Numerous serious security breaches have occurred during the short history of underlying technologies for blockchains. It could be recalled that the Wormhole bridge was the recent Web3 incident. It is a technology outlook that allows users and decentralized applications to exchange digital assets within blockchains.
Due to an error in the design of a smart contract, a malicious actor was able to mint 120,000 ETH (approximately $360 million as of this writing) by exploiting a bridge to the Solana blockchain.
In this post, we will take a look at the current state of Web3 vulnerabilities, its challenges, and possible solutions.
Many security issues arise as Web3 is developed. When it comes to protecting decentralized applications in the new Web3 era, enlisting the help of experts is a challenge. Several cybersecurity experts have written off Web3 and blockchain technology as fads, at best, or outright scams, at worst.
Web3 security is heavily dependent on the unique ability of blockchains to establish promises and withstand human intervention. These software-controlled networks, however, are a potential hacking target because of the related trait of finality – the fact that transactions are often irreversible.
Even though blockchains and other web3 technologies and applications are becoming increasingly valuable, they are also becoming more attractive targets for cybercriminals.
Even though web3 differs from previous versions of the internet, we’ve noticed similarities with historical patterns of software security. In many cases, the most pressing issues are the same as they have been for a long time.
A third party can steal user funds from a smart contract in a permissionless environment if there is a bug in the code. Unlike traditional banking, where large transactions necessitate wire transfers, DeFi does not require checks for large ones.
Top 5 Web3 Vulnerabilities
1. Ice Phishing
“Ice phishing” is a relatively new term, having been coined only a few years ago. When a user is tricked into signing a transaction that allows a cyber attacker to use tokens, it is known as a “deceptive operation.”
It is common for DeFi smart contracts to delegate token usage permission as a smart contract transaction. To engage in ice phishing, you don’t need your private keys. As an alternative, the attacker can trick the victim into signing a transaction that gives him or her control of their tokens.
Naive users are persuaded to sign transactions, granting the attacker access to their cryptographic tokens. People are frequently duped into believing that the money is being sent from a family member or friend in some wire transfers.
One of the most effective methods of ice phishing is to make use of well-designed graphics. These images employ a variety of strategies to trick viewers into clicking on buttons and making financial transactions.
Be cautious when opening emails, especially those that are unwanted, even though you’ve been taught that you should always treat others with respect. In addition, a thorough examination of websites and URLs, as well as their logos, can help prevent ice phishing attacks.
To commit cryptojacking, a criminal steals a victim’s processing power and uses it to generate Bitcoin for their gain.
When a victim unwittingly downloads malicious script-containing software, such as a link in an e-mail or a malicious website, a cybercriminal gains access to their computer or other Internet-connected devices. Using ‘coin miners,’ the criminal creates cryptocurrency through the use of third-party programs.
Because they are digital money, cryptocurrencies can only be created through the use of computer programs and computational power. Unlike other cryptocurrencies, Monero is mined primarily at home using a personal computer.
To mine new cryptocurrency tokens and generating fees, cryptojackers take advantage of the computers of unsuspecting victims to perform the necessary calculations.
Attackers get their hands on new tokens and fees, while their victims are forced to cover the costs of mining, including electricity and computer repair bills.
Get the best security software you can afford. As with all other anti-malware measures, it is far preferable to take action before becoming a victim. Also, it is a good idea to install the most recent software updates and patches for your operating system and all applications, particularly for web browsers.
To avoid being subjected to cryptojacking, make sure that any website you visit is included on an approved whitelist. It is also possible to block known cryptojacking sites, but this may leave your device or network vulnerable to new cryptojacking sites.
3. Data Manipulation In Dapps
Decentralized apps (Dapps) are a type of Web 3.0 application. A distributed codebase and peer-to-peer networks will be used to store the data. The fact that DApps are built on the blockchain and fueled by cryptocurrency necessitated some people to develop a blockchain campaign and launch the tokens themselves.
AI is a common feature in a lot of Dapps and smart contracts. A large amount of high-quality data is needed to train an AI on a specific topic.
If Dapps or smart contracts are not adequately protected, a malicious third party could take advantage of yet another type of vulnerability.
Even more, emphasis is placed on the importance of data in AI when a third party uploads low-quality, defective data.
Venture capitalists and Silicon Valley insiders control a significant portion of the blockchain sector. It is important to keep in mind that a small group of people who control the crypto market can shut down any blockchain-based Web 3.0 software at any time.
4. NFTs Exploitation
It is through the development of NFTs that cryptocurrencies are becoming more widely accepted and which portends a flexible narrative for other scopes of cryptocurrency like finance, which in turn would shape Web3.
There are many other ways to use Web3 to drive your target audience to take a step, one of which is the acceptance of Bitcoin for privacy and cross-border payments. However, it should be noted that NFTs are a key component of Web3.
It is possible to break, manipulate, or abuse the smart contracts built into NFTs. NFTs are just getting started, so it’s important to be aware of the risks associated with them and to take the appropriate precautions to maximize profits.
Putting NFTs on the back burner because of security concerns and weaknesses is an irrational decision. You should look for ways to better understand the vulnerabilities of NFT smart contracts. NFT markets and your accounts can also be alerted to any suspicious activity that occurs.
5. Rug Pulls
Rug pull is when a malicious developer abandons a certain crypto project and absconds with the funds injected into the project by investors. Often fraudulent individuals create a cryptocurrency, get it listed on a DEX, and then link it to a major cryptocurrency like Ethereum.
By removing money from the liquidity pool, the perpetrators cause the price of the coin to fall to zero. To gain investor confidence, they may even flood their pool with liquidity on Telegram, Twitter, and other social media platforms.
Decentralized exchanges (DEX) allow users to publish their tokens for free and without audit, unlike centralized cryptocurrency exchanges. Open-source blockchains like Ethereum, for example, make it simple and free to create tokens. These two factors are exploited by criminals.
A proper check of the pool’s liquidity is very important to prevent an event of rug pull. There is more to come. Look for a lock in the token pool. Funding for the vast majority of reputable projects comes from a pooled source.
Cybersecurity risks are expected to increase as Web 3.0 develops. There are many reasons to consider privacy and security at the beginning of a project, regardless.
The future of the web without gatekeepers, information that matters to people, and artificial intelligence to be a fantasy come true. From the outset, security should be built in to prevent this dream from turning into a nightmare.