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Defi is attacked – but not because of the threats for which the industry is used to defend against. While developers carefully scan code lines on vulnerabilities, attackers have shifted tactics, using economic weaknesses that are unnoticed under flawless programming.
For example Jelly Token exploit On Hyperledger, where attackers were able to transfer more than $ 6 million from the Hyperledger insurance fund, there is a good example. That exploit was not at all caused by coding errors, but by gamaable incentives and inappropriate risks that no one had investigated.
Defi cyber security has taken a long way. Smart contract audits – designed to catch bugs in the code of a software – are nowadays the norm. But we urgently need to broaden the scope of the code. Smart contract audits are fundamentally insufficient unless they also analyze economic and game theoretical risks. The too high dependence on the industry of only code audits is outdated and dangerous, making projects vulnerable to an endless cycle of attacks.
Recent attacks drive home the danger of economic exploits
In March 2025, the exchange of Hyperliquid, who had checked his contracts, was ambushed by an exploit of $ 6 million with his Jelly -Token. How? Attackers did not find a bug in the code; They developed a short squeeze by abusing Hyperliquid’s own liquidation logic, pumping the price of Jelly and manipulating the risk parameters of the platform.
In other words, the Hyperliquid designers had not priced in certain market behavior – a supervision that traditional audits are not catching. The Hyperliquid case shows that impeccable code cannot save a project that is built on shaky economic assumptions.
Shortly before the Jelly incident, Polter Finance, a credit protocol on Fantom, was removed $ 12 million by one Flash Loan AttackAnother common type of attack that depends on economics, no vulnerabilities coding. The attacker removed flash loans and manipulated the price oracle of the project, so that the system has treated the treatment of worthless collateral as billions of value.
The code did exactly what it had to be, but the design was poor, making it possible to do an extreme price swing the platform too bankrupt. The exploit turned out to be so devastating that Polter Finance, a promising project, was forced to stop the activities.
These are not isolated attacks/events; They are part of a growing pattern in Defi. In the event that after the case smart opponents exploit protocols by manipulating market input, stimuli or administrative mechanisms to activate the results of the results, developers had not expected. We have broken down liquid farms by remuneration meshes, stablecoin -pens that have been attacked through coordinated market movements and insurance funds that are disposed of by extreme volatility.
Strengthen audits with economic and play-theoretical analysis
Traditional audits check whether “the code does what it should do”, but who checks whether “what it should do” makes sense among opponents? In contrast to a closed program, Defi protocols live in a dynamic, opponents’ environment. Prices fluctuate, users adjust strategies and protocols connect in complex ways.
Although most Web3 teams are staffed with engineers who can catch software bugs during development, few have internal economic expertise, making it crucial for audits to fill that gap and identify vulnerabilities in incentive design and economic logic.
Really rigorous audits include game theoretical and economic analysis, in which things are investigated, such as cost mechanics, liquidation formulas, collateral parameters and administrative processes. They force auditors to consider: “Given these rules, how can someone benefit by bending him?”
During an audit conducted by Oak Security, for example, we discovered that the insurance fund of a perpetual Swaps platform can be completely disposed of by volatility because it was not responsible for “Vega risk” – the sensitivity of the Volatility protocol – in the price model. This was not a code bug – it was a design error that collapsed into turbulent markets. Only a game theoretical and economic deep dive caught it up and luckily we could mark the problem before the launch.
These economic exploits are well documented and not terribly difficult to recognize, but they only come up when auditors ask the right questions and think after the code on the page.
Founders must demand more of auditors
UPRECTOCOC founders must ask for auditors to investigate all components of a trading system, including implicit logic and off-chain components, to guarantee extensive security. In the best scenario, all mission -critical logic would be brought to chain.
If you are a founder or investor, it is crucial to ask your auditors: what about Oracle manipulation? What about liquidity crunch scenarios? Have you analyzed the tokenomics on attack vectors? If the answer is silence or by hand, you must dig deeper.
The costs of these blind spots are simply too high the integration of economic and game-theoretical analysis is not just a “fun to-have”; It is a matter of survival for Defi projects. We must cultivate a culture in which code review and economic assessment go hand in hand for every important protocol.
Now let’s raise the bar higher a different lesson of millions of dollars.
