The Biggest Ethereum Hacks and How They Happened

Ethereum, the second-largest cryptocurrency by market capitalization, has been a transformative force in the blockchain world. However, its complexity and flexibility have also made it a prime target for hackers. Over the years, several high-profile hacks have resulted in millions of dollars in losses. Below, we examine some of the biggest Ethereum hacks, how they happened, and the lessons learned from each.

1. The DAO Hack (2016) – $60 Million

How It Happened

The DAO (Decentralized Autonomous Organization) was one of Ethereum’s first major projects. It raised over $150 million in Ether (ETH) through crowdfunding, aiming to create a decentralized venture capital fund. However, the DAO’s smart contract contained a reentrancy vulnerability, which allowed an attacker to repeatedly withdraw funds before the balance could update.

Aftermath

The attack drained approximately $60 million worth of ETH. In response, Ethereum’s community decided to hard fork the blockchain, effectively reversing the hack. This controversial decision led to the creation of Ethereum Classic (ETC), which retained the original, unforked chain.

2. Parity Multisig Wallet Hacks (2017) – $150 Million Combined

How It Happened

Parity Technologies, a major Ethereum infrastructure provider, suffered two significant hacks due to vulnerabilities in their multisig wallet smart contract.

• First Hack (July 2017): Attackers exploited a flaw in the wallet’s code, draining 150,000 ETH (worth about $30 million at the time).
• Second Hack (November 2017): A user accidentally triggered a self-destruct function in the Parity smart contract, permanently freezing $280 million worth of ETH (of which around $120 million was user funds).

Aftermath

The funds remained locked forever, leading to significant losses for multiple projects. The incident highlighted the dangers of flawed smart contract logic and the importance of security audits.

3. The Mt. Gox of Ethereum: The EtherDelta Hack (2017) – $800,000

How It Happened

EtherDelta, a decentralized exchange, was hacked when attackers took control of its DNS server, redirecting users to a malicious website. Unsuspecting traders entered their private keys, allowing the hackers to steal their ETH and tokens.

Aftermath

Though losses were relatively small compared to other hacks, this incident showed that even decentralized platforms could suffer from centralized weaknesses, such as DNS vulnerabilities.

4. The Coincheck Hack (2018) – $534 Million (In NEM, Not ETH)

How It Happened

While not an Ethereum-specific hack, the Coincheck breach serves as an important lesson for the crypto space. Hackers stole 523 million NEM tokens by exploiting weak security practices, such as storing assets in a hot wallet instead of a more secure cold wallet.

Aftermath

Coincheck reimbursed affected users, but the attack reinforced the need for better security protocols among exchanges and wallets.

5. The dForce/Lendf.me Hack (2020) – $25 Million

How It Happened

Lendf.me, a decentralized lending protocol under the dForce ecosystem, was exploited through a reentrancy attack similar to The DAO hack. Hackers manipulated the price of imBTC (a Bitcoin-pegged token on Ethereum) to withdraw more funds than they should have been allowed to.

Aftermath

Interestingly, the hacker returned most of the stolen funds after being identified. The incident underscored the need for better security testing and DeFi risk management.

6. The KuCoin Hack (2020) – $280 Million

How It Happened

KuCoin, a major cryptocurrency exchange, suffered a breach in which attackers accessed private keys to the exchange’s hot wallets. They siphoned $280 million worth of various cryptocurrencies, including ETH and ERC-20 tokens.

Aftermath

Fortunately, KuCoin managed to recover most of the stolen funds with the help of blockchain tracking and law enforcement agencies. This incident reinforced the necessity of cold storage and multi-layered security.

7. The Poly Network Hack (2021) – $611 Million

How It Happened

One of the largest hacks in DeFi history, the Poly Network exploit occurred when an attacker exploited a vulnerability in the platform’s smart contract to steal over $600 million worth of cryptocurrencies, including Ethereum tokens.

Aftermath

Surprisingly, the hacker returned most of the funds, claiming they wanted to “highlight vulnerabilities.” The Poly Network hack emphasized the need for rigorous security audits and proper access controls in DeFi protocols.

8. The Ronin Network Hack (2022) – $620 Million

How It Happened

Ronin Network, an Ethereum sidechain for the Axie Infinity game, suffered one of the biggest crypto hacks ever. Attackers compromised five out of nine validator nodes, allowing them to withdraw $620 million worth of ETH and USDC.

Aftermath

The hack exposed the dangers of centralized control in blockchain systems. Axie Infinity’s developers pledged to reimburse victims, and the attack prompted calls for stronger node security.

9. The Wintermute Hack (2022) – $160 Million

How It Happened

Wintermute, a leading market maker, was exploited via a vulnerability in its smart contract related to private key exposure. The hacker used a flaw in Wintermute’s vault to siphon funds without proper authentication.

Aftermath

Despite the significant loss, Wintermute assured users that the company remained solvent. This hack further highlighted the risks associated with improper key management and access control.

Lessons Learned

The Ethereum ecosystem has suffered numerous hacks, each exposing unique vulnerabilities. The key takeaways include:

1. Smart Contract Security Is Crucial – Many hacks stem from poorly written smart contracts. Rigorous security audits and formal verification can help prevent exploits.
2. Reentrancy Attacks Are a Persistent Threat – The DAO and dForce hacks show that reentrancy vulnerabilities remain a major problem in Ethereum smart contracts.
3. Centralized Weaknesses Can Undermine Decentralization – Hacks like EtherDelta and Ronin Network demonstrate that centralized points of failure (DNS servers, validator nodes) can lead to massive breaches.
4. Multi-Signature Wallets and Cold Storage Are Essential – Exchange hacks like KuCoin and Coincheck highlight the importance of storing assets securely.
5. DeFi Protocols Need Stronger Safeguards – The rapid growth of DeFi has led to increasingly sophisticated attacks. Developers must implement rigorous security measures to protect user funds.