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Black Hat Hackers Can Protect the DeFi Projects like No Others.
Hats finance is the decentralized cybersecurity network governed by the community of stakeholders, including project holders, token holders and hackers. The aim of the project is to incentivize the security of the protocol by providing prize pools, and thus, it can turn black and grey hat hackers into white hat hackers.
Today, Hats finance announced the close of a $3.5M seed round supported by Greenfield One, Lemniscap, Accomplice, Collider Ventures, Spartan Capital and IOSG Ventures.
The Defi industry has seen many hacks and exploits in recent times. Decentralized finance was gaining momentum because of its trustless nature. People believe that in the case of traditional financing, they have to trust different people with their assets. But, don't you think that is Decentralized Finance also, we merely trust a code?
This is the reason why hacks are growing in the DeFi region because no code can be 100% accurate even after the audits. So, hats finance believes that the white hat hackers can be a crucial group to predict the vulnerabilities in an ecosystem. They find that the black hat hacker community is becoming a problem for DeFi space because of the 'zero incentive' for 'white hat hackers'.
Let’s understand the working of Hats Finance:
Hats Finance creates a scalable model for responsible disclosure to incentivize a transparent hacking market. Bounty vaults with project tokes are created by Hats DAO, filling up some portion of token's circulating supply and farms Hats token during the process.
Here, when an exploit is detected, the hacker discloses this vulnerability to the Hats committee (consisting of project core developers, white hat hackers and the researchers) using an on-chain hash proof of disclosure. Then the committee approves or disapproves the vulnerability according to the allocation of tokens specified in the vault. The hacker will be awarded a special NFT.
What is the role of hackers in protecting the Defi projects?
What happens when a person (or a hacker) finds an exploit in a DeFi protocol? Well, he has an option to make a substantial monetary reward by exploiting the protocol. He can probably gain a considerable sum of money, but let's consider the risks as well. Hacking is a criminal offence; hence the person can go to jail also.
Let's visualize it in a different way. What if the person gets incentivize for detecting the vulnerability. In this way, the users’ funds will be unaffected, and the hacker will also get some reward which indeed will not land him in jail.
With a similar thought, hat Finance proposes the hacker disclose the exploit and get fully fungible funds in return. It creates scalable security vaults by using the token of the project itself. Bounty depends on the success of the project and the token. Additionally, numerous unique NFTs will be explicitly minted for the hackers who will disclose the vulnerabilities.
We are pretty aware that DeFi hacks are increasing with the growth of decentralized space, but everything is just a matter of perspective. The person, who can hack the system by exploiting the vulnerability of a protocol, can potentially protect the system as well. So, with Hats Finance, the black hat hackers can actually be lured for protecting the DeFi projects.