Crypto Head, which tracks information on the crypto market, conducted an analysis and found that the number of cases reported of cryptocurrency hacking and theft increased by more than 40 percent in 2021.

Hacking has been around since the fathers of technology invented access control for computing technologies. Even before widespread internet use, some geniuses were exploiting password-protected computers.

In 1965, MIT researchers discovered an exploit in time-sharing software that allowed anyone trying to access an editor to see everyone else’s passwords. When multiple users attempted to access the editor, the system — only designed for a single user at a time — would randomly swap the password file, allowing access by those who already knew the password.

However, hacks in the cryptocurrency space are problematic because transactions are irreversible. A decentralized and trustless network cannot distinguish between transactions with stolen coins and legitimate ones since it is decentralized. This means that the protections around preventing illegitimate transactions are fundamental.

How Much has Crypto Lost to Hackers

There is a lot of coverage about high-profile hacks since they make for good headlines. The crypto security forum at Unify reports that hackers have made off with $1.2 billion so far this year. Consequently, this amount of money is almost eight times higher than the $154 million lost in the first quarter of 2021. Now, I will mention the five largest hacks in the history of cryptocurrency for illustration’s sake.

• Ronin Network– In one of the largest crypto heists on record, the Ronin blockchain project announced last month that hackers exploited its systems and stole cryptocurrency worth $615m.The project reported that unidentified hackers stole 173,600 ether tokens and 25.5 million USD coin tokens on March 23rd. Axie Infinity uses Ronin to power its popular online game. It has the most extensive collection of non-fungible tokens (NFTs) by all-time sales volume, according to the NFT market tracker CryptoSlam.
• Poly Network– Poly Network tokens worth $611m were transferred to three wallets controlled by a hacker on August 10th, 2021. A security researcher Mudit Gupta discovered that the attacker could ‘unlock’ (buy) tokens on Poly Network without having to ‘lock’ (sell) the corresponding tokens on other blockchains. The Poly Network is a platform for exchanging tokens between blockchains other than Bitcoin and Ethereum, such as Ethereum and Bitcoin.
• Coincheck– Coincheck, a Japanese crypto exchange, revealed to the public that $547m worth of lesser-known cryptocurrency NEM had been stolen in January 2018. The firm admitted to storing the assets in a ‘hot wallet,’ meaning cryptocurrency storage connected to the internet, making it vulnerable to cyber-attacks. Coincheck was one of the most prominent exchanges in Japan at the time of the attack, which was one of the biggest markets for cryptocurrency trading.
• KuCoin– Singapore-based crypto exchange KuCoin announced in September 2020 that $275 million worth of cryptocurrency had been stolen, including $127 million in ERC20 tokens used in Ethereum smart contracts. Chief executive Johnny Lyu revealed that hackers gained access to the exchange’s ‘hot wallets.’
• Mt. Gox– One of the most well-known crypto heists was the theft of $480m from another Japanese exchange, Mt. Gox, in 2014. Around 7% of all Bitcoins were in circulation at the time, making the haul worth $480m. It would be worth more than $35 billion today.

According to investigations, wallet and exchange breaches are the most common, with 126 outpacing attacks and fraud involving DeFi, or decentralized finance, at 41 each during the last ten years. These hacks are a wake-up call for the industry to improve its security posture. Meanwhile, you as an individual can take steps to protect your cryptocurrency from being hacked.

How Can you Protect Your Cryptocurrency from Hackers?

Since the digital currency has virtually no regulations backing it, investors cannot find their way out of cyber-attacks because there is no involvement of centralized authority. So, how do you get to safeguard your cryptocurrency investment? This article gives you a few suggestions;

Use Cold Wallets

Online wallets have gained incredible popularity in recent years, becoming a prime target for hackers. While online wallets are convenient, they also present a greater risk than cold or offline wallets. Terence Jackson, a chief information security officer, recommends that most consumers keep their cryptocurrencies in offline or cold wallets since it’s less vulnerable to cyber-attacks online.

