1. Introduction

1.1 Background and Significance

As one of the most influential blockchain platforms globally, Ethereum, since its launch in 2015, has sparked widespread changes and innovations in many fields such as finance, gaming, and supply chain with its innovative smart contract technology and decentralized application (DApps) ecosystem. ETH, as the native cryptocurrency of the Ethereum network, serves not only as the fuel for network transactions and smart contract execution but also as the core value carrier of the entire Ethereum ecosystem, playing a crucial role in the global cryptocurrency market.

However, with the rapid development of the Ethereum ecosystem and the continuous rise in the value of ETH, the security threats it faces are becoming increasingly serious. Hacker attacks, as one of the main security risks, frequently impact the Ethereum network and related applications. From the early The DAO incident, where hackers exploited smart contract vulnerabilities to steal about 60 million US dollars’ worth of Ether, leading to a hard fork in Ethereum, to recent major security incidents such as the theft of 1.4 billion US dollars’ worth of ETH from the Bybit exchange, each attack has brought significant economic losses and reputational damage to investors, project parties, and the entire Ethereum ecosystem. These attacks not only undermine users’ trust in the security of Ethereum, but also pose a serious threat to the stability and healthy development of the cryptocurrency market.

2. ETH Overview

The development history of 2.1 ETH

The concept of Ethereum was first proposed at the end of 2013 by Vitalik Buterin, a Russian-Canadian programmer. Building on the foundation of Bitcoin, he envisioned a more universal blockchain platform that not only enables digital currency transactions but also supports the development and operation of various decentralized applications (DApps). In 2014, Ethereum raised about 18 million US dollars in Bitcoin through an Initial Coin Offering (ICO), providing funding for the project’s launch and development.

On July 30, 2015, the Ethereum mainnet was officially launched, opening the stage called “Frontier”. At this stage, the Ethereum network was still in its early experimental stage, mainly targeting technical developers. The user interface and operations were relatively complex, and the functionality was not perfect. However, it marked the official birth of the Ethereum blockchain, allowing users to start mining ETH and conducting simple transactions and smart contract deployment.

In March 2016, Ethereum entered the “Homestead” phase. This phase involved a series of important updates and improvements to the Ethereum protocol, enhancing the network’s stability and security, introducing new security features such as security checks for smart contracts, making the Ethereum network more user-friendly, marking Ethereum’s transition from the experimental stage to the practical stage. However, in June 2016, the shocking The DAO incident occurred, shaking the cryptocurrency field. The DAO was a decentralized autonomous organization based on Ethereum, raised a large amount of Ether through an ICO, but due to vulnerabilities in the smart contract, it was hacked, resulting in the theft of around $60 million worth of ETH. In order to compensate investors’ losses, the Ethereum community decided to conduct a hard fork to return the stolen funds to the original address. This measure triggered a community split, with some adhering to the immutability principle of blockchain continuing to maintain the original chain, forming Ethereum Classic (ETC), while Ethereum (ETH) continued to develop on the new chain.

From 2017 to 2019, Ethereum entered the “Metropolis” phase, which aims to improve the scalability, privacy, and security of Ethereum. Metropolis is further divided into two hard fork upgrades, Byzantium and Constantinople. The Byzantium upgrade was completed in October 2017, introducing multiple improvements including optimization of smart contract execution, delay of the difficulty bomb, and reducing block rewards, thus enhancing network performance and security. The Constantinople upgrade was originally scheduled for January 2019 but was delayed to February 28th due to the discovery of security vulnerabilities. This upgrade further optimized the efficiency of smart contract execution, reduced gas costs, and introduced some new features and improvements, such as supporting more efficient smart contract programming and data storage.

On December 1, 2020, the beacon chain of Ethereum 2.0 was officially launched, marking the beginning of Ethereum’s transition to the Proof of Stake (PoS) consensus mechanism and the start of the ‘Serenity’ phase. The goal of Ethereum 2.0 is to address scalability, security, and energy consumption issues faced by the Ethereum network by introducing PoS mechanism, sharding technology, etc. The beacon chain, as a core component of Ethereum 2.0, is responsible for managing the validator set and allocating validation tasks, laying the foundation for subsequent shard chains and virtual machine upgrades. Subsequently, the development and upgrade work of Ethereum 2.0 continues to advance, constantly moving towards the goal of achieving a more efficient, secure, and scalable blockchain platform.

In the development process of Ethereum, in addition to technical upgrades, its ecosystem is also expanding. Decentralized finance (DeFi), non-fungible tokens (NFT), and other applications based on Ethereum experienced explosive growth from 2020 to 2021, attracting a large number of developers, investors, and users worldwide. This greatly expanded and enhanced the application scenarios and value of ETH, further consolidating Ethereum’s position in the blockchain field.

