Investors in decentralised finance are losing nearly three times as much to panic-induced price crashes as to cybercriminals actually stealing funds.
A new study by the Complexity Science Hub (CSH) in Vienna analysed 22 major cyberattacks between 2020 and 2022 to calculate the actual cost of security breaches, the Complexity Science Hub reports.
The researchers found that while direct theft in 12 specific cases amounted to roughly 454 million US dollars, the subsequent collapse in token value wiped out 1.3 billion US dollars in market capitalisation.
“While the direct damage in these twelve cases amounted to around 454 million US dollars, the indirect losses due to declining token values reached 1.3 billion US dollars,” said study author Stefan Kitzler.
Offloading and speculation
On average, affected tokens lost 14 per cent of their value after an attack. Trading volume increased in roughly 68 per cent of cases as investors scrambled to offload assets or speculate on the volatility.
The team focused on the Ethereum network, specifically examining attacks on Decentralized Autonomous Organizations (DAOs) where investors use governance tokens to vote on decisions.
By comparing price movements 24 hours before and 48 hours after attacks on similar assets, the researchers isolated the impact of the hacks from broader market trends.
“Reactions to cyberattacks in the DeFi sector closely resemble how traditional financial markets respond to scandals and security incidents – however, on average, we observe larger declines on the one hand, but also counterintuitive price increases on the other,” said Bernhard Haslhofer, leader of the Digital Currency Ecosystems research group at CSH.
The findings highlight the systemic nature of DeFi risks, where a single security breach can destabilise the entire ecosystem through eroded market confidence.
