ConsenSys Diligence Co-Founder Talks On DeFi And Flash Loan Attacks On Ethereum
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As the second-biggest cryptocurrency in the world, finance for Ethereum seems to be its most important use case. Powered by smart contract blockchains on Ethereum, decentralised finance (DeFi) is able to provide several benefits to those who currently don’t have access to traditional forms of finance.
In a recent episode on the Epicenter podcast, the co-founder of ConsenSys Diligence, Gonçalo Sá has talked about these issues and more in regards to the security complexities and flash loan attacks on DeFi.
It was specifically highlighted by Sá that with these flash loans, many security assumptions are completely shut down. On top of this, he said “In a sense that these could have already have happened there. There are whales that would have the capability to perform such attacks, but there’s the reputational risk of doing so.”
He specifically went on to highlight the reputational risk that whale accounts are faced with if they were to carry out an attack.
He further said:
“Whales have an incentive not to break things because they are invested in the ecosystem too. They’re invested in the success of the network. I can not hold practically any ETH and still carry on these attacks and that’s the whole issue here”.
It was also highlighted by Sá that even though these kinds of vulnerabilities are still very much real, the community has responded in a positive light and has taken the right steps in order to prevent these kinds of attacks from happening again.
“One thing that has gotten much better is the incident response time as a community, as a tribe. Like I think Etherium was very disorganized when I first started getting into this space. A lot of things were wrong. But then people from older industries that are more used to having standards and proper methodology for a secure lifecycle of a product and development, in general, started trickling in.”