2.2 The technical principles and characteristics of ETH

1. Smart Contract: Smart contract is one of the core innovations of Ethereum, it is a self-executing contract stored on the blockchain in code form. Smart contracts contain predefined rules and conditions, when these conditions are met, the contract will automatically execute the corresponding operations without the need for third-party intervention. For example, in a decentralized lending platform based on Ethereum, borrowers and lenders can agree on loan amounts, interest rates, repayment terms, and other terms through smart contracts. When the repayment term expires, the smart contract will automatically check the borrower’s repayment status, transfer funds, calculate interest according to the agreement, the whole process is transparent, fair, and tamper-proof. The implementation of smart contracts depends on the Ethereum Virtual Machine (EVM), EVM is a sandbox environment for executing smart contracts, providing the necessary computational resources and storage space for smart contracts to securely and reliably run on the Ethereum network.
2. Consensus Mechanism: Ethereum’s consensus mechanism has undergone a transition from Proof of Work (PoW) to Proof of Stake (PoS). Under the early PoW mechanism, miners compete for the right to create new blocks by solving complex mathematical problems. Miners who successfully create new blocks will receive ETH as a reward. The advantages of the PoW mechanism are high security and decentralization, but it has disadvantages such as high energy consumption and slow transaction processing speed. To address these issues, Ethereum is gradually transitioning to the PoS mechanism. In the PoS mechanism, validators earn the right to create new blocks and validate transactions based on the amount of ETH they hold and the duration of their holdings. Validators with more ETH and longer holding periods have a greater probability of being selected to create new blocks. The PoS mechanism significantly reduces energy consumption, improves transaction processing speed, and enhances the decentralization of the network, as more ordinary users can participate in the network’s validation process by staking ETH.
3. Decentralization: Ethereum is a decentralized blockchain platform without centralized servers or management organizations, maintained by nodes distributed globally. Each node stores a complete copy of the blockchain ledger, communicating and synchronizing data through a P2P network. This decentralized architecture gives the Ethereum network high resistance to censorship and fault tolerance, ensuring that the normal operation of the entire network is not affected by the failure or malicious attacks of any single node. At the same time, decentralization also ensures that users have complete control over their assets and data, without the need to trust any third-party organization.
4. Openness and Scalability: Ethereum is an open-source platform, and its source code is open to everyone. Developers can freely develop various decentralized applications on the basis of Ethereum without permission. This openness has attracted a large number of developers worldwide to participate in the construction of the Ethereum ecosystem, promoting technological innovation and application diversity. In addition, Ethereum continuously enhances the network’s scalability by introducing solutions such as sharding and sidechains to meet the growing user needs and application scenarios. Sharding technology divides the blockchain network into multiple shards, each of which can independently process transactions, thereby increasing the overall network’s transaction processing capacity. Sidechains are blockchains parallel to the Ethereum main chain, enabling asset transfer and data interaction with the main chain through two-way anchoring technology, further expanding Ethereum’s application boundaries.

2.3 ETH’s position in the cryptocurrency market

1. Market Cap Ranking: ETH is the second largest cryptocurrency in the world by market cap, second only to Bitcoin. According to Gate.io’s data, as of 2025-2-26, the circulating market cap of ETH has reached 300.5 billion US dollars, accounting for approximately 9.86% of the total market cap of the cryptocurrency market. Its market cap reflects the market’s high recognition of the Ethereum ecosystem and the value of ETH, with a large number of investors and institutions considering ETH as an important part of their digital asset allocation.
2. Trading Volume: ETH has a very high trading volume in the cryptocurrency market, making it one of the most actively traded cryptocurrencies in the market. On major cryptocurrency exchanges, ETH has numerous trading pairs with Bitcoin, stablecoins, and various other digital currencies, leading to frequent trading activities. The high trading volume not only ensures the liquidity of ETH, allowing it to be bought and sold quickly and conveniently in the market, but also reflects the widespread demand and high level of attention for ETH in the market. For example, during periods of significant market volatility, the daily trading volume of ETH can reach billions of US dollars, surpassing the trading activity of some traditional financial assets.
3. Application Ecosystem: Ethereum has the most abundant and active application ecosystem, serving as the major infrastructure for decentralized finance (DeFi), non-fungible tokens (NFT), decentralized applications (DApps), and other fields. In the DeFi sector, a plethora of lending, trading, insurance, and wealth management applications built on Ethereum have emerged, forming a vast decentralized financial system where the value of ETH locked in DeFi projects reaches billions of dollars. The NFT market is also centered around Ethereum, with a large number of digital artworks, collectibles, game items, etc., issued, traded, and circulated in the form of NFTs on Ethereum, driving innovation and development in digital assets. Additionally, numerous DApps run on the Ethereum platform, spanning various areas such as social, gaming, e-commerce, identity verification, attracting hundreds of millions of users worldwide. Ethereum’s robust application ecosystem not only creates a wide range of use cases and practical demands for ETH but also positions it as a vital bridge connecting the entire cryptocurrency market and the real world, further solidifying its core position in the cryptocurrency market.

3. ETH Hacker Attack Event Panoramic Scan

3.1 Attack Event Statistics Analysis

3.1.1 Historical Attack Frequency and Trends

Through the analysis of ETH hacker attacks, we found that the number of ETH hacker attacks shows a complex trend of changes. In the early stage, with the rise and development of the Ethereum network, the number of attacks was relatively small but grew rapidly. In 2016, due to The DAO incident, it triggered a high level of concern in the cryptocurrency community about the security of Ethereum. Although the number of attacks in that year was not high, the significant impact of The DAO incident made security issues the focus.

