Money laundering, market manipulation and online theft are the biggest threats globally to decentralised finance (DeFi) on Web3 and collaborative solutions are needed to ensure user trust in the next iteration of the internet, according to report by Chainalysis.
While it cannot be totally eradicated, reduced volume of illicit activity is a sign that stakeholders are more engaged to combat these threats, which have the potential to cost users billions, the blockchain data platform said in its State of Web3 report.
The pattern is similar to previous cycles of emerging technologies: as decentralised finance protocols steadily rise in popularity, illicit use is also trending upwards, said Ethan McMahon, an economist at New York-based Chainalysis.
“As with any emerging technology that has tremendous potential for widespread use, bad actors are among the first to act. It, therefore, isn’t surprising to see that,” Mr McMahon told The National.
“That being said, experience tells us that as the DeFi space matures, illicit usage will make up an ever-smaller share of the total usage.
“Of course, this will require a concerted effort by industry stakeholders to harness the inherent transparency of blockchains to mitigate malicious activity and thus increase consumer confidence in the technology.”
Web3 is the latest iteration of the world wide web, with blockchain, decentralisation, openness and greater user utility among its core components. Its market value is expected to reach about $6.2 billion in 2023 and is projected to grow at a compound annual rate of 44.6 per cent from 2023 to 2030, Market Research Future said.
Blockchain-based DeFi, meanwhile, is generally considered to be a safer way to conduct transactions and can potentially replace middlemen, such as brokers and banks, in the financial system.
The global DeFi platform market is expected to hit $507.92bn in 2028, at a compound annual growth rate of about 44 per cent, Emergen Research reported.
It is proving to be a lucrative opportunity for the digital underworld. Losses in the cryptocurrency sector surged to $14bn in 2021, a 79 per cent jump over 2020, largely due to the rise in DeFi platforms and the proliferation of fraud, Chainalysis said earlier this year.
The share of illicit activity in the cryptocurrency market dropped to a mere 0.15 per cent in 2021, the lowest level since 2017, with the only notable spike coming in 2019 when it rose to almost 3.4 per cent.
That peak, however, was largely attributed to the PlusToken scandal, which defrauded investors of about $2.25bn in China. The perpetrators were sentenced to 11 years in prison in late 2020.
“The volume of illicit cryptocurrency transactions as a share of the overall market is at a record low. This bodes well for the adoption and utilisation of these digital assets by a broader segment of consumers and businesses,” Mr McMahon said.
However, DeFi specifically appears to be going through the same growing pains that cryptocurrencies as a whole did previously, with illicit activity rising over the past two years, Chainalysis said.
“As the cryptocurrency ecosystem matures, cyber criminals are setting their sights on the emerging trends of DeFi and NFTs [non-fungible tokens]. As with the early days of cryptocurrencies, hackers have been quick to execute their illicit schemes,” Mr McMahon said.
The value of cryptocurrency stolen from DeFi protocols surged to about $1.25bn in the first quarter of 2022, only half a year removed from the first time it breached the $1bn mark.
The Chainalysis study showed that much of the cryptocurrency stolen from DeFi protocols has gone to hacking groups associated with North Korea, with around $840 million funnelled there in 2022.
The transparency of blockchain allows government agencies to identify and hit services being used for money laundering, Mr McMahon said, but with hacking at a record high, he recommends prioritising investments in preventive measures to stem this rise.
“Attacks on DeFi protocols by North Korean-linked hackers demonstrate the need for these protocols to shore up their systems not just to protect consumers, but also for national security,” he added.
“For confidence to grow, it is imperative for industry stakeholders to step up and stamp out this abuse of these technologies.”
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Jetour T1 specs
Engine: 2-litre turbocharged
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Price: From Dh126,000
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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%3Cp%3EAuthor%3A%20S%20Frederick%20Starr%3Cbr%3EPublisher%3A%20Oxford%20University%20Press%3Cbr%3EPages%3A%20290%3Cbr%3EAvailable%3A%20January%2024%3C%2Fp%3E%0A
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
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- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
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In the Restaurant: Society in Four Courses
Christoph Ribbat
Translated by Jamie Searle Romanelli
Pushkin Press
UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Name: Mamo Year it started: 2019 Founders: Imad Gharazeddine, Asim Janjua Based: Dubai, UAE Number of employees: 28 Sector: Financial services Investment: $9.5m Funding stage: Pre-Series A Investors: Global Ventures, GFC, 4DX Ventures, AlRajhi Partners, Olive Tree Capital, and prominent Silicon Valley investors. From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
BUNDESLIGA FIXTURES
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
Dubai World Cup Carnival card
6.30pm: Al Maktoum Challenge Round-2 Group 1 (PA) US$75,000 (Dirt) 1,900m
7.05pm: Al Rashidiya Group 2 (TB) $250,000 (Turf) 1,800m
7.40pm: Meydan Cup Listed Handicap (TB) $175,000 (T) 2,810m
8.15pm: Handicap (TB) $175,000 (D) 1,600m
8.50pm: Handicap (TB) $135,000 (T) 1,600m
9.25pm: Al Shindagha Sprint Group 3 (TB) $200,000 (D) 1,200m
10pm: Handicap (TB) $135,000 (T) 2,000m
The National selections:
6.30pm - Ziyadd; 7.05pm - Barney Roy; 7.40pm - Dee Ex Bee; 8.15pm - Dubai Legacy; 8.50pm - Good Fortune; 9.25pm - Drafted; 10pm - Simsir
pakistan Test squad
Azhar Ali (capt), Shan Masood, Abid Ali, Imam-ul-Haq, Asad Shafiq, Babar Azam, Fawad Alam, Haris Sohail, Imran Khan, Kashif Bhatti, Mohammad Rizwan (wk), Naseem Shah, Shaheen Shah Afridi, Mohammad Abbas, Yasir Shah, Usman Shinwari
MATCH INFO
BRIGHTON 0
MANCHESTER UNITED 3
McTominay 44'
Mata 73'
Pogba 80'
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Dubai works towards better air quality by 2021
Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.
The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.
These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.
“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.
“We’re in a good position except for the cases that are out of our hands, such as sandstorms.
“Sandstorms are our main concern because the UAE is just a receiver.
“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”
Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.
There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.
“There are 25 stations in total,” Mr Al Daraji said.
“We added new technology and equipment used for the first time for the detection of heavy metals.
“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”
Company name: Farmin
Date started: March 2019
Founder: Dr Ali Al Hammadi
Based: Abu Dhabi
Sector: AgriTech
Initial investment: None to date
Partners/Incubators: UAE Space Agency/Krypto Labs
