CoinEfficiency

2022 NFT Security Report: Key Risks and Vulnerabilities Exposed

Discover the critical security risks in the NFT ecosystem revealed by BlockSec and NFTGo's 2022 report, highlighting privilege functions, wash trading, and market manipulation.
Published on 2022-09-19

NFT Security Risks: A Comprehensive Report

The 2022 NFT security report by BlockSec and NFTGo has uncovered significant vulnerabilities in the NFT ecosystem, emphasizing the need for heightened vigilance among investors and creators.

Inaccessible NFT Assets

A staggering 19% of NFT projects, totaling 16,100 out of 84,800, face inaccessibility issues. This puts approximately 330,200 Ether ($515 million) at risk, potentially rendering these digital assets worthless and causing substantial financial losses for owners.

Security Vulnerabilities in NFT Contracts

Over 55% of open-source NFT contracts exhibit reentrancy and access control issues. Additionally, 54,500 contracts contain privilege functions that allow privileged users to manage others' assets without consent, posing a significant security threat.

Sleepmint Attacks

BlockSec identified 1,960 sleepmint transactions across 75 contracts. These attacks involve minting NFTs to high-profile individuals without their consent, which are then transferred to attackers' accounts and listed for sale, undermining trust in NFT platforms.

Holder Pooling Risk

61.8% of NFT projects are susceptible to holder pooling risk, where a small group of "big whales" own most tokens. This concentration disrupts market liquidity and robustness, with 50% of tokens in many projects held by a single user.

Wash Trading Prevalence

A striking 43% of trading volume on major platforms like OpenSea, LooksRare, and X2Y2—equivalent to 9.8 million Ether ($15.2 billion)—is attributed to wash trading. This manipulative tactic involves buying and selling the same NFTs to artificially inflate value without real market risk.

Conclusion

The report underscores the critical security challenges facing the NFT ecosystem, from technical vulnerabilities to market manipulation. Addressing these issues is essential for fostering a secure and trustworthy environment for NFT transactions.

What is Coinefficiency?

Coinefficiency is your go-to platform for optimizing cryptocurrency trading, investments and strategies. We provide a comprehensive suite of tools to analyze market trends, monitor price movements, and execute effective trading strategies. Whether you're a seasoned trader or new to crypto, Coinefficiency helps you maximize your profits with data-driven insights.

Why Use Coinefficiency?

  • Advanced market analytics to identify trading opportunities.
  • Compare markets relative performance.
  • Understand market cycles over time. See market levels.
  • Compare buy-and-hold, portfolio rebalancing, Dollar-Cost-Averaging trading strategies.

With Coinefficiency, you can stay ahead of the market and execute efficient trading strategies effortlessly.

Get Started with Coinefficiency

Ready to optimize your crypto investments? Take control of your portfolio with cutting-edge tools designed for both beginners and experts.