Subsequently, with the continuous expansion of the Ethereum ecosystem, various projects and applications based on Ethereum have emerged in large numbers, and the number of hacker attacks has also been increasing year by year. During the period of 2019-2020, the increase in attack frequency was more significant, which is closely related to the explosive growth of DeFi projects on Ethereum. The complexity and innovation of DeFi projects provide hackers with more potential targets and vulnerabilities.

Entering 2021-2023, the number of attacks fluctuated at a high level. Although the Ethereum community and developers continuously strengthen security measures, new attack methods and technologies continue to emerge, keeping the risk of hacker attacks high. By 2024-2025, some large exchanges such as Bybit were attacked by hackers, causing market shock once again. While the number of attacks did not sharply increase, the impact and destructiveness of individual attacks significantly increased.

From a long-term perspective, the growth in hacker attacks on ETH is closely related to the development stage and market popularity of the Ethereum ecosystem. When the Ethereum ecosystem is rapidly expanding with new applications and technologies emerging constantly, the lag in security measures often attracts hackers’ attention and attacks. At the same time, the increasing recognition of ETH’s value in the market also motivates hackers to seek attack opportunities for significant economic gains.

3.1.2 Statistics of Losses Caused by Attacks

In terms of the amount of losses caused by ETH hacker attacks, there is a fluctuating upward trend. In the early stages of the attacks, due to the relatively low price of ETH and the limited scale of the attacks, the amount of losses was relatively small. For example, in the 2016 The DAO incident, calculated at the price at that time, the loss was about 60 million US dollars, but if calculated at the historical highest price of ETH, this loss would be close to 17.5 billion US dollars, with potential losses increasing significantly with the fluctuation of ETH prices. Over time, especially during the DeFi boom from 2019 to 2021, a large amount of funds flowed into the Ethereum ecosystem, and the amount of losses caused by hacker attacks quickly soared. Vulnerabilities in some DeFi projects were exploited, leading to the theft of large amounts of ETH and other cryptocurrencies, with individual project losses reaching millions or even tens of millions of dollars. From 2022 to 2023, although the market as a whole was in a period of adjustment, the amount of losses from hacker attacks remained at a high level, partly due to the continuous upgrading of hacker technology, which can penetrate more complex security mechanisms. Entering 2024-2025, the theft of 1.4 billion US dollars’ worth of ETH from the Bybit exchange set a new record for the amount of losses in a single attack, once again making the amount of losses caused by attacks a focus of market attention.

Overall, the amount of loss caused by ETH hacker attacks is not only affected by the number of attacks, but also closely related to the market price of ETH, the scale of assets of the attack targets, and other factors. With the development of the Ethereum ecosystem and the increase in the value of ETH, there still exists a great deal of uncertainty and potential risk in the potential amount of losses that hacker attacks may cause in the future.

3.2 In-depth Analysis of Typical Attack Cases

3.2.1 Bybit Exchange $1.4 Billion ETH Theft Incident

1. Timeline: On the evening of February 21, 2025, blockchain detective ZachXBT issued an alert on the X platform, stating that abnormal fund outflows were detected from a related address of the Bybit exchange, involving a staggering amount of 14.6 billion US dollars. After confirmation by security teams such as SlowMist and PeckShield, it was determined that this incident was a hacker controlling Bybit’s ETH multi-signature cold wallet through a UI deception attack, stealing 491,000 ETH (equivalent to about 14 billion US dollars at the daily price). At the time, Bybit was in the process of a routine transfer of ETH from the multi-signature cold wallet to the hot wallet, which was part of their daily fund allocation process. However, the hacker utilized sophisticated attack methods to alter the smart contract logic during the transaction and concealed the signature interface. Bybit team members, unaware of the situation, proceeded with the signature operation as usual, unknowingly signing the malicious transaction pre-set by the hacker, leading to the attacker gaining control of the ETH cold wallet and swiftly transferring a large amount of ETH to an unknown address.
2. Hacker attack method: This time, the hacker used the extremely covert attack method of ‘Masked Transaction.’ The hacker implanted malicious code to tamper with the signature interface of the multi-signature wallet, disguising it as a normal transfer instruction. When the Bybit team signed, it appeared to be approving a normal asset transfer, but in reality, it was authorizing the hacker’s malicious operation. The hacker used the ‘delegatecall’ instruction to replace the instruction originally used for transfers with a malicious contract upgrade operation, successfully bypassing the security verification mechanism of the multi-signature wallet and gaining control of the cold wallet. This type of attack not only requires advanced technical capabilities but also a deep understanding of Bybit’s operational processes and security mechanisms, requiring meticulous preparation and layout in advance.
3. Market Impact: After the news exposure, the market quickly fell into panic. Users’ trust in the Bybit exchange was severely undermined, leading to a rush of withdrawals, resulting in Bybit receiving over 350,000 withdrawal requests in a short period of time, totaling over 5.5 billion US dollars. ETH price also suffered a severe impact, plummeting by 8% in a short period, rapidly dropping from a high of 2845 US dollars. The entire cryptocurrency market was also affected, with Bitcoin experiencing multiple sharp declines, falling below 95,000 US dollars per coin within 24 hours, reaching a low of 94,830.3 US dollars per coin. Over 170,000 people worldwide were liquidated, and the futures market liquidated over 200 million US dollars of long positions.
4. Bybit’s response: Bybit officials quickly responded to the incident, issuing a statement to users for the first time, explaining that this incident involved a theft of ETH cold wallet, and other asset categories were not affected. They also ensured that there are sufficient funds to meet users’ withdrawal needs. At the same time, Bybit actively collaborated with other exchanges. Exchanges such as Bitget and Binance swiftly transferred over $4 billion to Bybit to alleviate its liquidity crisis. Bybit also initiated an internal investigation mechanism, cooperating with the security team to thoroughly track the details of the hacker attack and fund flow, offering a reward of 10% of the stolen funds (up to $140 million) to call on global white-hat hackers and blockchain experts to assist in catching the hacker. Bybit CEO Ben Zhou assured users of fund security through live broadcast, emphasizing that the exchange will bear all losses to protect users’ rights.

