Security breaches are more than just a financial hit for crypto projects – they often signal the beginning of the end. According to industry experts, nearly 80% of crypto projects that suffer major hacks never fully recover their operational footing or market trust, even after fixing technical vulnerabilities.

 

The Root Cause: Breakdown in Trust and Response, Not Just Lost Funds

Mitchell Amador, the CEO of Web3 security platform, ImmuneFi, explains that the critical damage from hacks isn’t just the initial theft, but how teams respond once an exploit is uncovered. Many protocols enter a state of paralysis the moment an attack is detected because they lack predefined incident response plans. This hesitation leads to confusion, slower decision-making, and additional losses as teams scramble to assess the damage.

Communication failures make matters worse. Projects often avoid pausing contracts or issuing clear updates out of fear of reputational damage – but silence tends to amplify panic among users instead of containing it.

2025 RECAP | 4 Out of 5 New Tokens (~85%) Launched in 2025 Have Crashed

Trust: The Most Fragile Asset in Crypto

For crypto projects, trust is often more valuable than capital.

Once users lose confidence in a protocol’s security or leadership, liquidity dries up and community support evaporates. Alex Katz, co-founder of the security firm, Kerberus, notes that even after technical issues are patched, the reputational damage from a breach frequently marks the beginning of a project’s decline.

Modern hacks aren’t always about code flaws. Increasingly, human error and social engineering attacks – such as malicious approvals or fake interfaces that trick users into exposing keys – are driving losses, underscoring that human-centric vulnerabilities remain hard to eliminate.

EDITORIAL | In Crypto We Trust? Why Credibility Is the Real Currency (or Token) in the Age of Decentralization

The Rising Cost of Crypto Hacks

The trend isn’t abstract; data shows that crypto-related hacks resulted in $3.4 billion in total losses in 2025, the highest recorded since 2022. A handful of major incidents – including the multibillion-dollar breach at the exchange Bybit — accounted for a disproportionate share of that damage.

2025 RECAP | Crypto Losses Increased by ~40% YoY in 2025

Better security however doesn’t guarantee crisis readiness. While smart contract security tools and audit practices are improving – and experts predict 2026 could be the strongest year yet for smart contract security – the unresolved issue for many protocols remains operational readiness.

Amador stresses that acting decisively and communicating early, even amid uncertainty, is far less harmful than letting fear and indecision deepen a crisis.

For crypto projects, surviving a hack isn’t just about code – it’s about trust, transparent communication, and preparedness. Projects that incorporate concrete incident response plans and prioritize community communication stand the best chance of weathering security setbacks and rebuilding confidence.

2025 RECAP | 4 Out of 5 New Tokens (~85%) Launched in 2025 Have Crashed

 

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