Exploits and Flash Loans Are Just the Beginning, Defi Economy Is Less Private Than People Think

Decentralized finance otherwise known as defi has climbed significantly in value this year, as the total value locked (TVL) in defi today is over $14 billion. Meanwhile, numerous defi platforms are getting attacked with flash loans and there are so many new defi projects, it’s hard to keep track of them all. Moreover, while many defi supporters claim these platforms offer greater privacy, examples now show that most everything can be seen onchain connecting ethereum addresses to identities and companies.

Exploits and Flash Loans Are Becoming Commonplace in the Land of Decentralized Finance

In 2020, defi exploded and there’s billions of dollars sitting in a myriad of platforms and applications today offering a new type of finance. The growth defi has seen is unheard of and resembles the initial coin offering (ICO) days back in 2017. One of the biggest differences, however, is many defi projects are more than just a white paper and token, as numerous applications like Maker, Uniswap, Aave, and others have offered various degrees of utility.

On November 22, 2020, statistics show that the defi TVL has surpassed the $14 billion handle. At the end of August, the defi ecosystem’s aggregate TVL was only $7 billion, which means the defi economy doubled in a mere three months. The massive growth is not without problems and even blatant defi scams. It seems a myriad of defi projects are getting drained by experienced ethereum users, liquidating capital via complex flash loans.

This week alone, news.Bitcoin.com reported on two major flash loans, after reporting on these attacks on multiple occasions beforehand as well. Five days ago the Value Defi project saw a flash loan attack that siphoned $6 million in DAI. This was after the team tweeted that the project had “flash-loan attack prevention” and subsequently deleted the tweet. Flash loans and defi exploits have…

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