Publication Type

Conference Proceeding Article

Version

publishedVersion

Publication Date

12-2022

Abstract

Decentralized Finance (DeFi) emerged rapidly in recent years and provided open and transparent financial services to the public. Due to its popularity, it is not uncommon to see cybersecurity incidents in the DeFi landscape, yet the impact of such incidents is under-studied. In this paper, we examine two incidents in DeFi protocol that are mainly caused by misgovernance and mistake in the smart contract. By using the synthetic control method, we found that the incident in Alchemix did not have a significant effect on the total value locked (TVL) in the protocol, whereas the incident in Compound caused a 6.13% decrease in TVL. One factor that contributed to the difference in the result could be the incident response in social media platforms, and further study should investigate the possible moderating or mediating effects of public opinions and sentiment.

Keywords

DeFi, misgovernance, fat-finger error, total value locked, synthetic control, incident response

Discipline

Databases and Information Systems

Research Areas

Cybersecurity

Publication

Proceedings of the 2022 International Conference on Information System, Copenhagen, Denmark, December 9-14

City or Country

AIS Electronic Library (AISeL)

Additional URL

https://aisel.aisnet.org/cgi/viewcontent.cgi?article=1094&context=icis2022

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