Founder’s Guide to Web3 Security

Nearly $3 billion was lost to Web3 hacks and exploits in 2024. Think about that. That’s not just numbers on a screen; it’s lost funds, shattered dreams, and eroded trust in the entire ecosystem. And frankly, a lot of it was preventable.

If you’re a founder in this space, prioritizing security is not just a best practice; it’s a fundamental responsibility.

This article is a high-level overview of the critical Web3 security threats you must address and the essential actions you need to take. It is not an exhaustive, deep-dive technical guide; consider it a wake-up call and a starting point.

Web3 Threat Landscape: Understanding the Risks

You’re not building a simple web app anymore. You’re building on a fundamentally different architecture, with new attack vectors and a constantly evolving threat landscape. 

Here’s a breakdown of what you’re actually up against:

• Access control & data breaches: Web3 security is not just about code; it’s about people. Attackers are increasingly targeting the human element, exploiting trust, urgency, and lack of awareness.
  
  Social engineering, particularly phishing, is the number one attack vector, causing over $600 million in losses in 2024 alone. And it’s not just dumb phishing emails and websites anymore. Attackers are using AI-generated deepfakes and sophisticated tactics. Think compromised X accounts, targeted LinkedIn messages, fake job offers, infectious interviews, even impersonating project founders in video calls.

Your team will be targeted. One slip-up, one phishing email, one compromised device, and it’s game over.

• Smart contract exploits: These are responsible for over $300 million in losses. And it’s not always about complex vulnerabilities. Reentrancy, integer overflows/underflows, and simple logic errors can be devastating. If your contracts aren’t audited, someone will find the cracks and drain your funds.
  
• Flash loan attacks: Flash loans are a fundamental part of DeFi, and attackers are incredibly adept at using them. It’s not just about code vulnerabilities; it’s about economic vulnerabilities in your protocol design.
  
• Oracle manipulation: Oracles are the bridge between the real world and your smart contracts. If that bridge is weak, your whole system is vulnerable. Price oracles are a prime target, but any data oracle can be manipulated.
  
• Blockchain weaknesses: For most projects, they are less of an immediate concern than the other threats listed above. 51% attacks are expensive and difficult to execute on major chains like Ethereum. Sybil attacks are more relevant for specific applications, like decentralized governance. Still, you need to understand the inherent risks of the chain you’re building on.

Building a Security-First Culture: It’s Not Optional, It’s Existential

Security isn’t a feature; it’s a mindset. It needs to be baked into your company’s DNA from day one. This goes beyond simply checking boxes; it requires creating a culture of awareness, vigilance, and proactive risk management.

• Hire a CISO/Security Lead.

Don’t cheap out on this. Get someone who actually understands both Web2 and Web3 security. They need to be experienced, proactive, and able to challenge your assumptions. If you can’t afford a full-time CISO, get a fractional one, or at the very least, a very experienced consultant who’s on retainer.

• Implement security policies (and enforce them):
  • Device encryption: Mandatory. No excuses. Use Mobile Device Management (MDM) software to enforce encryption on all company devices. Regularly verify encryption status.
  • Multi-Factor Authentication: Enforce MFA on everything – email, code repositories, cloud services, wallets, internal tools. Use hardware security keys (like YubiKeys) for critical accounts for stronger protection against phishing.
  • Strong, unique passwords: Implement a company-wide password manager (e.g., 1Password, Keeper). Enforce password complexity requirements and regular password changes. Disable password sharing features.
  • No account sharing: Ever. Implement audit logs to track account usage and identify any violations.
  • Social media training: Your team will be targeted on social media. They need to be trained to recognize and avoid phishing attempts.
  • Clear information security policies: Document everything. Regularly review and update policies. Make sure everyone understands the rules and the consequences of breaking them.

Securing Your Infrastructure: The Foundation of Your House

Even with perfectly secure smart contracts, vulnerabilities in your infrastructure can expose you to attacks.

