Security is one of the most pressing concerns for everyone involved in crypto, from builders and VCs to traders and auditors. Every breach reflects poorly on an industry which, after all, purports to represent an exit-ramp from tradfi.
Bring up security and most crypto natives will think of seed phrases. But keeping your own wealth under lock and key is just part of it. Exchanges and apps have their own worries: about hackers exploiting flawed code and conducting social engineering attacks, about rogue employees, bad multi-sig setups, DDoS attacks – the list goes on.
Undoubtedly, the most talked-about crypto security failing relates to smart contract code. Last year, vulnerable smart contract logic was blamed for Bybit’s $1.4 billion hack. Savvy criminals have exploited similar vulnerabilities for years. The DAO. Parity Wallet. Truebit. Finding and exploiting bugs in a protocol’s code is meat and drink for cybercriminals.
Rather than obsessing over code logic, though, crypto platforms ought to take a more holistic approach.
What Good Security Really Looks Like
Without minimizing the risks of improperly written smart contracts, the majority of security failures in crypto don’t have anything to do with them. They occur at the operational edges, stemming from things like suspect governance decisions, careless key management, problematic off-chain dependencies, and inadequate incident response.
In this regard, security in crypto should be viewed through a similar lens as the one used by global financial institutions. The resilience of an organization, team or app depends on its ability to manage risk across people, processes, and systems, mirroring threats that are familiar to those working in traditional finance
With DeFi increasingly incorporating real-world assets (RWAs) and institutional use on the rise, platforms can therefore demonstrate their security bonafides by operating under stress rather than flexing about the behavior of their code in isolation. By protecting the sensitive data of users and maintaining uptime in the face of threats. RWA adoption will undoubtedly favor platforms with institutional-grade operational and governance maturity.
This is not to say builders should be cavalier about smart contracts. Over $50 billion has reportedly been lost to code bugs and exploits since their inception. It is merely to acknowledge that other, arguably more systemic risks exist. Given these are the threats which are familiar to tradfi users, addressing them is of paramount importance as more institutions turn their attention to the world of Web3.
Although some builders remain obsessively focused on smart contracts, other platforms have accepted the need to ensure security in all areas. Programmable Layer-1 blockchain Pharos, for instance, is designed to address the operational and governance failure points where most crypto incidents occur. Architectured to onboard real-world assets and support cross-chain liquidity, Pharos meets institutional security baselines rather than shielding itself solely from DeFi-specific threats.
Built by a talented team whose experience spans the likes of Ant Financial and Microsoft Research, Pharos checks the familiar blockchain boxes (30,000+ tps, sub-second block finality) while avoiding single points of failure and simplifying development. It aims to become the premier environment for tokenized real-world assets, payment systems and stablecoin transactions in the years ahead. Since launching its first testnet last May, the L1 has recorded almost 3 billion transactions across 23 million blocks.
The Road to Institutional Trust
The crypto industry’s journey toward mainstream adoption hinges on one non-negotiable: security must be demonstrated at every layer. As RWAs come on-chain, platforms who can show operational discipline across governance, key management and incident response will separate themselves from counterparts proudly waving their audit certificates as proof of their impregnability.
There is no blueprint for what the next generation of crypto infrastructure will look like. But by sticking to solid security principles, the industry’s builders can make sure they’re covering all bases.