3.2.2 M2 Exchange Hot Wallet ETH Theft Incident

1. Event: On the evening of October 31, 2024, the cryptocurrency exchange M2 reported that its hot wallet was hacked, resulting in a loss of over $13.7 million involving Ether (ETH), Solana (SOL), and Bitcoin (BTC) hot wallets. M2 is a relatively small exchange located in Abu Dhabi with limited daily trading volume. Nevertheless, the exchange still holds over $67 million in various assets in cold wallets and over $11.5 million in hot wallets. In this attack, the hacker specifically targeted ETH, stealing over $10.3 million worth of ETH in a single transaction from M2’s hot wallet, with funds flowing into the hacker’s wallet showing a pattern of repeated transactions of 17 or 42 ETH.
2. Attack Details: Although M2 did not disclose the exact details of the hacker’s attack, it can be seen from the on-chain data that the hacker made multiple precise operations in a short period of time. For the theft of ETH, the hacker seems to have some understanding of the transaction patterns and security vulnerabilities of M2’s hot wallet, enabling them to bypass some basic security monitoring and quickly transfer a large amount of ETH to their own wallet. At the same time, the hacker also attacked SOL and BTC, conducting operations to move or exchange SOL tokens for WSOL and making multiple transactions to collect a total of 41 BTC. The entire attack process was well-organized, demonstrating that the hacker possesses certain technical capabilities and operational experience.
3. Fund flow and subsequent handling: After the hacker succeeded, most of the stolen funds are still stored in the hacker’s wallet. On-chain researcher ZachXBT identified the final destination of the stolen funds and found that the largest share of the hacked funds, Ethereum (ETH), had not been mixed or sent to exchanges as of November 1. It seems that the hacker is waiting for a more suitable time to handle these assets. For SOL and BTC, the hacker also made corresponding transfers and operations, but did not cash out on a large scale. M2 took action quickly after the attack, recovering the funds within minutes, claiming to have made users whole and taking full responsibility for any potential losses. M2 did not shut down its hot wallet for investigation, but continued to pay out withdrawals to other traders while taking additional control measures to prevent similar incidents from happening again. However, this incident still exposed vulnerabilities in M2’s hot wallet security management, making it difficult for even small exchanges to avoid becoming targets of hacker attacks.

4. ETH Hacker Attack Methods Comprehensive Analysis

4.1 Attack on Smart Contracts

4.1.1 Principle and Method of Vulnerability Exploitation

1. Integer Overflow: Ethereum smart contracts use fixed-size data types to store integers, such as uint8 which can store values from 0 to 255, and uint256 which can handle values up to 2^256 - 1. When performing arithmetic operations, if the result exceeds the representation range of the data type, an integer overflow occurs. Integer overflow can be classified into two cases: overflow and underflow. Overflow refers to the increment of a number exceeding its maximum value that can be stored. For example, for a uint256 variable, when it reaches the maximum value of 2^256 - 1 and then adding 1, the result will become 0. Underflow occurs when a number is unsigned, and a decrement operation causes it to fall below the minimum representable value. For instance, subtracting 1 from a uint8 variable with a stored value of 0 will result in 255. Hackers exploit integer overflow vulnerabilities by carefully crafting transaction data to cause incorrect calculation results during the contract execution process, bypassing the contract’s security checks, and carrying out illicit operations on assets such as unauthorized withdrawals or balance tampering.
2. Reentrancy Attack: The reentrancy attack mainly exploits the feature of smart contracts that the called contract can execute code before the caller completes the operation when calling an external contract. When one contract calls another contract, if the caller contract’s state has not been updated yet, and the called contract can call back a specific function of the caller contract again, it may lead to a reentrancy attack. For example, in a smart contract containing a fund withdrawal function, the normal logic is to first check the user’s balance, then update the balance, and finally send the funds to the user. However, if the code is improperly written, when calling an external contract in the fund sending operation without updating the balance first, the attacker can take advantage of this opportunity to immediately call the withdrawal function again upon receiving the funds. Since the balance has not been updated, the attacker can repeatedly withdraw funds, thereby stealing a large amount of assets from the contract. The key to the reentrancy attack lies in the mishandling of the order of external calls and state updates in the contract, allowing the attacker to bypass the normal restrictions of the contract through recursive calls.

