- The Ethereum community members have proposed a new standard to enhance the security of decentralized finance (DeFi) protocols.
- This standard, called ERC 7265, allows DeFi protocols to add “circuit breakers” to their smart contracts.
- Meir Bank stated that DeFi attacks have led to significant losses and protocols often cannot react quickly enough.
In response to the recent increase in DeFi hack attacks, the ERC 7265 proposal from Ethereum community members was designed to reduce this issue.
Ethereum Community Members Present a New Proposal
The Ethereum community members have proposed a new standard to enhance the security of decentralized finance (DeFi) protocols. This standard, called ERC 7265, allows DeFi protocols to add “circuit breakers” to their smart contracts, enabling tokens to be stopped before separating from the contracts in the event of a hack.
The proposed ERC 7265 standard comes amidst increasing DeFi attacks. According to data, approximately $3 billion worth of funds have been stolen from DeFi protocols by attackers. Meir Bank from Fluid Protocol stated, “We all agree that DeFi is broken,” and added:
“Not only is there a large number of hacks, but the consequences are also disastrous. When protocols are attacked, they often lose everything. TVL [total value locked] reaches zero within seconds.”
ERC 7265 Designed to Reduce Hack Incidents
Meir Bank stated that DeFi attacks have led to significant losses and protocols often cannot react quickly enough. By the time anyone notices what is happening, it is usually too late, and even if a team tries to fix the problem, it is often too late. Bank provided the following details about ERC 7265:
“ERC 7265 allows teams to create circuit breakers that protect their protocols and provides customized speed limit parameters for each asset. When a hack occurs, the attacker can no longer completely drain a contract within seconds. Most funds can be recovered.”
The ERC 7265 standard is designed for upgradable protocols managed by governance, which are the most common in DeFi. Bank stated, “There are very few negatives and many positives for managed DeFi protocols to integrate ERC 7265.”
Since ERC 7265 is a proposed standard, it is not yet known whether it will be accepted and implemented by the Ethereum core team. ERCs are proposed standards that define how specific features or functions should be implemented on the Ethereum network, while Ethereum Improvement Proposals (EIPs) are changes and enhancements made to the Ethereum protocol. ERCs and EIPs become final after being accepted by the wider Ethereum community and implemented by core developers.