As for hardware wallets, these devices can get lost or stolen, so it is essential to have a backup stored in a deposit box. Additionally, public and private keys should never be identical to prevent hacking.

Despite their tremendous effectiveness against digital thieves, hardware wallets also pose a risk: Lose your password key, and you’ll never be able to recover your funds.

Passwords and PINs

It is essential to have strong passwords unique to each account and not used for any other purpose. A user should never choose the same password for more than one account to eliminate the risk of cyber-crime.

Several crypto experts propose this idea and consider it one of the safest methods for securing digital accounts. Two or more factors of authentication can help in this matter, as can a diverse and robust password for every account.

Web Security

To keep your online wallets secure, it is crucial to have strong password hygiene and two-factor authentication (or even better, three-factor authentication). Furthermore, avoid using public Wi-Fi to conduct any cryptocurrency transactions since it is easy for hackers to set up a rogue access point and steal your information. According to David Maimon, assistant professor at the University of Maryland’s department of criminology and criminal justice, public Wi-Fi is risky in three specific ways:

• Wi-Fi sniffing
• Man-in-middle attacks
• Malware

Don’t let your Wi-Fi search and connect to public Wi-Fi connections if you want to avoid cyber attacks. Please turn it off and carry an internet dongle for private connections instead. You can protect your assets by purchasing a $10 internet dongle. Depending on your data plan, you can also use your cell phone as a hotspot.

Use Two-factor Authentication

Two-factor authentication adds an extra layer of security to your accounts by requiring a second code from a device you own to log in. This makes it much harder for hackers to access your accounts since they need your password and access to your physical device.

Wallets that support two-factor authentication are a good investment. For example, if someone had access to your login details, they would also need your phone to get the 2FA code. The disadvantage of text and email 2FA is that they are easily intercepted if someone has access to your email account or if you port your phone number from one device to another.

According to PolySwarm CTO Paul Makowski, the best 2FA options, from most secure to least secure, are as follows:

• Hardware dongle, available at: https://landing.google.com/advancedprotection/
• A phone app that does not sync your secrets anywhere (e.g., Google authenticator)
• A phone app that allows you to sync (e.g., Authy)
• Email-based
• SMS-based communication

Two-factor authentication is not foolproof, however. In 2018, Google’s Advanced Protection program was fooled by a phishing attack that resulted in the theft of $120,000 worth of Ethereum from a user’s account. The best way to protect your accounts is to use a hardware dongle in addition to two-factor authentication.

Use a Reputable Crypto Exchanges

When you are ready to purchase cryptocurrency, make sure to do so through a reputable exchange. Some exchanges have been around for a while and have implemented strong security measures to protect their users’ assets.

Reputable exchanges will also have insurance if their platform gets hacked and users’ funds stolen. Make sure to check if an exchange has insurance before using it.

Be Careful with What you Download

Malware can be attached to files, and once on your device, it can perform a variety of sinister commands. A person racking up your phone bill or using all your data is no longer the biggest concern. Now you need to worry about malware reading keystrokes, giving hackers access to your accounts, and even reading the screen on your phone.

Remember, the crypto world is full of clever people, and as you browse communities, Telegram, Facebook, Reddit, Bitcoin Talk, etc., you’ll find posted files. It may be tempting to click them, but be aware that they could be bait.

It’s not just about being careful with what you download but also about keeping your devices updated. Software updates often include security patches that close vulnerabilities in your system. Outdated software is one of the easiest ways for hackers to access your device.

When in Doubt, Don’t Click it

If you’re not sure about a file, don’t download it. If you’re not sure about a link, don’t click it. When in doubt, don’t do anything. This may seem like common sense, but we often overlook things when we’re in a hurry or not paying attention.

Be extra careful when you’re online and take the time to verify that everything is legitimate before taking any actions. A few extra seconds of caution could save you a lot of headaches down the road.

