The Decentralized Finance or DeFi industry was developing slowly until the middle of 2020, when some significant innovations occurred and new capital flowed into the industry.As momentum built, this attracted the attention of millions of people around the world who then dived into a whole range of DeFi investment opportunities. Unfortunately, so did a lot of
scammers, who started exploiting smart contract vulnerabilities in order to drain off this wave of new capital for themselves. This led to tremendous losses for DeFi users.

In most cases, malicious actors created their own projects, gathered an audience and lured everyone into thinking their investments would result in gains of 10x or more. They developed smart contracts containing functions that acted as backdoors, allowing them to manipulate terms and steal user funds.

$154 million was lost in 2020 as a result of security vulnerabilities in smart contracts. This includes losses from malicious projects that had not been audited by independent third parties and legitimate
projects that were exploited by hackers.