Protecting Your Investments in Web3: Insights from Beosin EagleEye

On April 12th, according to the Beosin EagleEye security risk monitoring, warning, and blocking platform under the blockchain security audit company Beosin, 61 major attacks in the Web3 field were detected in the first quarter of 2023, with a total loss of approximately $295 million, a decrease of approximately 77% compared to the fourth quarter of 2022. The total loss amount in the first quarter of 2023 is lower than any quarter in 2022. In addition to attacks, 41 major Rug Pull events were also monitored in the first quarter of 2023, involving approximately $20.34 million.

Data: The total loss of Web3 attacks in the first quarter was approximately $295 million, a decrease of 77% compared to the previous quarter

Web3, the decentralized web platform that runs on blockchain technology, has emerged as a new avenue for investment opportunities. However, as with any new technology, it is also vulnerable to risks and attacks. According to Beosin EagleEye security risk monitoring and blocking platform, the first quarter of 2023 saw 61 major attacks and 41 major Rug Pull events in the Web3 field, resulting in approximately $295 million in losses. As an investor, it’s crucial to understand the nature of these risks and ways of protecting your investments.

Understanding the Risks in Web3

Web3 as a platform relies heavily on smart contracts, which are self-executing contracts with terms and conditions written into the code. While they offer transparency and automation in executing transactions, they are also prone to vulnerabilities in the code. Hackers can exploit these vulnerabilities to launch various types of attacks. The most common types of attacks in Web3 include:

1. Honeypot scams

Honeypot scams are a type of fraud where attackers create fraudulent tokens that increase in value initially but then rapidly decrease in value, leaving the investors with useless assets. These scams are commonly carried out through fake airdrops, fake liquidity pool creation, and fake partnerships.

2. Rug Pulls

Rug pulls are type of exit scam where developers, after creating hype around their token, suddenly withdraw all the liquidity from the pool, causing the value of the token to plummet, resulting in significant losses for investors.

3. Flash Loans

Flash loans are a type of exploit where attackers take advantage of the arbitrage opportunities within DeFi protocols. A flash loan is a loan that has to be paid back in the same transaction. While it can be used for legitimate reasons, it can also be used to launch attacks that manipulate token prices.

Beosin EagleEye’s Insights on Risk Management

Beosin EagleEye is a security risk monitoring and blocking platform that provides monitoring services to investors in the Web3 space. They analyze Web3 protocols and provide insights on the security risks, identify malicious tricks employed by attackers, and help investors make informed decisions.
According to the Beosin EagleEye report, there has been a decreasing trend in the total loss amounts in the first quarter of 2023, down by approx 77% from the fourth quarter of 2022. The overall quarterly loss amounts in 2023 were lower than any quarter in the previous year. This decline in losses can be attributed to the increase in security awareness and the implementation of sophisticated risk mitigation tools by investors and Web3 developers.
Beosin EagleEye has provided several best practices for investors to protect their investments:

1. Research and Analyze

Investors should conduct thorough research and analyze the Web3 protocol before investing. They should check the project’s reputation, audit reports, and the background of the team to ensure that the project is legitimate and has a strong foundation.

2. Diversify the Portfolio

Investors should avoid investing all their funds in one project or token. Diversification helps spread the risk and reduces the impact of losses in case of any attack or failure.

3. Implement Advanced Risk Management Strategies

Beosin EagleEye recommends using advanced risk management strategies like stop-loss orders, limit orders, and hedging techniques to protect investments from sudden market movements or price fluctuations.

Conclusion

Web3 has immense potential in the financial sector, but it comes with its own set of risks and challenges. As investors, it’s crucial to be aware of these risks and take appropriate measures to protect investments. Adopting a cautious approach, conducting thorough research, and implementing advanced risk management strategies can help mitigate the risks and optimize investment returns in the Web 3 field.

FAQs

Q1. What is Web3?

Web3 is the decentralized web platform that runs on blockchain technology. It offers transparency, security, and automation in transactions, making it an attractive investment opportunity for investors.

Q2. What types of attacks are common in Web3?

The most common types of attacks in Web3 include honeypot scams, rug pulls, and flash loans. These attacks exploit vulnerabilities in the smart contracts and result in significant loss of investments for the investors.

Q3. How can investors protect their investments in Web3?

Investors should conduct thorough research, diversify their portfolio, and implement advanced risk management strategies like stop-loss orders, limit orders, and hedging techniques to protect investments from sudden market movements or price fluctuations.