Hacking is becoming a major problem within the crypto community. As crypto continues to struggle for mainstream adoption amid rising demands for regulation, hackers are making life very difficult. Last year was particularly tough for Defi when it comes to hacks. Several projects have been hit and the entire cryptocurrency community has lost millions to these hackers.
That staggering amount, combined with the long-lasting impact the sudden loss of money could have on Hodler, has severely damaged the cryptocurrency’s credibility for many people. The worst hit exchange of these exchanges was Poly network that was hacked a few months ago. An exploit led the hacker to loot over $ 600 million in various coins, one of the largest single robberies in crypto history.
However, that story took a turn for the better when the hacker slowly started returning the funds and eventually explained through messages on the blockchain that he never intended to steal them and just wanted to highlight the bug 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 gaps in their project.
This was a story that highlights a specific point that the Bug Bounty Protocol, Hats. Finances seeks to exploit. Hats is a bug bounty protocol like no other. It’s the proactive step of pitting hackers against each other and, over time, creating a system that makes it more profitable to report bugs than to exploit them.
An ecosystem of white hat hackers for NFTs
A cursory stroll through the Discord of Hats gives an extremely relaxed look at the congregation. While this might be viewed as unprofessional, it gives the same impression one gets from new age tech companies where employees are allowed to be as comfortable as possible in order to maximize productivity. One user of Discord describes the project as “a bug bounty on steroids” and any further research would have a hard time contradicting it.
Hats tried to reduce the incidence of black hat hacking by giving hackers a higher reward than they would otherwise get for reporting security exploits. The protocol creates depots for projects in which a certain amount of the project token is blocked. As the project grows, so does the reward in the vault. If a hacker can discover a verifiable exploit for the project and report it to the hats committee, they will receive the rewards in the vault.
Along with, Hats has also drawn on the services of well-known NFT artists to create special NFT rewards to match the contents of each project’s vault. It is obvious that if the NFT can generate enough profit for the hacker, this could be a much larger payday in the future than he would have received from the hack if he hadn’t reported it.
It would be naive to believe that this alone will completely curb the theft on the blockchain, but with the idea of Hats they managed to come up with a solution that could significantly reduce it if it gains enough traction and attracts the right people . Protecting the blockchain would strengthen them, potentially make the vault’s contents even more lucrative, and encourage hackers to exploit these loopholes. The popularity of NFTs is not to be sneezed at either. With the right amount of publicity, NFTs could reach hundreds of thousands – a sizable amount that could overshadow any gains you might otherwise have hoped for.