Despite decentralized finance (DeFi) protocols taking their security obligations more seriously, there’s still a while to go until they meet the standards being adopted by their centralized counterparts.
We believe this is a great chance for Glue to position itself as a frontrunner. Our mission has always been to build an expansive decentralized ecosystem that gives users a smooth experience, stability and security that is commonly found on centralized exchanges. This is more than welcome in a sector that can be known for putting innovation first and the experiences of users second, regardless of how much improvements in security will benefit the growth of the sector.
Let’s take a closer look at how Glue is countering the problems that DeFi applications continue to face, with a multifaceted security approach that takes into account the latest advances in blockchain technology and DeFi.
DeFi exploits are a persistent problem
Known for being innovative and fast-moving, interacting with DeFi protocols brings with it an element of risk. The environment is ripe for malicious actors, which is why we continue to see protocols drained of funds due to a whole range of factors:
- Smart contract errors – Hackers are adept at exploiting mistakes in the code of smart contracts, which form the basis of decentralized applications. This allows them to do anything, from manipulating prices to rerouting token transfers.
- Protocol exploitation – Vulnerability in a blockchain itself is another common area ripe for exploitation, exposing validator nodes or the protocol’s virtual machine.
- Phishing – As in the world of traditional finance, phishing is a persistent problem in the DeFi world. Users can be tricked into signing permissions that allow another party to gain control of their funds.
These three methods helped contribute to the $1.7 billion worth of cryptocurrency that was stolen in 2023, according to Chainalysis. $1.1 billion of this was from DeFi platforms.
Glue has been able to observe and take into account the successes and pitfalls of other projects. With a range of security measures, we think we’ve struck the right balance of freedom, flexibility, and security, opening up the world of DeFi to those who have only trusted centralized exchanges so far.
The Glue solution
In our article ‘Substrate — the framework underpinning the Glue ecosystem’, we talked about the way other blockchains built for DeFi have inherent weaknesses. Monolithic models, which run consensus, execution and storage on the one blockchain, are prone to downtime and can be crippled by one change. Meanwhile, the app-chain model, running without a base layer, can be easily compromised should one app in the chain be exploited.
Contrasted with these models, Glue’s use-case optimized blockchains allow for flexibility and customization, but never at the expense of the strong consensus layer. It is one of the pillars — including the Glue Security Fund, two-factor authentication and better UX — that make up our Swiss cheese model of defense.
Our rock solid Layer 1 and Layer 2s
As seen in the graphic above, an app, depending on its sophistication, can be built to interact with one, two, or all three blockchains, leveraging the strengths of each Layer 2 to ensure optimal performance in different scenarios. Meanwhile, the Layer 2 blockchains are able to send information back and forth through Substrate’s cross-consensus messaging (XCM) technology. XCM is itself a security measure, as L2s no longer need to rely on third-party — another element that can be attacked — bridges to communicate.
As the L2s provide functionality for applications, Glue’s Layer 1 validators handle security and consensus, guaranteeing that all operations throughout the network benefit from rock-solid and consistent security.
True ownership of assets with reduced risk
Unlike with traditional finance, users operating on Glue’s decentralized platform benefit from true ownership over their assets. There is no centralized provider who can confiscate or freeze funds, as your keys make you the sole custodian of your crypto.
Automatic Multi-Signature Verification
Native multi-signature functionality is built into the core protocol, doing away with vulnerable single-key addresses.
The multi-signature model involves the creation of a 2/4 multi-signature address:
- Two cold storage keys, held offline.
- One key held in the user’s hot wallet online.
- One key held by a trusted service provider within the Glue ecosystem, acting as an additional layer of security and oversight.
For a transaction to be approved, 2 out of 4 addresses must sign the transaction – ensuring a greater level of security over your assets.
The use of service providers to countersign transactions is a unique development in the crypto sector. While most transactions will be approved instantly, suspicious or unconventional transactions may trigger a request for more information to ensure the security of user funds.
Glue users still retain complete control over their own assets and have the ability to override the service provider if desired.
The Glue Service Layer
The Glue Service Layer is another unique feature that aims to provide users with the security and support that are so often lacking in the decentralized sphere.
Our goal is to build a vast and diverse network of service providers with a strong focus on customer service, something that is at present basically absent from decentralized finance. Built directly into our infrastructure, users can discover, subscribe to, and pay for services they need — it can be best imagined as an “app store” model that gives users additional features.
For providers, Glue’s Service Layer is open to everyone Our platform handles all the technical aspects, allowing companies to easily capitalize on a new revenue stream, offering everything from insurance and customer support to tax assistance and portfolio management.
From a security perspective, users could purchase insurance, giving them recourse to their funds in the event of a mistake or a scam, a marked improvement on the current situation where funds simply disappear.
Glue security fund
The Glue Security Fund, responsible for putting forward proposals that stakeholders can vote on, will prioritize allocating initial funds to one or more security providers. This will further our goal of maintaining a secure and resilient network.
Read more about Glue governance in our blog.
Security through ease of use
Clunky interfaces and multi-step transactions are an overlooked security hazard, as many issues simply result from a lack of clarity and overly complicated processes leading to human error.
The largest centralized exchanges have made the process of trading crypto quick and easy, and we aim to do the same in the world of decentralized finance. Through the ability to choose between simple and advanced exchanges in the Glue Hub, support through the Glue Service Layer mentioned above, and our cross-chain communication doing away with the complexities of bridging through third parties, we’re offering a sleek and friendly approach to crypto services, benefiting each and every user. After all, even if you’re experienced with crypto, who wants to use an interface that’s more complicated than it needs to be?
Security at our core
As you can see, security on Glue is not an afterthought — it is baked into the DNA of our system. We ensure that users of all levels can access a huge range of applications and features without the fear and confusion that has been known to come from interacting with decentralized products.
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