On-Chain Risk Signals: Predicting Security Threats in DeFi Projects

Blockchain has revolutionized finance through decentralization, eliminating the need for traditional intermediaries. However, security concerns remain a major barrier to adoption, as DeFi platforms increasingly face targeted attacks. In this paper, we present the first methodology for automatically assessing and quantifying the risk of fund loss in DeFi projects due to smart contract exploits. By analyzing on-chain behaviors that signal potential malicious interactions, our approach assigns a dynamic risk score to DeFi projects over time. Relying solely on on-chain data ensures resistance to data manipulation and enhances the integrity of the assessment. We evaluated 220 compromised and 200 unaffected DeFi projects on multiple EVM-compatible blockchains-including Ethereum, BSC, Polygon, Arbitrum, Optimism, and Fantomand conducted a comparative risk assessment on these projects. Our findings reveal statistically significant differences in risk scores before attacks compared to a control group without attacks. We anticipated potential threats to 86% of the projects that were later attacked, one day before the incidents, with a precision of 78%.