BNB Chain, formerly known as Binance Smart Chain, has made headlines not only for its rapid growth but also for the losses incurred due to hacks and rug pulls. A recent report by Immunefi, a leading on-chain crowdsourced security platform, highlights how BNB Chain has lost $1.6 billion to hacks and rug pulls since its inception in 2017. Of this, $1.27 billion resulted from hacks and $368 million from rug pulls.
Quick Take
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$1.64 billion lost to hacks and rug pulls on BNB Chain since 2017, according to Immunefi research.
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Immunefi's report reveals 168 hacks and 228 fraud incidents since BNB Chain's inception.
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$368 million attributed to rug pulls, marking BNB Chain as the primary target.
Immunefi, a leading on-chain security platform, protects over $190 billion in user funds. It comprises a massive community of whitehat hackers who identify and responsibly disclose vulnerabilities, ensuring the safety of blockchain projects. Immunefi's comprehensive report, Hacking Deep Dive: BNB Chain, sheds light on the volume of crypto funds lost on BNB Chain since its inception.
BNB Chain: Hacks vs. Rug Pulls
An overview of hacks and rug pulls on BNB Chain: 2020-2024 | Source: Immunefi
Hacks have been the predominant cause of losses on the BNB Chain. The report identifies 168 specific hacking incidents, totaling $1,279,930,833, since 2017.
On the other hand, fraud and rug pulls account for $368,176,135 across 228 incidents during the same period Rug pulls, a type of fraud where project creators abscond with investors' funds, have plagued the network, making BNB Chain the primary target for such malicious activities. This stark contrast underscores the persistent vulnerability of BNB Chain to both hacks and fraudulent activities.
Yearly Overview of Losses: Over $900M Lost in 2022 Alone
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2020: $27.6 million
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2021: $505.1 million
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2022: $911.9 million
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2023: $165.5 million
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2024: $38.0 million (YTD)
The majority of losses were recorded in 2022, with a total of $911 million across 147 cases. This was followed by $505 million in 2021 and $165 million in 2023. Despite the significant losses, there has been a downward trend in recent years, attributed to enhanced security measures.
Major Hacks and Rug Pulls in BNB Chain Ecosystem
Top 10 BNB Chain ecosystem losses | Source: Immunefi
Several major incidents have marked BNB Chain's troubled journey:
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Venus Protocol: In May 2021, a price manipulation attack on Venus Protocol's native token led to a $200 million loss.
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Qubit Finance: In January 2022, hackers exploited QBridge, resulting in an $80 million loss.
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Uranium Finance: An automated market maker platform lost $50 million in April 2021 due to a code calculation error.
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DeFiAI Rug Pull: In November 2022, the DeFiAI project executed a $40 million rug pull, highlighting the persistent threat of such frauds.
BNB Chain’s $1.6B vs. Ethereum’s $3.6B Losses
Frauds vs. rug pulls in BNB Chain and Ethereum ecosystems | Source: Immunefi
While BNB Chain faces severe challenges, it is not alone. Ethereum, the second-largest blockchain, has also experienced considerable losses. However, the nature of these losses differs. Ethereum's total losses amount to $3.6 billion, but only 4.4% is due to rug pulls. In contrast, BNB Chain's rug pulls account for a more substantial percentage of its total losses.
Despite Ethereum's higher total losses, BNB Chain has recorded nearly 4.5 times more fraud cases. Since 2020, Ethereum has observed 50 fraud cases totaling $161 million, while BNB Chain has seen 228 cases amounting to $304 million. Most fraud losses on BNB Chain occurred in 2022, highlighting the network's ongoing battle against fraudulent activities.
Why Is BNB Chain Vulnerable to Rug Pulls?
BNB Chain's susceptibility to rug pulls can be attributed to several factors:
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Forked Code: Developers often use forked code, which introduces vulnerabilities.
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Quick-Profit Allure: The community's attraction to quick-money schemes makes it an easy target for scammers.
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Security Measures: Despite improvements, security remains a concern, drawing bad actors due to BNB Chain’s vast ecosystem and high on-chain activity levels.
Impact of Hard Forks
To counter these vulnerabilities, BNB Chain implemented several hard forks, including ZhangHeng, Plato, and Hertz. These updates aimed to patch security gaps and enhance network robustness. The result was a noticeable decline in losses, with 2023 and 2024 seeing significant reductions.
Key Strategies for Mitigating Rug Pulls
Preventing rug pulls requires a multi-faceted approach:
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Thorough Research: Investors must diligently research projects, examining their digital presence, roadmaps, and teams.
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Security Measures: Projects should showcase legitimate security measures, such as third-party audits and bug bounty programs.
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Community Engagement: A strong, engaged community can signal project legitimacy. Active participation in the project's development and accountability is crucial.
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Watch for Red Flags: Signs of potential rug pulls include false audit claims, centralized token control, inactive community engagement, and unrealistic return promises.
Conclusion
Despite the challenges, BNB Chain's efforts to secure its network are yielding positive results. The implementation of hard forks and proactive measures have reduced losses, although the threat of rug pulls remains. Investors must stay vigilant, and projects must prioritize security to build a more resilient blockchain ecosystem.
