Ethereum Users Propose ERC 7265 to Thwart DeFi Hacks – How Does it Work?
Members of the Ethereum community have proposed a new standard meant to improve the security of decentralized finance (DeFi) protocols and mitigate hacks.
The attacks on DeFi protocols have become all too common, draining billions in user funds. According to DeFiLlama, around $6.6 billion was stolen in exploits so far, with $5.31 billion of that going to DeFi protocol hackers.
Builder Diyahir argued in a blog post that, "no amount of audits, insurance, and white-hat hacker rewards will stop hackers from finding clever ways to extract value from a growing public honey pot."
"One line of code is the difference between working as intended and completely wrecked."
The new standard - ERC (Ethereum Request for Comments) 7265, proposed by Diyahir, tcb_00, and real_philogy - would enable protocols to integrate a "circuit breaker," adding a back-stop to smart contracts, which would stop tokens from leaving those contracts, thus preventing the scenario in which all funds get stolen.
Per the proposal,
"This standard outlines a smart contract interface for a Circuit Breaker that triggers a temporary halt on protocol-wide token outflows when a threshold is exceeded for a predefined metric.
Developers would have the ability to specify if the circuit breaker contract should delay settlement and "temporarily custody outflows" during the cooldown period, or if it should revert on attempted outflows.
This is meant to give flexibility to developers and assure correct internal accounting for protocols.
When a protocol is attacked, it commonly loses everything and its total value locked (TVL) drops to 0 in seconds.
Meir Bank of Fluid Protocol said that most protocols lack sufficient response time to react to a hack. By the time anyone even
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