Unverified DeFi Contracts Linked to $36.7 Million in Losses, Chainalysis Says

Rapid advances in artificial intelligence had fueled widespread fears that hackers would weaponize AI models and unleash a devastating “hackpocalypse” in decentralized finance, or DeFi, causing heavy losses for users. The issue is critical because DeFi's security directly affects trust and capital inflows across the global blockchain industry, making it a key measure of whether the broader Web3 ecosystem can enter the mainstream.

A partner at venture capital firm Dragonfly said in July 2026 that DeFi thefts were projected to run at an annualized $1.89 billion this year, below the 2025 level, confirming that the “hackpocalypse” had not materialized. Although the use of AI has increased the number of attacks, security upgrades at major protocols have significantly reduced losses per incident, suggesting that the overall security environment is gradually improving.

Decentralized finance (DeFi) protocols use smart contracts to manage onchain assets. Vulnerabilities involving private keys, code or access controls can allow funds to be stolen rapidly. DefiLlama data show that the scale of attacks often shifts with market cycles and liquidity, meaning lower losses do not indicate that security risks have receded.

In the first quarter of 2026, from January through March, 34 DeFi protocols were hacked, resulting in total losses of about $169 million. Step Finance suffered the quarter’s largest single loss, at $40 million, after its private key was stolen. Although overall losses fell sharply from the same period in 2025, the frequency of attacks remains a concern.