Analysis of Vulnerabilities in Classic Cases 4.1.2

1. The DAO Incident: This is the most famous smart contract attack in the history of Ethereum. The DAO is a decentralized autonomous organization based on Ethereum, which manages a large amount of Ether through smart contracts. Hackers exploited a logical vulnerability in a function call in The DAO smart contract, combined with a recursive calling mechanism, to carry out a reentrancy attack. In The DAO contract, there is a function for fund withdrawal. When this function calls an external contract to send funds, the internal fund balance status of the contract is not updated promptly. The attacker created a malicious contract that immediately called The DAO’s fund withdrawal function when funds were sent to it by The DAO contract. Since the fund balance of The DAO contract was not updated at that time, the attacker could repeatedly call the withdrawal function, continuously extracting funds from The DAO contract, ultimately resulting in the theft of approximately $60 million worth of Ether. The main cause of this vulnerability in the event lies in the insufficient risk awareness of smart contract developers regarding external calls, failing to follow the ‘Check-Effects-Interactions’ security programming pattern, updating the state before external interactions, thereby providing an opportunity for hackers.
2. Compound lending protocol attack: Compound is a well-known decentralized lending protocol on Ethereum. In 2020, hackers exploited an integer overflow vulnerability in the Compound contract to carry out the attack. The Compound contract has a problem with lax validation of user input data during interest calculation and fund transfer. By crafting special transaction data, the hacker caused integer underflow in interest calculation and balance updates. For example, when calculating the repayment amount, the underflow led to a minimal value or even 0, allowing the hacker to repay the loan at a very low cost, and in some cases, not only avoiding repayment but also obtaining additional funds from the contract, resulting in fund losses and system chaos for the Compound protocol. This incident highlights the importance of strict validation of data boundaries and calculation results in smart contracts when handling complex financial logic, as any oversight can be exploited by hackers for illegal gains.

4.2 Wallet Attack Methods

4.2.1 Hot Wallet Attack Methods

1. Phishing: Phishing is one of the most common attack methods against hot wallets. Attackers create websites, emails, or instant messages that are extremely similar to well-known cryptocurrency wallets or exchanges, tricking users into entering sensitive information such as wallet private keys, mnemonic phrases, or login passwords. These fake pages and messages often mimic the appearance and style of real platforms, exploiting users’ trust and negligence, deceiving them into thinking they are performing normal operations. For example, an attacker may send an email that appears to be from an official wallet, claiming that the user’s wallet needs a security upgrade and asking the user to click on a link and enter relevant information. Once the user enters information on the fake page, the attacker can obtain this critical information, thus gaining control of the user’s hot wallet and transferring the ETH assets within it.
2. Malware Invasion: Malware is also an important means of attacking hot wallets. Attackers implant malware into users’ devices (such as computers, mobile phones) through various methods, such as malicious download links, virus-infected software, malicious advertisements, etc. Once the device is infected, the malware can run in the background, monitor users’ operational behaviors, record the private keys, passwords, and other information entered by users in the wallet application, or directly tamper with the code logic of the wallet application to control the hot wallet. For example, some malware can record users’ keyboard input. When users enter private keys in the wallet application, the malware can obtain this information and send it to the attacker. Some malware can also modify the transaction function of the wallet application, replacing the user’s transfer target address with the attacker’s address, thereby transferring ETH assets without the user’s knowledge.

4.2.2 The Difficulty and Breakthrough of Cold Wallet Attacks

1. The reasons why cold wallets are relatively safe: Cold wallets, also known as offline wallets, are a digital currency storage method that is not directly connected to the Internet, and are considered a relatively secure choice for storing digital assets. Its security mainly comes from the following aspects: First, cold wallets are not connected to the Internet, which means they are almost immune to threats such as phishing, malware attacks, and other network-based attack methods, because attackers cannot directly access the private keys and other sensitive information of the cold wallet through the network. Secondly, cold wallets usually use hardware devices (such as Ledger, Trezor, etc.) or paper wallets to store private keys, and these storage methods are relatively physically secure. As long as the hardware device or paper wallet itself is not physically stolen or damaged, the private keys can be well protected. In addition, some hardware cold wallets also have multiple encryption and security authentication mechanisms, such as fingerprint recognition, password locks, etc., further enhancing the security of the private keys.
2. Hackers break through cold wallets with rare means: Although cold wallets have higher security, they are not absolutely secure. Hackers may also break through the protection of cold wallets through some rare means. One way is to obtain the private key of a cold wallet through physical attacks. For example, hackers may steal or rob a user’s hardware cold wallet device and then try to crack the device’s password or bypass its security authentication mechanism. Although hardware cold wallets typically use high-strength encryption technology and security measures, if the user sets a too simple password or there are security vulnerabilities during use (such as writing the password near the device), hackers may be able to obtain the private key through brute force cracking or other technical means. In addition, social engineering attacks may also be used to break through cold wallets. Attackers may use deception, inducement, etc., to obtain relevant information about cold wallets from users or people related to users, such as private keys, mnemonic phrases, etc. For example, attackers may disguise themselves as technical support personnel, claiming to help users solve wallet problems, and induce users to disclose key information about cold wallets, thereby attacking cold wallets.