Conclusion

Hacks are inevitable, but you can take some steps to protect your assets. By following the tips in this article, you can make it harder for hackers to target you and your cryptocurrency. However, no security measure is perfect, so it is essential always to be vigilant and stay up to date on the latest security threats.

Over the past few weeks, it’s been a wild ride in the Crypto Twitter and DeFi communities. The rollercoaster started when CoinDesk disclosed that one of the co-founders of the famous Avalanche-based automated money market (AMM) Wonderland, pseudonymous “Sifu,” was Michael Patryn.

Despite Patryn’s shady past, prominent co-founder Daniele Sestagalli knew who “Sifu” was but chose to offer him a “second” chance. But, members of the Wonderland community on Twitter did not share the same sentiment as Sestagalli.

As a result, Sestagalli’s reputation has taken a significant hit in the past week. And upon further investigation into his background, things only look worse for the embattled co-founder. This leaves us with the question: What’s next for Wonderland? Before we dig into Wonderland’s future, let’s take a look at Danielle Sestagalli.

Who is Danielle Sestagalli?

Daniele Sestagalli, also known as Danielle Sesta, has extensive experience in the blockchain industry. In several interviews, he has indicated that he began using Bitcoin in 2011. The crypto world didn’t know much about him, but his Zulu Republic project impacted the crypto industry in 2018. It was one of the first airdrops, giving around $30 million to over 500,000 people. The project’s website is now defunct.

The Zulu Republic is a digital ecosystem based on the Ethereum blockchain, focused on believing that decentralized finance is the future human protocol. With an emphasis on unrivaled user experience, the objective was to make it easier for people to join the cryptocurrency revolution, empowering them to take control of their own financial lives. There have been no updates on the projects pages since 2018.

Sestagalli ‘s Linkedin profile shows that he also was an advisor to Bancor from July 2017 to September 2018. Bancor is a decentralized liquidity network that allows you to hold any blockchain asset and convert it to any other asset in the network, with no counterparty, at an automatically calculated price, using a simple web wallet.

In July 2017, Bancor completed one of the most significant token sales, raising $153 million. The project was met with a lot of hype and excitement but failed to live up to the expectations.

By the beginning of 2021, Daniele Sesta appeared busy creating a music industry model that would benefit musicians and the industry. The aim was to establish a blockchain foundation for everyone working in the music industry.

The Utopia Genesis Basis was to carry the blockchain to the music industry. The idea behind it was to empower artists by a platform that permitted them to subject their tokens without intermediaries.

However, it is not clear how much progress was made on this project as there is no website or social media presence for Utopia Genesis Basis.

But, all of a sudden, Daniele Sestagalli diverted his attention elsewhere and re-appeared with three items that changed the blockchain sector; Popsicle Finance, Abracadabra, and Wonderland entirely.

Unknown people hacked Popsicle Finance for tokens worth more than $25,000,000 at the beginning of August 2021. It was a major hack, and the price of the $ICE token crashed as a result.

Abracadabra is a DeFi yield farm that allows you to stake your cryptocurrency and earn interest on it. The protocol has been live, having over $200 million worth of value locked in it.

In September, Sestagalli founded Wonderland. According to a November interview, Sestagalli originally envisioned Wonderland as a perpetual, “mega-ICO,” giving tokens to holders over time and developing a treasury, as an Olympus fork DAO — an infamous, sky-high APY rebasing project commonly criticized as unsustainable.

Wonderland eventually overtook Olympus in market capitalization and treasury size.

The Fallout of Wonderland

In January 2022, blockchain sleuths reported “Sifu” as Michael Patryn. According to the report, Michael Patryn is allegedly a skilled serial scammer, with a sentence and deportation on his record. Patryn was the co-founder of QuadrigaCX, a failed Canadian cryptocurrency exchange.

QuadrigaCX, a crypto exchange created by Gerald Cotten and Michael Patryn in 2013, quickly grew to become one of Canada’s largest crypto exchanges by trading volume. According to sources, Cotten died in December 2018 during a trip to India, after which over $190 million in cryptocurrency owed to 115,000 consumers went missing.

