Top 10 Common DeFi Attack Vectors You Should Watch Out For

The DeFi (Decentralized Finance) ecosystem is growing rapidly with countless opportunities, but also numerous security threats. Here are the top 10 attack types every user and developer should be aware of.

 

1. Flash Loan Attack

 

Flash loans are unsecured loans that must be repaid within a single blockchain transaction. Attackers use this feature to manipulate prices, drain liquidity pools, and exploit protocols by executing a sequence of actions within one block.

Case study: The bZx protocol was exploited using a flash loan that manipulated asset prices and resulted in over $1 million in losses.

 

2. Price Oracle Manipulation

 

Oracles supply off-chain data like price feeds to smart contracts. If an oracle fetches prices from low-liquidity sources, attackers can manipulate those prices to their advantage, enabling over-borrowing or wrongful liquidations.

Inaccurate or compromised oracle data can lead to millions in losses for DeFi protocols.

 

3. Reentrancy Attack

 

This vulnerability allows an attacker to repeatedly call a function in a smart contract before its initial execution is complete, enabling them to withdraw funds multiple times in a single transaction.

Notably, The DAO hack in 2016 exploited a reentrancy bug and resulted in over $60 million stolen.

 

4. Rug Pull

 

In a rug pull, project creators build hype around a new token, add liquidity, and then suddenly withdraw all funds, leaving investors with worthless assets.

This type of scam is especially common on decentralized exchanges (DEXs), where listing a token requires no permission.

 

5. Front-Running Attack

 

Nodes or bots detect pending transactions in the mempool and submit their own transaction with a higher gas fee to be processed first, profiting from the price movement.

This undermines fairness and causes losses for unsuspecting users.

 

6. Phishing

 

Scammers create fake websites, wallets, or airdrop campaigns to steal private keys or wallet signatures from users.

They often spread these scams via email, social media, or online forums with too-good-to-be-true offers.

 

7. Governance Attack

 

DeFi protocols that operate as DAOs allow voting through governance tokens. Attackers may accumulate these tokens to pass malicious proposals and drain community funds.

Example: Beanstalk was exploited for $180 million by a governance attack that manipulated voting power.

 

8. Infinite Minting Bug

 

A smart contract bug may allow unlimited token minting. This leads to hyperinflation, crashing the token’s price, and potentially enables further exploits across connected protocols.

Most often, this happens in projects without proper auditing or testing.

 

9. Logic Bugs In Smart Contracts

 

Even small coding mistakes can lead to severe vulnerabilities. Errors in logic may cause funds to be misallocated, functions to behave incorrectly, or attackers to bypass restrictions.

Compound once mistakenly distributed millions in rewards due to a simple logic flaw.

 

10. Fake Tokens

 

Scammers issue fake tokens with names and logos resembling legitimate ones, tricking users into trading or providing liquidity to worthless assets.

For example, a token named “USDTpro” might mimic “USDT” to fool less experienced users.

 

11. Conclusion

 

While DeFi offers immense opportunity, it also introduces serious security risks. Knowing these 10 types of attacks is your first step toward staying safe. Always research thoroughly, use audited protocols, and store your assets securely. The more you understand, the better prepared you’ll be to thrive in the DeFi space.