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Nearly four out of five crypto projects fail to fully recover after a major hack due to lasting damage to trust and operations, according to industry experts.
Immunefi chief executive Mitchell Amador said most protocols are unprepared for severe security incidents and underestimate their exposure.
“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,”
Mitchell Amador said.
Amador said the first hours after a breach are often the most damaging as teams hesitate and lack clear incident response plans.
“Decision-making slows as teams scramble to understand what happened, leading to improvisation and delayed action,”
Mitchell Amador said.
Projects often avoid pausing smart contracts due to reputational concerns, while poor communication fuels panic among users.
“Nearly 80% of projects that suffer a hack never fully recover,”
Mitchell Amador said, citing operational breakdown and loss of trust as the main causes.
Kerberus co-founder Alex Katz said even technically resolved hacks frequently mark the beginning of a project’s decline.
“There are always exceptions, but in most cases a major exploit is a death sentence,”
Alex Katz said.
Katz said human error has overtaken smart contract flaws as the leading cause of crypto losses.
“Human error is clearly the weakest link in crypto security,”
Alex Katz said.
Earlier this month, a user lost more than $282 million worth of Bitcoin and Litecoin in a social engineering attack.
Crypto-related losses reached $3.4 billion in 2025, with a small number of major incidents accounting for most of the damage.
Amador said advances in artificial intelligence are making phishing and social engineering attacks more effective.
Despite the risks, Amador said stronger audits and tooling could make 2026 the strongest year yet for smart contract security.
At the time of reporting, Bitcoin price was $92,710.48.