In 2023, we are on the cusp of the next Internet era. The development of blockchain technology and smart contracts has changed the way people interact with information and money. However, the benefits of this technology come with some notable risks.
Networks that handle user funds need to be absolutely secure – otherwise why would anyone trust them? Testing the underlying networking code is an important first step, but it’s not enough.
The major and latest iterations of Web3 technologies are the metaverse, and the public attention and massive financial dollars make it possible for them to eventually gain widespread adoption, especially among consumers and gamers. However, blockchain technology applications still face security issues. The Metaverse space is relatively new, so the security risks posed by complex smart contract interactions need to be addressed before it can scale sustainably.
Path to the Metaverse
The Internet has come a long way in the past three decades. It all started with what we now call Web1, the early days of basic text, images, and web links. By the early 2000s, the Internet was moving to Web2, primarily for online entertainment and social networking. Right now, we are at the dawn of Web3.
This new era of the internet is built on decentralized technologies that allow data and value to move freely across multiple interconnected networks.
One of the promises of an open and decentralized blockchain economy is personal empowerment, allowing everyone to control their own financial and profile information.
The sum of these Web3 services, and the virtual worlds that are beginning to be built on top of them, is collectively known as the Metaverse. We’re only at the pinnacle of this movement right now, but it has the potential to become the standard that everyone will join, especially in online shopping, entertainment, and socializing. Despite its tremendous development, there are still many unanswered questions about the reality of security in this new world.
Opportunity comes with responsibility
With this unprecedented level of control and flexibility, we face new risks. While users should be in control of their own data and assets, there are places where things can go wrong, and these are known as smart contracts.
The promise of smart contracts is true decentralization, allowing users to rely on logic without needing to trust third parties. Since smart contracts are heavily invested, their logic needs to be perfect to avoid glitches that lead to hacking attacks, putting user funds at risk. This is not unheard of, especially for contracts with large balances. Recently, there was a major hack of the BNB Token Hub (the bridge between the BNB Beacon Chain and Binance Smart Chain).
DeFi bridge hacks alone cost over $253 million, with the largest being the Binance bridge hack, which lost $570 million pic.twitter.com/cHlYjyHT4a
— DefiLlama.com (@DefiLlama) January 6, 2023
About half of all DeFi hacks come from cross-chain bridges, as they tend to be complex and have additional requirements to maintain a constant reserve of funds, making them a target for attacks.
Furthermore, any oversight in the smart contract puts assets on both connected networks at risk. Blockchains themselves are virtually immune to successful attacks, but the services built on top of them, like DeFi platforms and Metaverse smart contracts, are only as secure as their code.
When code has not been thoroughly tested for security, the chances of an exploitable bug are actually very high. The reality is that developers and administrators will need to beef up their security if this space is going to expand to cover a large portion of everyday life.
How to Really Secure Web3
The first line of defense in ensuring the smooth operation of a decentralized service is always to thoroughly test and secure smart contracts prior to deployment. Additionally, additional testing should be done early and closely before code updates are applied.
By engaging a third party to review and review all code, the chances of bugs or exploits are greatly reduced. This can go a long way towards protecting users and giving them peace of mind when dealing with real money and highly sensitive information using a decentralized platform.
However, despite prior security, accidents between multiple contracts still occur frequently. The only reliable way to protect users from these types of risks is real-time network monitoring combined with automated risk assessment and flagging of threats, anomalies, and anomalous behavior. other.
Monitoring of this nature allows developers to respond immediately to security events as they manifest themselves as potential threats. When development teams take such proactive steps, they signal to users and the market that they really care.
Poly cyberattacks are just one example of where real-time monitoring can prevent significant damage. In this case, the loss amounted to $600 million. The hack occurs while some blocks are being mined, so with advanced monitoring, functionality can be halted after the first block, preventing any further losses.
Continuous auditing support for components across different Metaverse systems is required. This includes native metaverse token monitoring, meta transaction implementation, and other required dependencies. Because the parts that make up the Metaverse algorithm are so complex and large, there are a lot of caveats.
Real-time Fraud Detection
Often, odd trading activity can be the first sign that something bad is afoot. For example, if suddenly a large number of large transactions start moving funds out of the platform, well above the average flow, at least it should be looked at more carefully and quickly.
When warning signs become more apparent, such actions can stop attacks before they start to get bigger. Automated monitoring can send alerts to teams of security experts who can immediately scrutinize activity and respond appropriately.
In the absence of active observation, these types of incidents are often only discovered days or weeks later, after the damage has been done and the attackers have had time to cover their tracks. .
Too little good is happening in current Web3 applications, but this needs to change. Users cannot participate in the Metaverse without thoroughly tested security protocols. It turns out that security testing is critical to implementing existing Web3 services. But these measures cannot account for all possible variables when considering the increased complexity of metadata projects, especially when the code is already deployed and functioning properly. .
That said, automated 24/7 monitoring of blockchain transactions and smart contract activity could be an effective way to counter threats that have yet to emerge. This model will make Web3 practical and safe enough for general adoption, as users will stay away from anything that harms them.
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