Officials at QuadrigaCX claimed that only Cotten had access to the secret keys containing millions of dollars worth of client cash. However, crypto circles quickly labeled the entire incident as an exit scam.

Patryn had remained under the radar since then, until a few weeks ago, when he was discovered to be one of Wonderland’s architects.

“Sifu,” a co-founder of the Olympus, made the DeFi project, Wonderland, what it is today.

With the wonderland team’s help, including his partner Danielle Sesta, Michael Patryn (Sifu) made seed investments in the Olympus project making significant, unilateral investments. Wonderland being the fork of Olympus, overtook it in every aspect.

In particular, the wonderland co-founder, Sestagalli, popularized the idea that Frog Nation investors will someday compete with and replace “the suits,” a term that refers to established investment funds.

However, the Olympus project has come under fire in recent weeks due to the wonderland saga. There is a devastating drop in both the original project and its forks. Wonderland dropped by as much as 40% in 24 hours after Sifu’s unmasking as Patryn, tumbling as far as 95% from its all-time high.

With Patryn’s revelation, the already weak price action suffered another blow after Sestagalli stated that he had known Patryn’s identity and connections to QuadrigaCX but opted to work with him as the treasury manager nevertheless. The dynamic caused wonderland investors to lose faith in the project.

A few days later, the “frog nation” leader, Sestagalli, stated the path forward; “Do we wind down or continue to fight for the aspect of an investment DAO [decentralized autonomous organization] being a revolutionary new organization? For the option that I am for, which is to fight and replace Patryn with someone new and experienced to manage the treasury.”

The information caused a lot of commotion with community members who refer to themselves as the “Frog Nation.” Although Patryn was relieved of his duties, the question remains; what will become of Wonderland’s treasury?

What’s Next for Wonderland?

In light of the recent revelations, what will happen to Wonderland is unclear. The crypto community is up in arms, and wonderland investors doubt the wonderland treasury.

Although Danielle Sestagalli actively worked with a convicted felon, a community vote to shut down Wonderland and distribute the treasury to investors failed to pass a few days ago.

The outcome of votes may programmatically and automatically prompt actions on-chain, such as changing the code for a protocol or triggering treasury payments, depending on the decentralized autonomous organization (DAO) governance model.

Wonderland’s developers designed the protocol of DAO to protect against a single bad actor. However, in this situation, the majority of the community desires that the Wonderland team can hypothetically choose whether or not to enact.

This scenario heightened tensions in the crypto community when Sestagalli appeared to imply that Wonderland would close regardless of the outcome of the “Wind down Wonderland” vote.

A few days later, the vote concluded with 55 percent of the token weight in favor of the project moving on. Also, time token holders agreed to give the team a chance to make some changes in the project.

It was possibly the most active governance proposal in DeFi history, with over an overwhelming majority voting to continue the project, defeating a considerably smaller number of opposing addresses. Danielle Sestagalli, in turn, wrote in discord that the wonderland team was taking time to “compile suggestions, and determine the best path forward.”

The problems at Wonderland and the consequences show the fundamental flaws with the DeFi administration, which frequently relies on anonymous or pseudonymous oversight from a small number of critical people. Though smart contracts automatically execute various decisions when certain circumstances arrive, the financing of such projects is typically left in the hands of people with little checks and balances.

However, DeFi supporters should use this opportunity to reflect on how to prevent anything this egregiously audacious from happening again. Wonderland DAO agrees!

What’s Left of Danielle Sestagalli’s Name?

In the decentralized financial world, Daniele Sestagalli made a name for himself through his work. He is the brains behind three of the most successful DeFi initiatives, with a combined market worth of 6.5 billion dollars (including MIM) and a total value of 6.7 billion dollars. By market capitalization, MIM is also the 6th largest stablecoin in the Sestagalli ecosystem.

