Hacking is increasingly becoming a significant problem within the crypto community. As crypto continues to struggle for mainstream adoption amidst mounting calls for regulation, hackers are making life very difficult. The past year especially has been especially hard for Defi in terms of hacks. Multiple projects have been hit and the cryptocurrency community as a whole has lost millions to these hackers.
This staggering amount combined with the long-lasting effects the sudden loss of funds could have on hodlers has significantly dented the credibility of cryptocurrency to many people. The worst-hit of these exchanges was Poly Network which was hacked a few months ago. An exploit saw the hacker make away with over $600 million in different coins, one of the single largest heists in crypto history.
That story, however, did take a turn for the better when the hacker slowly started to return the funds, eventually stating through messages on the blockchain that he never intended to steal them and only wanted to highlight the fault so it could be fixed. The exchange, in turn, offered the anonymous hacker a job on their security team as well as a bug bounty to the crypto community for anyone who could identify network loopholes in their project.
This was a story that highlights a particular point that bug bounty protocol, Hats.finance is looking to take advantage of. Hats is a bug bounty protocol like no other. It is taking the proactive step to pit hackers against one another and over time create a system that makes it more profitable to report bugs than to exploit them.
An Ecosystem of White Hat Hackers to foray into NFTs
A cursory stroll through the hats discord gives an extremely laid-back view of the community. While this could be viewed as unprofessional, it gives off the same impression one gets of new-age tech companies where employees are allowed to be as comfortable as possible to maximize productivity. One user on the discord describes the project as “a bug bounty on steroids” and on further research, anyone would be hard-pressed to disagree.
Hats is looking to reduce the occurrence of black hat hacking by giving hackers a bigger reward for reporting security exploits than they would otherwise get. The protocol is creating vaults for projects in which a specified amount of the project’s token will be locked. As the project grows, so does the reward in the vault. If a hacker can discover a verifiable exploit to the project and reports it to the hats committee, they will receive the rewards in the vault.
Along with this, Hats has also enlisted the services of popular NFT artists to create special NFT rewards to go along with the contents of each project’s vault. It stands to reason that if the NFT can generate enough profit for the hacker, it could, in the future, be a far bigger payday than they would have gotten from the hack had they not reported it.
It would be naive to believe that this alone will completely curb theft on the blockchain but with Hats’ idea, they have managed to create a solution that could significantly reduce it if it could gain enough traction and attract the right set of people to it. Protecting the blockchain would strengthen it, potentially making the vault’s content even more lucrative and incentivizing hackers against exploiting these loopholes. The popularity of NFTs is not to be scoffed at either. With the right amount of publicity NFTs could go for hundreds of thousands- a substantial amount that could overshadow whatever profits you hoped to gain otherwise.