4.3 Network Layer Attacks

4.3.1 Impact of DDoS attacks on the ETH network

DDoS (Distributed Denial of Service) attacks are a common form of network attack, which involves controlling a large number of computers (botnets) to send a massive amount of requests to the target server, depleting the server’s resources such as bandwidth, CPU, memory, etc., thereby causing the target server to be unable to provide services normally. In the Ethereum network, DDoS attacks mainly have the following impacts on the normal operation and transaction processing of the ETH network:

1. Network congestion and delays: DDoS attacks send a large number of invalid requests to Ethereum nodes, occupying network bandwidth and causing congestion. Normal ETH transaction requests are difficult to transmit on the network, resulting in significantly extended transaction confirmation times. For example, during a large-scale DDoS attack, the average transaction confirmation time on the Ethereum network may be extended from the normal several seconds to several minutes or even longer, severely impacting user transaction experiences and normal business operations. For some applications with high transaction timeliness requirements, such as lending and trading in decentralized finance (DeFi), prolonged transaction delays may cause users to miss the best trading opportunities, resulting in economic losses.
2. Node failure and network instability: Continuous DDoS attacks may deplete the server resources of Ethereum nodes, causing nodes to malfunction. When a large number of nodes are attacked and become ineffective, the overall stability of the Ethereum network is severely affected, leading to partial regional network interruptions, abnormal communication between nodes, and other issues. This not only affects the processing of ETH transactions, but may also result in errors or stall in the execution of smart contracts. For example, in some cases, smart contracts may fail to obtain the required network data in a timely manner due to node failures, resulting in incorrect contract execution and thus harming the interests of users. In addition, network instability may also raise doubts about the security and reliability of the Ethereum network, affecting market confidence in ETH.

4.3.2 Principle of Man-in-the-Middle Attack and Prevention Challenges

1. The principle of a Man-in-the-Middle (MITM) attack: In ETH transactions, a MITM attack refers to an attacker intercepting, tampering with, or forging communication data between a user and Ethereum network nodes, thereby gaining control over the transaction or stealing user information. Attackers typically exploit network vulnerabilities or deception to establish a connection between the user’s device and the intermediary node controlled by the attacker, instead of directly communicating with the genuine nodes of the Ethereum network. For example, attackers may set up a malicious access point in a public wireless network to lure users to connect to it. When a user initiates an ETH transaction in a wallet application, the transaction request is first sent to the attacker’s intermediary node. The attacker can intercept the transaction request on the intermediary node, modify key information such as the transaction amount and recipient address, and then send the modified request to the Ethereum network. Users, unaware of the situation, may think the transaction is proceeding normally, but in reality, the assets are transferred to an address specified by the attacker. Additionally, MITM attackers may also steal sensitive information such as the user’s wallet address and private key to facilitate future attacks.
2. Challenges of prevention: Preventing man-in-the-middle attacks poses many difficulties. Firstly, the complexity of the network environment provides attackers with more opportunities to carry out attacks. In public networks, mobile networks, and other environments, it is difficult for users to judge the security of the network, making them vulnerable to deception by malicious access points. Moreover, with the development of network technology, attackers’ methods are becoming increasingly covert and sophisticated, making it difficult for traditional security measures to effectively address them. Secondly, insufficient security awareness among users is also a challenging aspect of prevention. Many users lack vigilance regarding network security when using ETH wallets, making it easy for them to conduct transactions in insecure network environments or click on links from unknown sources, providing opportunities for man-in-the-middle attacks. Additionally, the openness and decentralization of the Ethereum network itself make it more difficult to identify and prevent man-in-the-middle attacks in the network. Due to the decentralized nature of the Ethereum network without a centralized management organization, communication between nodes is based on a distributed P2P network, making it difficult to comprehensively monitor and verify all network connections, thus unable to promptly detect and prevent malicious intermediary nodes.

5. Impact of ETH hacker attacks

5.1 Impact on Investors

5.1.1 Asset Loss Risk

Hacker attacks on ETH directly expose investors to the significant risk of asset loss. In various hacking incidents, it is not uncommon for investors’ ETH assets to be directly stolen.

5.1.2 Confidence Shaken and Market Panic

The hacker attack on ETH seriously hit investors’ confidence in the Ethereum ecosystem and the cryptocurrency market, triggering market panic. When a hacker attack occurs, investors often doubt the security of their assets and fear that similar attacks may happen to them again. This concern has led investors to take action, such as selling off ETH assets in large quantities, to mitigate potential risks.

