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Creating a safe Web3 is like building a super strong castle, with each digital brick adding to the decentralized structure and keeping it safe from cyber attacks. At this point in our journey, we know there are inherent risks in Web3 and smart contracts, namely human error, Solidity, human error, hackers and their potential to cost millions. 

A flaw in Euler's "donateToReserves" function was exploited by a hacker who used flash loans and a leverage system. This led to an undervalued position and the creation of uncollectible debt. The issue was caused by a faulty donation mechanism that did not accurately track debt, allowing the attacker to walk away with $200 million in illicit gains. It can be compared to discovering a loophole in a video game that allows one to win unfairly by spamming the move.

Euler's current total value locked (TVL) is slightly above $63k.

How do we secure our crypto bags from hacks? 

Solutions are many and varied; crypto projects can implement bug bounty programs, encouraging ethical hackers to uncover vulnerabilities before malicious actors exploit them, often in conjunction with frequent audits.

Web3 Bug Bounty Programs

Web3 bug bounties are about finding security flaws in Web3 technology and are like a treasure hunt for tech detectives. Ethical hackers explore the digital frontier to uncover and fix vulnerabilities, earning rewards for their efforts.

Do Bug Bounties Work? 

Picture yourself as a diligent security researcher examining protocols for potential vulnerabilities. During your investigation, you uncover an overlooked vulnerability. After promptly reporting this issue, you earn a generous $1.8 million bounty for your efforts. By taking action, you have contributed to millions of users' safety. This scenario is not purely hypothetical - the NEAR protocol recently rewarded two individuals for their efforts in this exact manner. 

Aurora recently rewarded a whitehat hacker, , with a $6 million bug bounty for identifying a vulnerability that could have potentially risked $200 million of user funds. Pwning.eth discovered a flaw in the Aurora Engine that could have resulted in an inflation risk, allowing for the unlimited minting of ETH. This artificial ETH could have been utilized to drain the bridge contract, containing over 70k ETH during the time of the report.   

While it may sound repetitive, it is important to note that offering bounties is ultimately less costly than dealing with a security breach.
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Related Article: Best Practices for Web3 Bug Bounty Programs