Hacks are fast becoming a major threat within the crypto space and are rising at an alarming rate. Hurting the crypto world has become a serious factor that inhibits crypto investments and slows down global crypto adoption. The crypto space is supposed to be completely trustless (you don’t have to trust a third party), but in the light of several jaw-breaking hacking events, there’s been no choice but to employ a safe loss mitigation system. This, exactly, is the reason that Lossless is coming to the rescue.
The Decentralized Finance (DeFi) market grew quite rapidly within the last few years and further growth is impossible to underrate. The true features of blockchain technology and decentralized ecosystems allow us to control our privacy and finances. People have increasingly shown interest in decentralized markets much more in recent times and this presents new opportunities as well as challenges.
DeFi Pulse estimated that the Total Value Locked (USD) in DeFi has been hitting all-time highs constantly since the Q2 of 2020. This explains a significant shift of trust towards the DeFi structures that have been based on value-driven foundations: decentralization, immutability, and the absence of overpowered third parties.
The Problem We Are Solving
According to crypto media Coin desk, a popular security firm, Certik, released a report stating that crypto hacks grew by 160% in 2021. More regulations coming from external financial bodies into the crypto space will allow more global adoption. This will ultimately invite bigger players like the banks and other big financial bodies into the crypto space.
As the blockchain and DeFi gain more popularity, nefarious actors will become more incentivized to plot their attacks than ever before. They have found numerous ways through the likes of Ethereum Time Bandit attacks, wash trading as well as flash loans (loans that have to be paid back in the same block they are taken) to maliciously extract funds from smart contracts. Exchange hacks are also a method employed by these crafty individuals in order to breach the security standards of both centralized and decentralized exchanges.
Furthermore, Ethereum’s smart contract Turing-completeness makes many DeFi projects a target of major hacking and exploitation, resulting in investors’ loss of funds.
This is where the Lossless Core Protocol comes in. We create a trusted and safe DeFi ecosystem with minimal to no losses from hacks, exploits, or social engineering. As a team of experienced engineers, finance professionals, as well as DeFi experts, and white-hat hackers, we are dedicated to making crypto investing accessible and safe.
Lossless Core Protocol
Lossless Core Protocol is essentially designed to mitigate hacks and facilitate scam alerts, making the DeFi space as trustless as possible. It continues to promote the growth and development of its hack mitigation features. These are bringing to life better security standards in the fast-growing DeFi space. At Lossless, we are creating an environment where everyone could employ their money quickly with minimum risk. Creating a safer space for everyone, we are aiming to increase the adoption of DeFi.
At its core, the Lossless Protocol is a piece of code that token creators insert into their tokens. Integrating this code will enable Lossless to freeze any fraudulent transaction, which conforms to a set of fraud identification parameters.
The Core Protocol works in an integrated manner to complete a set of actions necessary to mitigate losses. This set begins with our code integration into the project smart contracts and ends with a reversal of funds if hacks were reported. In between, are a complex structure of hack detection mechanisms by which our Core Protocol takes effective measures in protecting the project’s and its users’ funds.
In the event that a hack is detected as seen above, the Core Protocol takes any or both of the following steps:
- Transaction freezing: urgent freezing after a hack is identified. It’s a community and technology-based step which rewards the one who reports the hack and freezes the transaction.
This employs a Proof-of-Stake (PoS) hack finding system with an intuitive dashboard that allows manual overview and reporting for hack spotters. There are bot-friendly APIs for community-created hack-spotting bots. This allows technically-inclined community members to render endless unreserved help in creating bots that may integrate our APIs for platform compatibility hack detecting techniques.
And, in order to reward these contributors, there’s a transparent system that guarantees high levels of participation and innovation. There’s an incentive system that encourages the community to build on top of an initial model and improve on it as time goes on. The resulting bots created by the network of hack spotters will be able to determine the best ways to detect hacks, and the quickest spotter will get the reward. It is guaranteed that the alertness of the network will only improve rapidly in the coming years as hack spotters will continually compete to make the fastest hack-spotting tools.
Lossless Core Protocol allows freezing transactions for 24–48 hours automatically if they match hack signs. These mechanisms are open source for everyone to contribute. And together we’re building a reputable system for reliable DeFi investment and development to support blockchain technologies’ growth.
2. Decision-Making Body: permanent freezing occurs after a hack is verified by the committee, Lossless company, and token creator, which takes steps to reverse the fraudulent transaction.
There is a 3-Party Lossless Decision-Making Structure:
- Token Creator
- Lossless Company
- Committee
The committee that overviews frozen transactions consist of investors with a substantial amount of LSS tokens and key public figures that provide trusted and unbiased decision-making, such as auditing firms.
The Lossless team will review the frozen address(es) in order to determine whether the detected hack is valid or not. If valid, then further steps are taken and finders are rewarded a fee. If no, staked tokens, that were used to report a hack, of the finder are confiscated, and the address will be unfrozen. This ensures that a properly balanced risk assessment procedure is taken by hack spotters before making their results public.
If the hack is valid, the address is frozen for further 14 days, and a committee proposal is enacted for permanent transaction freezing and reversing the transaction.
Bottom Line
In summary, Lossless shows great potential as DeFi enters mainstream and institutions become major players in this market. We are moving forward through our roadmap, launched two tools — Token Minter and Vault Protection — in the last quarter of last year and are proceeding to the main event — the Core Protocol’s launch in Q1 in 2022.
About Lossless
Lossless is the world’s first DeFi hack mitigation tool for token creators. Apart from our known cyber security solutions and renowned professionals, the community also plays a role. With a tangible reward system, community members are also encouraged to explore new ways to detect hacks and fraudulent transactions.
Our protocol halts counterfeit transactions through various methods of fraud identification and automatically reverses any stolen tokens back to the original owner. Our solutions to the impending problems of cyber theft within the blockchain space are thorough and applicable within many protocols.
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