Attacks

Governance Attack

The developers can change the protocols to make them less profitable. This attack is due to not being fully descentralized.

The protocol governance is created. The users can buy the tokens that has been assigned protocol governance right. Then, the holders use these tokens to vote on protocol change.

But, there is still the risk, 51% attacks.

For example, a hacker

1. amasses governance token
2. votes to himself 11.5 billion equity token
3. sell all of them on a descentralized exchange (DEX).

The hacker takes the profit, but the token price drops.

Oracle attack

Oracle adds the outside data to the blockchain, such as market price from an exchange.

Oracle attack represents the highest risk to DeFi.

All on-chain oracles are vulnerable to front-running, and million of dollar have been lost due to the arbitrageurs.

What's more, the entire DeFi system will stop working if the oracle is down.