Why Are Private Keys Becoming a Primary Attack Vector?
Private key compromises are emerging as one of the most costly risks in crypto, with more than $17 billion stolen across 518 incidents over the past decade, according to data from DefiLlama. The figures point to a growing concentration of losses tied to compromised credentials rather than flaws in protocol code.
Data shows that 22.3% of incidents were linked to brute-force attacks on private keys, while 18.2% stemmed from unknown compromise methods. Phishing attacks targeting multi-signature wallets accounted for another 10%, highlighting the continued role of social engineering in large-scale losses.
The trend reflects a shift in attack strategy. As smart contract security has improved through audits and formal verification, attackers are increasingly targeting wallet infrastructure, access credentials, and user behavior to extract funds.
How Recent Exploits Reinforce the Trend
The latest data follows one of the largest crypto breaches of 2026, when an attacker drained approximately 116,500 restaked Ether from Kelp DAO’s rsETH bridge, valued at roughly $290 million to $293 million at the time. The incident adds to a growing list of high-value exploits linked to operational vulnerabilities rather than core protocol failures.
Decentralized finance has also absorbed significant losses. More than $600 million was stolen from DeFi protocols over the past 60 days, according to a report from GSR, with the Kelp exploit and an April attack on Solana-based Drift Protocol accounting for most of the total.
The pattern suggests that improvements in smart contract audits are not eliminating risk, but instead redirecting attacker focus toward weaker points in the broader system, including bridges, signing processes, and developer tooling.
Investor Takeaway
What Is Driving the Rise in Credential-Based Attacks?
Cybersecurity firms point to advances in malware and artificial intelligence as key factors enabling attackers to scale credential-based exploits. Social engineering tactics, including transaction history spoofing, are being used to trick users into copying malicious wallet addresses.
The emergence of hacking-as-a-service tools is also lowering the barrier to entry. These services allow attackers to deploy pre-built malware and phishing infrastructure, often in exchange for a share of stolen funds.
“If people are getting these links, their wallets can be completely drained,” said Dyma Budorin, co-founder and CEO of Hacken. “The platform on the darknet will take the commission for their tools and [scammers] get the bigger portion of the drained wallets.”
This model enables less technically sophisticated actors to execute attacks at scale, increasing both the frequency and reach of wallet-targeting campaigns.
Investor Takeaway
What Does This Mean for DeFi Risk and Returns?
The shift in attack patterns is adding pressure to a sector already facing tighter margins. GSR noted that DeFi yields are converging with traditional finance levels, raising questions about whether the risk-reward balance remains attractive for users.
At the same time, phishing and social engineering continue to dominate loss categories. Web3 projects lost $482 million in the first quarter of 2026, with $306 million attributed to these attack vectors, according to Hacken.
Some indicators suggest partial improvement. Data from Scam Sniffer shows that phishing-related losses declined in 2025, pointing to increased user awareness. However, the continued evolution of wallet-draining scripts and malware indicates that the threat environment remains active.
The overall trajectory suggests that security in crypto is becoming less about protocol design and more about operational discipline, infrastructure resilience, and user behavior.
