Binance CEO on Largest DeFi Hack: Nothing is Risk Free

The cryptocurrency ecosystem witnessed the largest decentralized finance (DeFi) hack on the interoperable Poly Network today. The hack saw a total sum of about $610 million removed across the Binance Smart Chain (BSC), Ethereum, and Polygon Network. The hack, discovered when a transaction on O3 Protocol could not process a transaction worth $150 million, comes off as one of the largest breaches to a named protocol after CoinCheck’s $530 million breach.

The unforeseen event has stirred a number of controversial conversations about the security assurances of DeFi projects, in contrast with their centralized counterparts. Weighing on this matter is Changpeng Zhao, Binance’s Chief Executive Officer, popular known on Twitter as CZ. According him, he noted that both CeFi and DeFi protocols are unique in themselves, and that both have different risk characteristics which users are supposed to be familiar with before using them.

A big DeFi hack. Brings up a few controversial topics:

1. is CEX or DeFi safer? Well, they are just different. They have different risk characteristics. Learn about how to use them safely before using them. (read my previous tweet)

— CZ 🔶 Binance (@cz_binance) August 10, 2021

The seeming confusion might want to make some to consider the use of fiat and legacy banks for transactions. However, CZ said he does not think fiat are in anyway safer, highlighting its weaknesses, the Binance boss said fiat is fraught with inflation, high transaction fees, and the challenge of banks preventing users from accessing their own funds.

2. Is fiat safer then? Well, it’s different again. It’s your own judgement. Inflation, high fees, and banks preventing you from spending your money.

— CZ 🔶 Binance (@cz_binance) August 10, 2021

How Can the Blockchain Network Be Hacked

Many blockchain protocols are supposedly pitched by creators to be immune to breaches, however, the current happenings as it relates to multi-million dollar exploits is saying otherwise. CZ says the possibility for any blockchain network or decentralized application to be hacked depends on how the smart contract was written designed.

While not common, there is a 51% risk of attack in mainstream blockchain networks and despite the low possibility of this risk being initiated, users are still supposed to know about it and act accordingly.

In all, Changpeng Zhao noted that nothing is risk free, and that in helping to freeze the funds from the addresses of the hacker, a lot of analysis will have to be done by centralized exchanges, that is if the funds are deposited their.

4. Why are CEX CEOs busy while a DeFi gets hacked? We do try to help. While we can’t freeze funds on blockchains, if those funds land on our CEX (@binance), we will (try to) freeze them. So, we have a lot of blockchain analysis to do. Nothing is easy. We try.

— CZ 🔶 Binance (@cz_binance) August 10, 2021

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