Auditing seems to be unnecessary to DeFi projects before but has now become vital for any project. Auditing is the independent examination and screening of projects.
The total value locked (TVL) in Decentralized Finance Projects grew over two-thousand five hundred percent last year (2000+%) and was close to 700 million USD in the early days of 2020, moving to more than $15 billion in December 2020.
In decentralized finance, total value locked is a more efficient measure than market cap, as it precisely denotes the equity investors are ready to put into these projects.
Their commitment has increased over time in a couple of months into 2021, the total value locked in decentralized finance reached 40bn USD.
Transactions recorded on a blockchain give a proper understanding and proof of the existence of the transaction. The auditor must confirm every party in a specific crypto transaction, the seed phrase/ private key owner, and the authorized nature of the transaction on the chain.
Amidst the growth of DeFi in 2020, several attacks liquidated investors, with a large percentage of them in the DeFi aspect of the crypto industry. Though losing funds is disheartening, but the security of Decentralized Finance has improved lately.
Before a top crypto exchange can list a project, it must have passed through an audit, as it is unsafe for crypto exchanges to compromise the security of their customers’ funds.
It is required to know that an audit before launching a project is not enough therefore, there is need to carry out a secondary audit after the project is launched. Several DeFi projects choose to run their projects with inadequate coverage unit evaluation and disregard security audits of smart contracts.
It is essential to contemplate the issue of cybersecurity even before the start of a project. Therefore, engaging a team of skilled blockchain technology developers with adequate knowledge of DeFi projects’ weaknesses is extremely important.
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