Crypto is Bleeding Billions a Year. Traditional Finance Is Watching.
Traditional finance is watching with growing concern as the crypto industry continues to bleed billions of dollars each year due to hacking incidents and security breaches. The DeFi industry, in particular, is under pressure to adopt the security tools already built by experts like Immunefi's Mitchell Amador, who warns that if institutions don't take action, hackers will continue to fund their operations with the losses suffered by crypto projects.
Crypto has a technological edge over traditional finance, achieving finality in mere seconds and having throughput sufficient for real-world mass adoption. However, this technological superiority comes with a major security problem. If left unaddressed, it could lead to catastrophic consequences for the entire ecosystem.
According to estimates, the industry is on track to lose around 4% of total value locked to hacks in 2025, with over $2 billion lost in H1 alone. This translates to over $4 billion flowing into hackers' wallets this year. If these losses were mirrored in traditional finance, the entire system would collapse.
But the damage goes far beyond immediate theft. The real cost of hacking incidents is a burden on the whole ecosystem and gets priced in. Hacked protocols suffer a median 52% token price decline over six months, with the majority still showing price suppression half a year later. For an industry aspiring to manage the world's wealth, this is an existential problem.
No traditional financial market could survive with annual theft rates approaching 4%. To unlock the institutional flood gates and bring the next trillion on-chain, crypto must drive hack rates below 1% – now. The North Koreans are stalking your development team. As soon as a crypto project announces funding, North Korean hackers begin social engineering attacks on development teams. They've gotten scary good at it.
The most painful part of all this is that we have the tools to stop this and they keep getting better. AI-driven monitoring systems can spot and resolve critical security issues before code is deployed, catching vulnerabilities that humans miss. Auditing services connect projects with elite Web3 security researchers to deliver tailored security reports. We have the tools, yet projects still ship with single pre-launch audits and pray.
Protocols set rewards to identify vulnerabilities at 1% of funds at risk when they should be at 10%. Moreover, they skip monitoring because it seems expensive until they're explaining to users why $50 million vanished. It's time for crypto to get serious about security. Reducing hack rates below 1% is an engineering challenge we already know how to solve.
Protocols must embrace comprehensive security stacks: continuous monitoring, meaningfully priced security rewards to encourage security researchers, formal verification for critical components and AI-powered threat detection. The cost is trivial compared to the potential losses. Banks and institutions see these hack rates. They run the math. And they conclude – correctly – that crypto isn't ready for prime time.
DeFi survived every market crash with no systemic bad debt. We solved the technical problems. Security can't be an afterthought. Either we adopt the security tools we've already built, or we watch institutional capital deploy elsewhere while hackers fund their operations with our losses.