Common DApp risks and how to avoid them
Table of Contents
- Poorly designed DApp
DApps are built using smart contracts, which consists of code - and code sometimes has bugs. The most reputable DApps have been thoroughly audited by third-party security firms, but many DApps have not been audited. This means there's a chance the DApp you're connecting to may contain a weakness that could be exploited by hackers - with the result that the funds you send to the DApp could be lost or stolen. Even audited DApps may have bugs that could result in the loss of funds.
- Malicious DApp
The risk here is the same as with a poorly designed DApp. The only difference is, with a malicious DApp, the code has been purposely compromised, usually in such a way that the DApp makers can steal funds. The best way to avoid losing your funds to poorly designed and/or malicious DApps is to take the time to investigate the DApp maker and ensure that the DApp's code has been audited by a reputable third-party service. That being said, in general, the longer and more widely a DApp has been used, the less likely it is to have bugs or malicious code that could result in the loss of funds.
- Phishing DApp
Let's say you fully trust the 'ABC Finance' DApp. It has a solid team of developers behind it, and the smart contracts it is compromised of have been audited by two reputable third-party security firms. When you search for ABC Finance's website, imagine you accidentally click on a link that takes you to ABDfinance.com. This website looks identical to the ABC Finance website you're used to, but when you connect your wallet, you're unknowingly connecting to a malicious DApp. Any funds you send to the DApp, rather than being deposited into a smart contract that earns interest on your principele as you intended, are instead stolen by the 'phishing' DApp's creators.
The best way to avoid getting caught by a phishing DApp is to double check the URL of the DApp's webpage to ensure it is correct. Another tip is to check that the lock icon (🔒 ) appears in your browser's address bar preceding the website's URL.
Read more: What is WalletConnect? Learn about the bridge that connects your wallet to DApps and how to use it.
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