Dfinity Foundation’s founder and chief scientist, Dominic Williams, recently stated that applications should operate entirely on the blockchain, highlighting that the security issues seen in the recent Bybit hack could have been avoided with a fully on-chain user interface.

According to Williams, most decentralized applications and blockchain projects currently have on-chain tokenomics but rely on centralized platforms such as Amazon Web Services for their infrastructure, which makes them vulnerable to centralized security breaches. He said:

“The primary purpose of running software on the blockchain is to guarantee that the written logic will operate on correct on-chain data. You don’t get those guarantees with traditional information technology.”

“We’ve lost our way as an industry. We started calling projects on-chain that are built on Amazon Web Services just because they have a token,” he continued.

Williams also emphasized that any code updates to a project or platform should be made through a decentralized autonomous organization (DAO) and be subject to community review rather than a single developer pushing code.

The Impact of Centralized Security Breaches on Crypto Economy

Williams then turned his attention to the financial impact of the $1.4 billion Bybit hack on the crypto market. He pointed out that the state-backed Lazarus Hacker group is skilled at money laundering and that the money would be siphoned off from the crypto markets into other sectors of the economy, never to be seen again.

“This is ultimately one of the reasons that prices are crashing today,” the Dfinity founder added.

According to CoinMarketCap, the total cryptocurrency market capitalization is currently around $2.8 trillion, down from a peak of approximately $3.62 trillion in January 2025.

The Bybit hack, the largest in crypto history, led to a sharp decline in crypto prices amid macroeconomic uncertainty and a loss of investor confidence in the emerging asset sector.

Bohdan Opryshko, COO of Everstake, also noted that the Bybit hack had caused institutional investors to move away from centralized platforms due to security concerns.

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