Nearly four out of five crypto projects that suffer a major hack never fully regain stability, according to industry security experts. The damage, they argue, stems less from stolen funds and more from how projects respond in the critical hours after an exploit is discovered.
Mitchell Amador, chief executive of Web3 security platform Immunefi, said most protocols are unprepared for large-scale security incidents. “Most protocols are fundamentally unaware of the extent to which they are exposed to hacks, and are not operationally prepared for a major security incident,” he said.
The Dangerous Delay After a Breach
Amador warned that the first hours following a breach are often the most destructive. Teams without predefined incident plans frequently hesitate, debate internal responsibilities and underestimate the scope of the attack.
“Decision-making slows as teams scramble to understand what happened, leading to improvisation and delayed action,” he said. According to Amador, this window is when additional losses often occur.
Projects are often reluctant to pause smart contracts out of fear of reputational damage. However, Amador cautioned that silence and inaction usually amplify panic rather than contain it.
“Nearly 80% of projects that suffer a hack never fully recover,” he said. “The primary reason is not the initial loss of funds, but the breakdown of operations and trust during the response.”
Trust Collapse After Major Exploits
Alex Katz, CEO and co-founder of Web3 security firm Kerberus, said even technically resolved exploits can mark the beginning of a project’s decline. In most cases, user confidence never fully returns.
“There are always exceptions, but in most cases a major exploit is a death sentence,” Katz said. He explained that users withdraw funds, liquidity evaporates and reputational damage becomes permanent.
Trust, he added, has become the most fragile asset in the crypto ecosystem.
Human Error Overtakes Smart Contract Bugs
While smart contract vulnerabilities once dominated crypto headlines, recent losses increasingly stem from operational and human-layer failures. Katz said users approving malicious transactions or exposing private keys now account for most losses.
“Human error is clearly the weakest link in crypto security,” he said.
Earlier this month, one crypto user lost more than $282 million worth of Bitcoin and Litecoin in a social engineering attack. The victim was reportedly deceived by an attacker impersonating hardware wallet support and revealing their seed phrase.
Hacks Reach Multi-Year Highs
Crypto-related hacks surged in 2025, driving total losses to $3.4 billion, the highest level since 2022. Just three incidents accounted for 69% of losses by early December.
The $1.4 billion hack on Bybit alone contributed nearly half of the annual total. “Beyond Bybit, we’ve seen a rise in similar attacks that bypass smart contracts entirely,” Amador said.
Why Experts Still See Hope Ahead
Despite grim statistics, security experts remain cautiously optimistic. Amador believes smart contract security is improving rapidly due to stronger audits, better tooling and real-time monitoring.
“I think 2026 will be the strongest year yet for smart contract security,” he said. However, he stressed that response readiness remains the industry’s biggest unresolved weakness.
