ByBit’s $1.4B Wake-Up Call For Web3 Security

Why centralized security is failing web3 and how DePIN is the answer.

On February 21, 2025, Web3 faced its most devastating hack yet—Bybit, a leading exchange, was hacked for $1.4 billion in ETH and staked ETH, sending shockwaves through the digital asset community. This unprecedented breach exposed a persistent truth: centralized exchanges (CEXs) are the Achilles’ heel in Web3 security.

The attack reportedly exploited a sophisticated phishing hack, deceiving multisig wallet signers into approving fraudulent transactions via UI spoofing. While ByBit’s core infrastructure survived, trust in centralized security suffered yet another heavy blow.

Centralized Security’s Fatal Flaw for Web3

ByBit’s loss highlights an alarming trend. In 2024 alone, Web3 suffered $2.36 billion in losses across 760 security incidents, most targeting centralized platforms. Why? Centralized systems hinge on human trust—making them predictable, lucrative targets for cybercriminals. While Web3 preaches decentralization, many of its most valuable assets still rely on Web2-era security models.

CEXs, with their centralized control over funds, operate as high-value targets. Unlike decentralized finance (DeFi) protocols, where users retain self-custody, CEXs depend on human trust—an inherently exploitable weakness. ByBit joins Binance and OKX among victims proving centralized Web2-era security models are inadequate for decentralized ambitions.

Decentralized Infrastructure (DePIN) as the Solution

Web3 security urgently requires a shift from centralized vulnerability to decentralized resilience. Decentralized Physical Infrastructure Networks (DePIN) distribute trust and validation, eliminating the single points of failure exploited by attackers.

Naoris Protocol stands at the forefront of this security evolution. Utilizing its Post-Quantum powered Decentralized Proof of Security (dPoSec) blockchain, Naoris Protocol replaces traditional centralized control with a decentralized network of validator nodes. Each node continuously validates every other, forming a robust, real-time “security hive mind” to swiftly detect and neutralize threats.

Could Naoris Protocol Have Prevented the Bybit Hack?

While no security system is infallible, a DePIN cybersecurity framework like Naoris Protocol  could have significantly reduced such risks. Here’s how Naoris Protocol could have mitigated the ByBit incident:

Phase 1: Preventing Credential Theft and Host Compromise

Naoris Protocol assigns quantum-resistant cryptographic identities to devices, making stolen credentials unusable from compromised machines. Its decentralized validator nodes automatically detect abnormal user behaviors or compromised devices, isolating threats immediately. Lazarus operatives would have faced instant detection and containment, blocking persistent system access.

Phase 2: Stopping UI Spoofing and Malicious Transactions

Attackers tricked ByBit’s signers with fake transaction interfaces. Naoris Protocol addresses this vulnerability through quantum-secure UI hashing, continuously verifying transaction interfaces against cryptographically secure, on-chain versions. Any alteration triggers instant consensus failure, halting malicious transactions. Moreover, its distributed code attestation ensures only verified smart contracts execute, thwarting any unauthorized transactions.

Had ByBit adopted this type of security, fraudulent transactions would have detected and blocked the breach in real time, protecting $1.4 billion in user assets.

Web3’s Imperative: Decentralized Security

The ByBit breach underscores why centralized models are no longer viable for Web3’s decentralized vision. David Carvalho, CEO of Naoris Protocol, emphasizes this urgency:

The ByBit hack highlights systemic flaws in centralized security. Web3 must break free from Web2 vulnerabilities. Decentralized ecosystems demand decentralized security. The time for DePIN is now.

CEO of Naoris Protocol

ByBit’s transparent response and swift reassurances to users—pledging 1:1 asset backing and full solvency—are praiseworthy. Yet, the reality remains stark: centralized security has failed repeatedly, demanding immediate evolution.

Web3 stands at a crossroads. To fulfill its decentralized promise, it must embrace trustless, resilient security models. The ByBit attack is more than a breach—it’s an urgent call for Web3 to transition fully to DePIN-based cybersecurity solutions like Naoris Protocol.

Decentralized security isn’t theoretical—it’s operational now. Discover Naoris Protocol’s Post-Quantum DePIN Testnet. With 918K+ wallets and 11.4M+ quantum-secure transactions, Naoris Protocol is proving that the future of Web3 security is decentralized.

About Naoris Protocol

Naoris Protocol is revolutionizing cybersecurity and digital trust with the world’s first Decentralized Security Layer, — a Post-Quantum powered DePIN that secures Web2 & Web3 infrastructures, including L0, L1, L2, DEXes, bridges, and validators. By turning every device into a trusted validator node, our Decentralized Security Layer leverages the cutting-edge dPoSec consensus mechanism and Decentralized Swarm AI, to set a new standard in transparency, trust, and security — preparing Web2 and the blockchain ecosystem for a Post-Quantum future.

Led by industry experts and cyber pioneers adding decades of experience who are committed to advancing the frontiers of cybersecurity and trust, here’s some of our trusted advisors;

• David Holtzman: former CTO of IBM and architect of the DNS protocol
• Ahmed Réda Chami: Ambassador for Morocco to the EU. Former CEO Microsoft North Africa
• Mick Mulvaney: Former White House Chief of Staff
• Inge Kampenes: Former Chief of Norwegian Armed Forces & Chief of Cyber Defence adding decades of experience who are committed to advancing the frontiers of cybersecurity and trust.

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