Unveiling the Centralized Security Risks in Decentralized Ecosystems

Abstract

The decentralized ecosystem is claimed to avoid security risks caused by centralization. Decentralized services, such as crypto wallets and decentralized applications (DApps), are purported to offer more reliable security and better protect user privacy. However, our research suggests a different reality: centralized components or scenarios are still prevalent within decentralized ecosystems, introducing security risks typically associated with centralization. This work systematically investigated the centralized security risks in crypto wallets and DApps. We found seven security risks and developed a series of methods to identify these risks. The detection results indicate that centralized security risks are widespread in the decentralized ecosystem. Among the 28 Ethereum-recommended crypto wallets, 96.4% have security risks. Of the 78 Web3 sites (frontends of DApps), 100% contain third-party scripts, and 44.9% expose the user's address to third parties. Furthermore, we developed a high-precision automated tool and inspected 110,506 on-chain smart contracts (backends of DApps), discovering that 83.5% contain at least one security risk. These risks affect 260 well-known tokens with a combined market capitalization exceeding${\$}$98 billion.