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Understanding Cybersecurity Management in Decentralized Finance: Challenges, Strategies, and Trends

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This book discusses understand cybersecurity management in decentralized finance (DeFi). It commences with introducing fundamentals of DeFi and cybersecurity to readers. It emphasizes on the importance of cybersecurity for decentralized finance by illustrating recent cyber breaches, attacks, and financial losses. The book delves into understanding cyber threats and adversaries who can exploit those threats. It advances with cybersecurity threat, vulnerability, and risk management in DeFi. The book helps readers understand cyber threat landscape comprising different threat categories for that can exploit different types of vulnerabilities identified in DeFi. It puts forward prominent threat modelling strategies by focusing on attackers, assets, and software.

The book includes the popular blockchains that support DeFi include Ethereum, Binance Smart Chain, Solana, Cardano, Avalanche, Polygon, among others. With so much monetary value associated with all these technologies, the perpetrators are always lured to breach security by exploiting the vulnerabilities that exist in these technologies. For simplicity and clarity, all vulnerabilities are classified into different categories: arithmetic bugs, re-Entrancy attack, race conditions, exception handling, using a weak random generator, timestamp dependency, transaction-ordering dependence and front running, vulnerable libraries, wrong initial assumptions, denial of service, flash loan attacks, and vampire

Since decentralized finance infrastructures are the worst affected by cyber-attacks, it is imperative to understand various security issues in different components of DeFi infrastructures and proposes measures to secure all components of DeFi infrastructures. It brings the detailed cybersecurity policies and strategies that can be used to secure financial institutions. Finally, the book provides recommendations to secure DeFi infrastructures from cyber-attacks.

Author(s): Gurdip Kaur, Arash Habibi Lashkari, Iman Sharafaldin, Ziba Habibi Lashkari
Series: Financial Innovation and Technology
Publisher: Springer
Year: 2023

Language: English
Pages: 128
City: Cham

Preface
Introduction
Acknowledgement
Contents
About the Authors
Chapter 1: The Origin of Modern Decentralized Finance
1.1 A Brief History of Finance
1.2 Introduction to FinTech
1.3 Key Problems of Centralized Financial System
1.4 Introduction to Crypto-Based Finance
1.4.1 Roots of DeFi
1.4.2 Examples of DeFi
1.4.3 Advantages of DeFi Ecosystem
1.5 Bitcoin
1.5.1 Characteristics of Bitcoin Ecosystem
1.5.2 History of Bitcoin
1.6 Smart Contract-Based Blockchains
1.7 Summary
References
Chapter 2: Introduction to Smart Contracts and DeFi
2.1 History of Smart Contracts
2.2 Fundamentals of Smart Contracts
2.2.1 Creating First Smart Contract
2.3 The Operation Process of Smart Contracts
2.3.1 Technical Operational Process
2.4 How Can We Use Smart Contracts
2.5 Benefits and Problems of Smart Contracts
2.6 Introduction to DeFi
2.6.1 DeFi Characteristics
2.6.2 DeFi vs CeFi
2.7 DeFi Applications
2.7.1 DeFi Exchanges
2.7.2 Lending Pools
2.7.3 Derivatives
2.7.4 Insurance
2.7.5 Gaming
2.7.6 NFT
2.8 Importance of Oracles in the Rise of DeFi
2.9 Summary
References
Chapter 3: DeFi Platforms
3.1 Popular Blockchains that Support DeFi Apps
3.1.1 Ethereum
3.1.2 Binance Smart Chain
3.1.3 Solana
3.1.4 Cardano
3.1.5 Avalanche
3.1.6 Polygon
3.1.7 Fantom
3.2 Security and Safety of DeFi Platforms
3.3 Evaluating the Security of DeFi Platforms
3.4 Summary
References
Chapter 4: Blockchain Security
4.1 Blockchain Attacks and Countermeasures
4.1.1 Double-Spending Attack
4.1.2 Finney Attack
4.1.3 Race Attack
4.1.4 Brute Force or Alternative History Attack
4.1.5 Vector 76 or One-Confirmation Attack
4.1.6 Balance Attack
4.1.7 Nothing-at-Stake Attack
4.1.8 Selfish Mining or Block Discarding Attack
4.1.9 Long-Range Attack
4.1.10 Block Withholding Attack
4.1.11 Fork After Withholding Attack
4.1.12 51% Attack
4.1.13 Feather and Punitive Forking Blockchain Attack
4.1.14 Eclipse or Netsplit Attack
4.1.15 Distributed Denial of Service Attack
4.1.16 Liveness Denial Attack
4.1.17 Refund Attack
4.1.18 Tampering or Delay Attack
4.1.19 BGP Hijacking or Routing Attack
4.1.20 Sybil Attack
4.1.21 Time Jacking
4.1.22 Quantum Attack
4.2 Summary
References
Chapter 5: Smart Contracts and DeFi Security and Threats
5.1 Arithmetic Bugs
5.2 Re-entrancy Attack
5.3 Race Conditions
5.4 Unhandled Exceptions
5.5 Using a Weak Random Generator
5.6 Timestamp Dependency
5.7 Transaction-Ordering Dependence and Front Running
5.8 Vulnerable Libraries
5.9 Wrong Initial Assumptions
5.10 Denial of Service
5.11 Flash Loan Attacks
5.12 Vampire Attack
5.13 Maximal Extractable Value
5.14 Sample Attack Scenarios
5.14.1 Weak Random Generator Attack
5.14.2 Transaction-Ordering Attack
5.14.3 Denial of Service Attack
5.15 Summary
References
Chapter 6: Challenges, Issues, and Basic Security Practices
6.1 Introduction
6.2 Challenges and Issues
6.3 Best Security Practices
6.4 Summary
References