Crypto Threat Landscape | BakerHostetler ... - JD Supra

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Stars Arena, a social platform supported by Avalanches Contract Chain, recently faced a major security breach. The official Stars Arena Twitter account confirmed the attack on the platforms smart contract and advised users against depositing funds during the ongoing investigation.

Crypto expert Redline, who discovered the breach, revealed that hackers successfully transferred 266,103 AVAX (approximately $2.85 million) through the FixedFloat exchange service. This incident caused AVAXs price to drop from $11.56 to $10.78, prompting users to remove Stars Arena from their Twitter accounts.

The breach highlights the vulnerability of smart contracts and the importance of robust security measures. Stars Arena is actively working to recover funds and restore platform functionality.

The security breach had an immediate impact on AVAXs price, underscoring how security breaches can affect cryptocurrency market sentiment and value.

In light of the breach, it is advisable for users to remove Stars Arena from their Twitter accounts to avoid further risks or potential scams.

Stars Arena apologized for the exploit and acknowledged a distributed denial-of-service (DDoS) attack. Efforts are underway to address these issues and prevent future attacks.

A specialized white hat development team is reviewing the platforms security, working to recover stolen funds, and committed to restoring platform functionality quickly.

To address user concerns, Stars Arena hosted a live Twitter Spaces session to provide a comprehensive explanation of the breach and reassure users.

The formation of a specialized white hat development team reinforces Stars Arenas commitment to security, conducting a thorough security audit to enhance security measures.

Once the security audit is complete, Stars Arena plans to reopen the contract with fully secured funds, ensuring user protection and platform security.

Stars Arena, supported by Avalanches Contract Chain, allows influencers to monetize their fan base by granting exclusive access to content and offers, with Twitter account integration for enhanced user engagement.

Prior to this breach, Stars Arena had experienced an exploit where $2,000 was stolen, emphasizing the importance of ongoing vigilance and robust security.

In addition to Stars Arena, friend.tech, another social token-driven platform, faced SIM-swapping attacks resulting in the theft of $385,000 worth of digital assets. These incidents highlight the need for stringent security measures.

September 2023 saw a record-high value of $332 million lost to crypto exploits, hacks, and scams, prompting a reassessment of industry security practices.

The security breach on Stars Arena serves as a lesson for both the platform and users, emphasizing the constant need for vigilance and robust security.

Stars Arena is proactively strengthening security through a comprehensive audit and the involvement of a specialized white hat development team, aiming to prevent future breaches.

Rebuilding trust and regaining user confidence are essential for Stars Arenas future success, achieved through security and transparency.

The security breach on Stars Arena underscores the importance of security within the Avalanche ecosystem, requiring prioritization and robust measures to protect users and their funds.

The broader crypto industry must address security concerns, prioritize user safety, and implement robust measures to safeguard user funds and data.

By prioritizing security, Avalanche can attract users and projects to its ecosystem, positioning itself as a platform that supports secure and trustworthy applications.

The crypto industry faces ongoing security challenges due to its digital nature and value. Vigilance and continual security updates are necessary to stay ahead of malicious actors.

Users and investors must exercise vigilance when choosing platforms, implement security best practices, and diversify their crypto portfolios to minimize risks.

Learning from security breaches is crucial for enhancing security measures and protecting user funds.

Collaboration among platforms, developers, and security experts can lead to industry-wide security improvements and more secure environments.

Ultimately, creating a secure crypto environment should be the industrys goal, fostering trust and attracting more users and investors through robust security measures and cooperation.

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Security Breach of $3 Million Hits Stars Arena, Backed by Avalanche - CryptoCoin.News

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