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Developer proposes ETH DeFi 'circuit breaker' to potentially reduce hack losses by 70%

Developer proposes ETH DeFi ‘circuit breaker’ to potentially reduce hack losses by 70%

Diyahir Campos, a smart contract developer, has proposed a new Ethereum request for comment (ERC) called ERC-7265, which aims to establish a standard for a decentralized finance (DeFi) “circuit breaker.” This circuit breaker would be able to halt suspiciously large token outflows from DeFi protocols, potentially preventing billions of dollars in losses. Campos believes that circuit breakers could have prevented a significant portion of the $3.1 billion stolen from DeFi protocols in 2022. He was personally affected by the Euler Finance hack in March and believes that circuit breakers could have saved a significant amount of money for users. However, there are concerns about the potential misuse of circuit breakers, with some skeptics worried that they could be used to freeze funds indefinitely. Campos acknowledges that circuit breakers are not suitable for every DeFi protocol and that they must strike a balance between protecting users and avoiding false positives. The proposed standard is still being developed but is expected to be ready for integration into protocols within months.