The recent news has taken away a big part of Sesta’s success. Sestagalli’s reputation has taken a significant blow, regardless of what happens to Wonderland. His noble associations with a convicted felon who faced financial crimes will not help him salvage his name.

Michael Patryn is dragging Danielle Sestagalli’s name in the mud, and it doesn’t look like it’s going to get any better from here. Can the crypto community trust Sestagalli to lead any future projects?

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Following a massive rally over the last few years, no one can deny that cryptocurrency is a legitimate contender in the financial markets. The crypto concept is more than just a fad or a pump and dump scheme when viewed as a whole.

While the value of cryptocurrency is obvious, it does not change the fact that it is a complicated system to invest in. Fortunately, one new evolution in the crypto world is making it easier for ordinary investors to tap into the crypto world’s growing wealth.

One new development in the crypto world that has been gaining traction in recent years is staking. This article will explore what staking is and how it works and help you understand crypto rewards and incentive programs.

What is Staking?

Staking is an investment strategy that allows investors to earn rewards for holding onto their cryptocurrency. Users can lock or hold their funds in a cryptocurrency wallet to maintain the operations of a proof-of-stake (PoS)-based blockchain system. Similar to crypto mining, it assists a network in coming to consensus and rewards participants in the process.

The legitimacy to validate transactions is baked into the number of coins “locked” inside a wallet during staking. However, just like mining on a PoW platform, stakers are encouraged to find a new block or add a transaction on a blockchain. The more coins an investor commits, the higher the chances of being selected to validate a block and earn rewards.

Apart from incentives, PoS blockchain platforms are scalable and have high transaction speeds. In addition to incentives, PoS blockchain platforms are configurable and have fast transaction speeds. For these reasons, staking has become a popular investment strategy for crypto investors.

By staking their crypto, investors can earn a share of the profits generated by the crypto project. In other words, staking is a way to earn passive income from your cryptocurrency holdings.

How Staking Works

To understand how staking works, we first need to understand the concept of proof-of-stake.

The proof-of-stake (PoS) consensus mechanism uses validators to verify transactions and maintain consensus in a blockchain network. By running validator nodes and staking their coins, users contribute to securing the network and earning interest on their stakes.

Under this consensus algorithm, instead of miners solving complex cryptographic puzzles to validate transactions and add new blocks, validators are chosen randomly to the number of coins they stake.

The validator then checks the authenticity of the transactions. The validator adds the block to the ledger and gets the block rewards and transaction fees if everything is correct. However, if a validator adds a block with incorrect data, its staked holdings will be penalized.

PoS is known for being more energy-efficient, having lower entry barriers, and being more scalable than PoW. Indeed, the Ethereum PoS model provides improved support for shard chains, one of the most promising scaling solutions.

Back to how staking works.

The process of staking works as follows:

Participants must first pledge their coins to the cryptocurrency protocol. The protocol selects validators from among these participants to confirm blocks of transactions. The more coins you commit, the more likely you will be chosen as a validator.

New cryptocurrency coins are minted upon adding a new block to the blockchain and given as staking rewards to each block’s validator. Most of the time, participants receive the same type of cryptocurrency they stake. Specific blockchains, however, use a different type of cryptocurrency as a reward.

You must first own a cryptocurrency that employs the proof-of-stake model to stake cryptocurrency. Then you can decide how much you want to invest. After that, you must find a staking pool or set up your validator node.

When you stake your coins, they remain in your possession. You’re putting those staked coins to work, and you can always unstake them later if you want to trade them. The unstaking process may take some time; some cryptocurrencies require you to stake coins for a set period.

Staking is not available for all types of cryptocurrency. It is only available for coins that use the proof-of-stake model. The most popular cryptocurrencies that use PoS are Ethereum, NEO, and EOS.

To add blocks to their blockchains, some cryptocurrencies employ the proof-of-work model. The intricacy with proof of work is that it needs significant computing power. As a result, cryptocurrencies that use proof of work consume a lot of energy. In particular, Bitcoin (CRYPTO: BTC) has been rebuked for its environmental impact.