5.2 Impact on the Ethereum Ecosystem

5.2.1 Trust Crisis in Smart Contract Applications

The ETH hacker attack incident has triggered a trust crisis among users towards smart contract applications. Smart contracts, as a core component of the Ethereum ecosystem, are widely used in various decentralized applications (DApps), such as decentralized finance (DeFi), non-fungible tokens (NFTs), and other fields. However, hackers exploit vulnerabilities in smart contracts to attack, causing serious doubts about the security of smart contracts among users. Taking The DAO incident as an example, it not only resulted in substantial financial losses but also created a trust crisis among users towards projects built on Ethereum smart contracts. Many users are now concerned about the security of their assets in other smart contract applications, fearing that similar vulnerabilities could be exploited by hackers. This trust crisis hinders the development of the Ethereum ecosystem, leading to a significant decrease in user activity and engagement in some DApps projects. Developers also face greater challenges in promoting new smart contract applications. Users have become more cautious in choosing to use smart contract applications, requiring a more in-depth security review and risk assessment of projects, which increases user costs and time costs, and limits the popularity and innovation of smart contract applications.

5.2.2 Impact on the price trend of ETH

The ETH Hacker attack has had a significant impact on the price trend of ETH, which is reflected in the short-term and long-term aspects. In the short term, hacker attacks often trigger market panic, leading to a rapid decline in the price of ETH. After the Bybit exchange ETH theft incident, the price of ETH plummeted by 8% in a short period of time, quickly falling from the highest point of $2845. This is because investors sell off ETH in large quantities in a panic, causing an oversupply in the market and naturally leading to a price drop. At the same time, hacker attacks can also raise concerns in the market about the security of the Ethereum ecosystem, reducing the demand for ETH by investors, further lowering the price. In the long term, hacker attacks may affect the development prospects of the Ethereum ecosystem, thereby having a negative impact on the price of ETH. If the Ethereum ecosystem cannot effectively address security issues, users and developers may gradually defect to other more secure blockchain platforms, weakening Ethereum’s market competitiveness, eroding the value foundation of ETH, and potentially keeping the price in a long-term downturn. However, if the Ethereum community can actively respond to hacker attacks, strengthen security measures, enhance the security of smart contracts, restore the confidence of users and investors, the price of ETH is expected to remain stable and grow in the long term.

6. ETH Hacker Attack Prevention Strategy

6.1 Technical Measures for Prevention

6.1.1 Smart Contract Security Audit

Smart contract security audits are a crucial step in ensuring the security of Ethereum applications. Before the smart contract goes live, a comprehensive and thorough security audit is essential. The audit process should start with static code analysis, using automated tools such as Slither, Mythril, etc., to scan the smart contract code and identify common vulnerabilities such as integer overflow, reentrancy attacks, improper access control, etc. These tools can quickly detect potential risks in the code, but they also have limitations and cannot discover all logical bugs. Therefore, manual code review is also necessary, where experienced security experts inspect the code logic line by line, deeply analyze key areas such as function calls, state variable access, mathematical operations, and permission control to uncover deep-seated vulnerabilities that automated tools may overlook.

In addition to code review, formal verification is also an important auditing method. It uses mathematical logic and theorem proving to verify the correctness of smart contracts, describes the behavior and properties of contracts by building precise mathematical models, ensures that contracts can execute as expected in various situations, and effectively avoids security vulnerabilities caused by logical errors. However, formal verification requires high technical requirements and implementation difficulty, and is usually applicable to key smart contracts with extremely high security requirements.

During the operation of smart contracts, continuous security audits should also be conducted. With the development of business and the changing needs, smart contracts may be upgraded and modified, requiring a comprehensive audit of the updated code to ensure that the new code does not introduce new security vulnerabilities. At the same time, closely monitor the dynamics of the blockchain security community, timely understand the latest security threats and attack methods, incorporate this information into the audit scope, conduct targeted security checks on smart contracts, and adapt to the constantly changing security environment.

6.1.2 Wallet Security Technology Upgrade

As an important tool for storing and managing ETH assets, the security technology upgrade of the wallet is crucial. In terms of encryption technology, the wallet should adopt advanced encryption algorithms, such as Elliptic Curve Cryptography (ECC), to encrypt the private key and mnemonic phrase with high strength, ensuring that even if the wallet data is stolen, attackers will have difficulty cracking the encrypted private key, thereby protecting the security of user assets. At the same time, continuously optimize the implementation details of encryption algorithms, improve the efficiency of encryption and decryption, and ensure the security without affecting the user’s normal experience.

Multi-factor authentication is an important means to enhance wallet security. Wallets should support various forms of multi-factor authentication, in addition to traditional password login, they should also introduce SMS verification codes, hardware tokens, biometric technologies (such as fingerprint recognition, facial recognition), etc. When users perform important operations such as transfers and withdrawals, they need to be verified through multiple authentication methods. Even if the password is leaked, attackers cannot easily access the user’s assets. For example, some hardware wallets support fingerprint recognition unlocking, and transactions can only be made after the user’s fingerprint verification, greatly enhancing the security of the wallet.

In addition, wallet developers should regularly scan and fix vulnerabilities in wallet software, update software versions in a timely manner to deal with new security threats. At the same time, strengthen the security protection of wallet network communication, use encryption protocols such as SSL/TLS to prevent man-in-the-middle attacks, and ensure the security of data transmission when users use the wallet.

