An ounce of prevention is worth a pound of cure.” It’s a saying that has endured for centuries – because it’s true.

And nowhere is it more relevant than in the fast-evolving world of crypto. Hacks and technical failures have plagued the web3 space, resulting in billions of dollars in losses – to say nothing of the reputational damage to individual businesses and to the industry as a whole. That’s why high-quality audits are so crucial: to catch problems before they can cause real damage.

Audits cost money, of course, like any service. The upfront price tag of a security audit can be tens to hundreds of thousands of dollars, depending on scope and scale. And it’s not surprising that many founders – laser focused on maximizing runway to ensure growth – are reluctant to make outlays of this size. But the cost of not having strong systems and safeguards in place is exponentially greater.

A Hack’s True Cost

The impact of a successful hack goes well beyond the funds that are lost or stolen.

First, there is the proverbial “pound of cure”: the price tag for emergency work to patch the bug that made the hack possible in the first place. This often requires a project to be taken offline for a period of time, denting revenues, delaying key development milestones, and risking user attrition.

If a hack is significant in size and affects a large number of people, it can destroy confidence and send users rushing for the exits. Crypto exchange HTX (formerly Huobi Global) was targeted by hackers on November 22. Losses from the exploit amounted to some $30 million, with HTX promising to compensate users in full. This was not a huge sum for an exchange with more than $2 billion in assets.

But the damage didn’t end there. Since HTX resumed service on November 25, it has experienced more than $300 million in net investment outflows. The lesson is clear: investor confidence is easy to lose, and hard to gain back.

Reputational risk goes beyond any individual project. If an exploit is large and public enough, it can cause long-term damage to investor faith in Web3 as a whole. In 2022, a record $3.8 billion in crypto was stolen by thieves who exploited vulnerabilities in crypto wallets, platforms and token protocols. The staggering size of these losses was seen as a major contributor to the most recent crypto winter.

Indeed, security concerns have been one of the main obstacles to mainstream crypto adoption, which is crucial for more than just financial reasons. It is a must if blockchain is to achieve its vision of transforming the nature of global finance. That’s why quality audits are so important. And not just for individual projects – for the health of the space as a whole.

There are some who actually argue that hacks can be beneficial in the long run: that by exposing design flaws, they encourage projects to check more closely for the same types of vulnerabilities. We disagree – hacks are paralyzing for the industry as a whole and the antithesis to the broad adoption of decentralized tech. But even if that were true, it would be cold comfort to those who worked at or invested in a project that was hacked. A high-quality security audit is a far less painful way to achieve the same ends.

The Power of Prevention

At Thesis Defense, we employ a team of experienced auditors, cryptographers and experts who apply rigorous and consistent standards to every audit they perform. Our auditors are not only highly knowledgeable about current attack vectors, but are careful to stay abreast of new technologies so they can find gaps in defenses before bad actors do.

Crypto auditing is a young industry, and standards can vary widely between firms. Unfortunately, some operations are willing to offer a project a clean bill of health so long as their fees are paid. So it’s crucial to know who you are hiring before moving forward.

No audit, however extensive, can promise to stop every hack. But there is one thing we can guarantee: a high-quality security review reduces your risk of being hacked by an order of magnitude. In the crypto space, few things are more important. Quality may have a higher up-front cost. But compared to a hack, it’s one of the best deals out there.