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The Ethereum community has proposed a new token standard, ERC-7265, aimed at reducing hack attacks targeting Decentralized Finance (DeFi). The ERC-7265 will enable the integration of a circuit breaker into protocols, preventing the total depletion of tokens in the event of a hack.
ERC-7265 Holds Great Importance for DeFi Altcoins
A group of Ethereum community members proposed a new token standard to boost the security of DeFi protocols. Dubbed ERC (Ethereum Request for Comment) 7265, this proposed standard will activate a “circuit breaker” that allows DeFi protocols to easily add a backstop that halts tokens from exiting smart contracts in the event of a hack.
The proposal for the ERC-7265 token standard comes at a time when hack attacks targeting DeFi are on the rise. Current data indicates that so far, hackers have stolen approximately $3 billion in funds from DeFi protocols. This fact underscores the importance of the new token standard, particularly for DeFi altcoins.
Meir Bank from Fluid Protocol told The Block, “We all agree that DeFi is broken. Not only are there numerous attacks, but the results are also catastrophic. When protocols get hacked, they usually lose everything. The TVL (Total Value Locked) drops to zero within seconds.” He underlined that the proposed ERC-7265 standard could undertake a crucial role.
Further Details of the ERC-7265 Token Standard
ERC-7265 is a standard proposed to reduce hack attacks targeting DeFi. DeFi hack attacks often result in significant losses due to the slowness of protocols in reacting and preventing them. ERC-7265 aims to address this issue by enabling teams to implement a circuit breaker with per-asset customized rate limit parameters.
This circuit breaker will increase the chance of rescuing most of the funds by preventing attackers from quickly draining all the funds in a smart contract during an attack. The standard is designed for managed DeFi protocols that can be upgraded by governance and is expected to bring numerous benefits and few disadvantages upon integration. However, the acceptance and implementation of ERC-7265 as a final standard will depend on the decision of the core Ethereum team and the broader Ethereum community.