• DDoS protection: You will be targeted by DDoS attacks. Implement robust defenses. Cloudflare, Akamai… use something. Don’t try to roll your own.
• Keep dependencies updated: Outdated dependencies are a goldmine for attackers. Automate this process. Use dependency scanning tools.
• Regular penetration testing: Hire external security experts to try and break your system. This is not a one-time thing; it’s an ongoing process. Find your weaknesses before someone else does.
• Protect against data breaches & private key compromise: Implement robust access controls, multi-signature wallets, hardware security modules (HSMs), and cold storage. Assume you will be breached. Plan accordingly.

Smart Contract Security: Audits Aren’t Magic, But They’re Essential

Smart contract security starts with you, the founder, and your development team. Audits are non-negotiable, but they are a validation step, not a starting point. Think of them as a highly skilled, external review, designed to catch flaws that even diligent development can miss. 

To make audits truly effective, you need to build a solid foundation of secure code before you bring in external reviewers.

• Follow secure coding best practices religiously. Solidity is unforgiving. Understand reentrancy guards (Checks-Effects-Interactions pattern is the golden rule), overflow/underflow protection (use SafeMath or Solidity 0.8+), access control modifiers (least privilege), and proper event emission for logging.
• Formal verification. Seriously consider formal verification for critical smart contracts. Tools like Certora and Halmos can mathematically prove the correctness of your code, going beyond what audits can achieve.
• Write comprehensive unit and integration tests. Testing is not optional. Aim for high test coverage and test all edge cases, especially around security-sensitive logic.
• Implement circuit breakers and emergency pause functions. Even with best practices, have a “kill switch.” Implement circuit breakers for rapid response to exploits. Decentralized governance for these functions adds complexity but is often worth it.

With this strong security foundation in place, audits become powerful validation tools. They provide expert external assessment, identify blind spots, and confirm your code’s resilience.

To maximize audit value, remember these key points:

• Choose a reputable auditor: Don’t go for the cheapest option. Cheap audits are often worthless, or even harmful if they give you a false sense of security. Reputation, experience, and specialization in Web3 security are key. Look for auditors with a proven track record. Check their past audits. Talk to their clients.
• Prepare for the audit: Audits are a collaborative process. The better you prepare, the more effective the audit will be. Don’t just dump your code on the auditors and expect them to work miracles. Document your requirements clearly. Provide clean, well-commented code. Be responsive to their questions.
• Bug bounty programs: Incentivize the community to find vulnerabilities. Offer significant rewards for critical bugs. This is a cost-effective way to leverage the collective intelligence of the security community.

Monitoring and Incident Response: You Can’t Prevent Everything, But You Can React

No matter how good your security is, breaches can happen. You need to be prepared to detect and respond to them quickly and effectively.

• 24/7 on-chain monitoring: Set up real-time monitoring to detect suspicious activity. Hacken Extractor, Forta, OpenZeppelin’s Defender, and other tools can help with this. Don’t rely on manual observation.
• Incident response plan: Have a plan in place before a breach occurs. Know who to contact, what steps to take, and how to communicate with your users. Practice your incident response plan. Run drills.
• Automated monitoring and response: Focus first on implementing robust automated monitoring and alerting. As you gain experience and the technology matures, carefully explore automated response capabilities for specific, well-defined, and low-risk scenarios.

Conclusion: Security is a Journey, Not a Destination

There’s no such thing as perfect security. The threat landscape is constantly evolving, and you need to adapt. If you haven’t made security a top priority yesterday, you’re already playing catch-up.

Key takeaways:

Security is the core priority. Not just a core priority. It’s the foundation upon which trust and long-term success are built in Web3.

Implement multiple layers of security. No single security measure is sufficient. Defense in depth is crucial to protect against diverse attack vectors.

Security isn’t a one-time fix. It’s a continuous process of monitoring, testing, updating, and adapting.

Culture is paramount. Security is not just about tools and technology; it’s about people and processes. Build a security-first culture from day one.

The billions lost in 2024 are a stark reminder of the consequences of security failures. Invest in security as if your project’s life depends on it – because it does. Don’t just aim to be “secure enough” – aim to be formidably secure. Your users, your investors, and the entire Web3 ecosystem will thank you for it.