DeFi offers amazing opportunities, but it also comes with unique risks. Let's talk about the top 5 threats in 2025—and how you can protect yourself. 🛡️
1. Stablecoin Depegs 💵
⚠️ Recent Examples
- USDC (March 2023): Dropped to $0.88 during Silicon Valley Bank crisis
- UST (May 2022): Catastrophic depeg from $1.00 to $0.01, $40B wiped out
- USDD (June 2022): Dropped to $0.93 after UST collapse
What Causes Depegs?
- Centralized Reserve Issues: Banking problems (USDC), regulatory seizures, reserve mismanagement
- Algorithmic Failures: Broken peg mechanisms (UST), death spirals, liquidity crises
- Market Panic: Bank runs, coordinated attacks, confidence loss
- Smart Contract Bugs: Minting exploits, collateral miscalculations
✓ How Tonsurance Protects You
Our depeg coverage monitors stablecoin prices every minute across multiple oracles. When a stablecoin drops below your chosen threshold (e.g., $0.95), your payout triggers automatically.
Average payout time: 6 minutes. No waiting for the peg to recover or hoping your funds are safe.
2. Smart Contract Exploits ⚠️
⚠️ 2024 Statistics
- $1.8B stolen in smart contract exploits
- 127 major hacks reported
- Average hack size: $14.2M
Common Exploit Types
- Reentrancy Attacks: Recursive calls that drain funds before state updates
- Flash Loan Attacks: Uncollateralized loans used to manipulate prices/oracles
- Access Control Bugs: Missing permission checks allowing unauthorized actions
- Integer Overflow/Underflow: Arithmetic bugs causing unexpected behavior
- Front-Running: MEV bots exploiting transaction ordering
📊 Risk by Protocol Type
✓ How Tonsurance Protects You
Our smart contract coverage monitors protocols 24/7 for exploit indicators. When a verified incident occurs (funds drained, protocol paused, admin keys compromised), your payout triggers automatically. We work with security firms like CertiK and Trail of Bits for rapid verification.
3. Oracle Failures 🔮
⚠️ Notable Oracle Failures
- Mango Markets (Oct 2022): $114M drained via oracle price manipulation
- Venus Protocol (May 2021): $200M liquidations from incorrect price feeds
- Synthetix (June 2019): Oracle bug allowed massive sKRW minting
Oracle Failure Modes
- Price Manipulation: Flash loan attacks, thin liquidity, wash trading
- Stale Prices: Oracle downtime, network congestion, keeper failures
- Incorrect Data: Bugs in aggregation logic, compromised data sources
- Single Point of Failure: Centralized oracles, lack of redundancy
✓ How Tonsurance Protects You
Our oracle coverage monitors deviations between multiple price feeds (Chainlink, Pyth, Band). If a price feed shows anomalous data (e.g., 50% deviation from consensus), or if oracles go offline for extended periods, coverage triggers. We use multi-oracle consensus to verify legitimate failures vs. normal volatility.
4. Bridge Hacks 🌉
⚠️ Biggest Bridge Hacks
- Ronin Bridge (March 2022): $625M stolen (validator key compromise)
- Wormhole (Feb 2022): $325M stolen (signature verification bug)
- Poly Network (Aug 2021): $611M stolen (later returned)
Why Bridges Are Vulnerable
Cross-chain bridges hold massive amounts of locked assets ($7.5B+ TVL) and rely on complex trust assumptions:
- Validator Compromise: Multisig thresholds breached, key leaks
- Smart Contract Bugs: Minting exploits, proof verification failures
- Relay Attacks: Message spoofing, replay attacks
- Economic Attacks: MEV extraction, front-running, liquidity drains
✓ How Tonsurance Protects You
Our bridge coverage monitors bridge health metrics 24/7: locked vs. minted supply discrepancies, validator activity, abnormal withdrawal patterns. If a bridge is exploited or paused due to security concerns, coverage triggers for all active policies on that bridge.
5. Rug Pulls & Exit Scams 🚩
⚠️ 2024 Rug Pull Statistics
- $347M stolen in exit scams
- 2,100+ tokens rugged
- Average rug size: $165K
Types of Rug Pulls
- Liquidity Removal: Dev removes all DEX liquidity, token becomes worthless
- Mint Function Exploit: Hidden backdoor allows unlimited token minting
- Sell Restrictions: Code allows buys but blocks sells
- Upgrade Scams: Proxy contract upgraded to malicious implementation
🚨 Red Flags to Watch For
- • Anonymous team with no track record
- • No contract audit from reputable firm
- • Ownership not renounced or transferred to multisig
- • Unrealistic APY promises (>1000%)
- • Low initial liquidity with no lock
- • Copycat of existing successful projects
Important: Tonsurance currently does NOT cover rug pulls on new/unvetted tokens. We focus on established protocols with security audits. If you're aping into low-cap gems, DYOR and only invest what you can afford to lose.
Building a Risk Management Strategy
Smart DeFi users layer multiple protections:
1️⃣ Diversification
Don't put all funds in one protocol or stablecoin. Spread across multiple chains, protocols, and asset types.
2️⃣ Due Diligence
Check audits, TVL history, team reputation, and smart contract permissions before depositing.
3️⃣ Parametric Coverage
Buy coverage for your largest holdings. Tonsurance offers protection for the 4 risks above with automated payouts.
4️⃣ Position Sizing
Never allocate more than you can afford to lose. High-risk strategies should be small % of portfolio.
Protect Your DeFi Assets Today
Get coverage for stablecoin depegs, smart contract exploits, oracle failures, and bridge hacks with automated payouts in minutes.
Final Thoughts
DeFi isn't going away—it's growing. But with growth comes new attack vectors and increasingly sophisticated exploits. The users who thrive long-term are those who:
- Understand the risks
- Size positions appropriately
- Diversify across protocols and chains
- Use parametric coverage for peace of mind
Stay safe out there, and feel free to reach out if you have questions! 🤖
Want a personalized risk assessment? Let's chat!