6.1.3 Network Security Protection System Construction

The ETH network needs to build a comprehensive and multi-layered security protection system to defend against various network attacks. In terms of DDoS attack protection, professional DDoS protection services and devices are used to monitor network traffic in real-time and detect abnormal traffic patterns in a timely manner. When a DDoS attack is detected, measures can be taken quickly, such as traffic cleaning, black hole routing, etc., to divert the attack traffic to a dedicated cleaning center for processing, ensuring that normal network traffic can pass smoothly and guaranteeing the normal operation of the ETH network. At the same time, optimizing network architecture, increasing network bandwidth, enhancing the network’s resistance to attacks, and enabling the network to withstand larger-scale DDoS attacks.

Intrusion Detection System (IDS) and Intrusion Prevention System (IPS) are important components of the network security protection system. IDS is responsible for real-time monitoring of network traffic, analyzing network activities, detecting intrusion behaviors or abnormal activities, and issuing timely alerts. IPS, based on IDS, can not only detect intrusion behaviors, but also automatically take measures for defense, such as blocking attack connections, prohibiting specific IP access, etc., to prevent further spread of attacks. Deploying IDS and IPS at key nodes of the ETH network, such as Ethereum node servers, exchange servers, etc., can effectively protect the network from external attacks.

In addition, strengthen the security management of Ethereum nodes, regularly update the node software version, and fix known security vulnerabilities. Strictly control access to the nodes, use technologies such as Access Control Lists (ACL), authentication, etc., to ensure that only authorized users and devices can access the nodes, prevent hackers from gaining network control by invading the nodes, thereby ensuring the overall security of the ETH network.

6.2 User Security Awareness Enhancement

6.2.1 Suggestions for Secure Use of ETH Wallet

1. Choose a reliable wallet: Users should prioritize well-known, reputable, and security-audited wallets. Well-known wallets usually have professional development teams and sound security mechanisms, providing more reliable security. When choosing a wallet, users can refer to other users’ evaluations and professional institutions’ reviews to understand the security and usability of the wallet. For example, hardware wallets like Ledger and Trezor, as well as software wallets like MetaMask and Trust Wallet, have high visibility and good user reputation in the market.
2. Set a strong password: Set a complex and unique password for the wallet, the password should contain at least 12 characters, including uppercase and lowercase letters, numbers, and special characters, avoid using easily guessed information such as birthdays, names, phone numbers, etc. At the same time, each wallet should use a different password to prevent other wallets from being threatened once a password is leaked. Regularly changing passwords further enhances the security of the wallet.
3. Safely store private keys and mnemonic phrases: Private keys and mnemonic phrases are crucial for accessing wallet assets, so it is essential to store them properly. Do not share private keys and mnemonic phrases online, or store them on insecure devices or cloud storage. It is recommended to write down the mnemonic phrase on paper and store it in a secure place, such as a safe or encrypted hardware storage device. For hardware wallets, follow the device’s instructions to correctly set up and store private keys, ensuring the physical security of the hardware device.
4. Regularly backup your wallet: Regularly backup your wallet to restore assets in case of device loss, damage, or wallet malfunction. When backing up, follow the backup guidelines provided by the wallet to ensure the integrity and accuracy of the backup. Store backup files in multiple secure locations to prevent backup loss due to issues with a single storage location.

6.2.2 Methods to Identify Phishing Websites and Scam Information

1. Double check the URL: When visiting websites related to ETH wallets, be sure to carefully verify the accuracy of the URL. Phishing websites often mimic the domain names of real websites, but there may be subtle differences, such as letter substitutions, adding prefixes or suffixes, etc. For example, changing “ metamask.io“ Replace with “metamask10.comUsers should develop the habit of directly entering the official website address in the browser’s address bar to avoid accessing wallet websites through clicking on links from unknown sources. At the same time, pay attention to checking the SSL certificate of the website. Legitimate websites usually use valid SSL certificates, and the address bar will display a green padlock icon to ensure the security of website communication.
2. Be cautious of unknown links and emails: do not click on links from unfamiliar emails, messages, or social media, especially those claiming to be related to wallets, such as requesting users to verify accounts or upgrade wallets. These links are likely phishing links, and clicking on them may lead to the theft of wallet information entered by users. For suspicious emails, do not reply, delete them directly, and report them to the email service provider. Also, pay attention to the sender’s address of the email, legitimate emails usually come from official domains, such as noreply@metamask.ioinstead of some suspicious-looking domain names.
3. Attention: Fraudulent information often exploits users’ fears, greed, and other psychological factors, such as claiming that the user’s wallet is at risk and requires immediate action to avoid asset loss; or promising users high returns and requesting transfer operations. Users should remain vigilant and carefully analyze such information, not easily believing it. If there are doubts about the authenticity of the information, verification can be done through official channels, such as the wallet’s official website, customer service phone, etc.

Conclusion

To prevent ETH hacker attacks, it is necessary to strengthen smart contract security audits, upgrade wallet security technology, and establish a network security protection system at the technical level; users should enhance security awareness, master the safe use of wallets, and identify methods of fraud information; industry regulators should introduce policies to strengthen supervision, and industry self-regulatory organizations should play a guiding and supervisory role.