The crypto sector just got even spicier. On April 7, Anthropic announced Claude Mythos, a new artificial intelligence (AI) model that the company (perhaps self-servingly) has called too dangerous for public release. Since the start of April, about $606 million in capital has been pilfered from decentralized finance (DeFi) protocols across 12 different hacks targeting Ethereum (ETH 2.76%), Solana (SOL 3.31%), a couple of smaller networks, and especially the cross-chain plumbing between them.
Don’t worry — there’s no causal connection between Mythos’ launch and the heists, as Mythos isn’t publicly available yet. But the crypto community is alight with fear anyway, as the hacking tools of today are clearly sufficient to bring plenty of ruin to DeFi ecosystems, and the tools of the (very) near future look to be dramatically more powerful. So, is there a real threat to DeFi majors like Ethereum and Solana, or, in other words, is the crypto community’s fear of Mythos justified?
Image source: Getty Images.
Don’t panic-sell just yet
If the experts and its creators are to be believed, Anthropic’s Mythos is indeed a real leap forward in both offensive and defensive cyber capabilities, as it’s supposedly able to autonomously find and exploit previously unknown software vulnerabilities at scale. Access to the model is currently limited to a few dozen owners of critical cyber infrastructure, and defensive work is being prioritized before its eventual release to the public, assuming that ever happens.
But crypto’s hacks in April weren’t a result of the type of vulnerabilities that a Mythos-style model is supposed to excel at finding.
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Solana’s $285 million Drift Protocol hack on April 1, allegedly performed by a group of hackers from North Korea, was implemented via a combination of normally allowed protocol interactions and social engineering, which is to say that the attackers were able to sweet-talk or otherwise deceive certain personnel into taking actions that compromised security when paired with other usually innocuous behaviors. Similarly, the $292 million Kelp DAO exploit on April 18 on Ethereum, also attributed to North Korean hackers, happened due to a cross-chain bridge being misconfigured in a way that left it vulnerable to a fairly rudimentary intrusion rather than an exotic cyberattack or advanced malware.
Thus, the anxiety about cybersecurity in crypto, while timely and well-grounded in reality, isn’t even directly connected to the AI tools that are widely available today.
Nonetheless, at the start of April, the entire DeFi sector had $94 billion in total value locked (TVL) in DeFi protocols. As of April 21, there was $85 billion in TVL. When the Kelp hack happened, roughly $13 billion in DeFi TVL vaporized within 48 hours, with a $6.6 billion drop concentrated at lending protocol Aave. It’s these cybersecurity incidents and the fears that follow them that are actually driving capital out of the sector.
And that’s certainly bad news for both Ethereum and Solana, as both rely heavily on the idea that their DeFi segments will attract capital to their chains and thereby boost the prices of the coins.
The attack surface isn’t getting any smaller
One important thing to note here, for the sake of understanding the risk to your crypto portfolio, is that not all cryptocurrencies are as exposed to present and emerging cybersecurity risks as Solana and Ethereum.
Bitcoin‘s programmable surface is, by design, very minimal; it doesn’t have native smart contracts or any DeFi ecosystem. It exposes less to potential attackers, no matter what tools attackers are equipped with.
Ethereum, Solana, and other smart contract-capable networks made the opposite bargain, and they can’t go back on it. Ethereum’s DeFi TVL alone is $45.8 billion, meaning that tens of billions in capital are tangled up in structures of user-written logic and human-created computer code. Solana’s TVL is only $5.5 billion, but the problem is the same.
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One key takeaway for investors is that if defensive cybersecurity on those networks doesn’t improve significantly in advance of the public getting access to Mythos or similarly powerful AI tools, few investors will be interested in committing their capital to places where they perceive it will be easy to steal.
So, is Mythos a threat to Ethereum and Solana? Yes, it could be, but in practical terms, it probably won’t be a problem for a while, and there are many more urgent risks to address in the meantime. If you hold these coins, be advised that there might be some choppy waters ahead.