On the other hand, proof of stake doesn’t necessarily require nearly the same time and energy. This also makes it a more expandable option capable of handling larger volumes of transactions.

The key difference between the two models is that proof of stake rewards users based on how many coins they hold, while proof of work rewards users based on how much computing power they contribute.

The main benefit of staking is that it allows users to earn a Passive Income from their cryptocurrency holdings. They can earn rewards in new coins, transaction fees, or interest by staking their coins.

What is Incentive in Staking?

Staking incentive examines the staking participation rate and the most efficient ways to design a proof-of-stake network. Staking rates impact the security and strength of the chain, making it an important metric to monitor over time.

The incentive to stake is twofold. First, stakers earn rewards in the form of new cryptocurrency coins. Second, staking helps secure the network and contributes to its overall health.

Validators earn various types of revenue depending on the stake pool they join and the specific cryptocurrency they are validating. The most common forms of revenue are staking rewards and transaction fees.

Staking rewards is a ratio obtained by dividing the inflation rate by the stake ratio. You can compare inflation to a pie: the newly-minted NOM is the size of that pie. As a staker, you sit at a table where new NOM gets served.

Validators split the pie proportionally with everyone else at their table, so the more people join, the smaller the pie you get. The larger the pie, the greater the rewards for everyone who stakes. The total stake rewards are divided among validators according to their weight in the staking pool. Their rewards are then distributed to delegators in proportion to their stake.

You should note that validators may charge a commission on their delegates before distributing the rewards.

Validator’s Commission

The revenue generated by a validator’s pool gets divided among the validator and their delegators. A validator may charge a commission on the portion of revenue distributed to its delegators. This fee gets calculated as a percentage.

Each validator has the option of determining its initial commission, maximum daily commission change rate, and maximum commission. The parameters that the mainnet enforces each validator sets. These parameters can only be defined when declaring candidacy for the first time, and they can only be constrained further after that.

The Incentive to Run a Validator

Validators make more money than their delegated earn through commission fees. They also get to keep a portion of the rewards that their delegators earn.

• Staking rewards: Validators earn more revenue when more people stake with them.
• Product rewards: Each Onomy Exchange, Onomy Reserve, and Onomy Bridge Hub has its own set of additional rewards for validators in addition to staking rewards.
• Transaction fees– Validators can set minimum gas fees for transactions included in their mempool to prevent spamming. At the end of each block, compute fees get distributed to validators in proportion to their stake.

So, what is the incentive for a user to run a validator? The answer is simple: more money.

Where Can You Stake?

Staking opportunities are galore in 2022, both on crypto exchanges like Binance, FTX, and Coinbase and directly on specific blockchain’s native wallets or dedicated hardware wallets.

Here are some of the best—however, many other options to consider, such as Fantom, Solana, and Avalanche.

• Polkadot staking– As its consensus algorithm, Polkadot uses nominated proof-of-stake (NPoS). Nominators entrust their stakes to multiple validators they believe to be of good behavior. Regardless of the type of staker, they earn a reward for locking their tokens as collateral. Note that a nominator will incur a loss if they support a malicious validator.
• Ethereum staking– At the moment, there are two types of Ethereum validators: miners and stakers. Miners validate transactions on the execution layer (formerly known as Eth1), while stakers verify blocks on the consensus layer (previously called Eth2). This means that Ethereum stakers will need to move their ETH from the execution layer to the consensus layer before they can stake. Furthermore, you can’t withdraw your ETH until the Ethereum mainnet merges with the Beacon Chain.
• Terra Luna Staking– Users can earn interest on their LUNA coins by staking them on supported wallets like Terra Station. You need to create a wallet, transfer your LUNA, select a validator, and stake your LUNA. There is, however, another way to earn even more money: farming.

Conclusion

When it comes to staking rewards, the number of new coins earned depends on several factors. These include the staking pool’s reward structure, the validator’s stake size, and the network’s overall health.