The Battle for Self-Custody: Defending Web3 from Cyber Warfare
Self-custody is the foundation of Web3, but defending it is becoming a full-scale cyber war
Web3 was never meant to be easy. It was never meant to be convenient, simple, or free from risk. It was meant to be sovereign. And sovereignty, in a world of ever-evolving threats, comes at a cost.
We often talk about security in Web3 as if it's just another category of engineering, a box to check, an audit to pass, or a bug bounty to run. But the truth is, we are no longer just fending off cyber attacks. We are defending ourselves against cyber warfare. The threats we face today are not just from rogue hackers or opportunistic scammers — they are from nation-state-backed adversaries with near-limitless resources and patience.
A Personal Shift Toward Self-Custody
I joined Web3 in 2016 when I first discovered the Ethereum ecosystem. That moment changed everything for me. I didn’t just see a new technology or an emerging financial system, I saw a fundamental shift in how ownership and sovereignty could be redefined. Self-custody was not just about holding tokens in a wallet. It was about having true control over assets, identity, and digital interactions without the need for an intermediary. It rewired my thinking about trust, power, and autonomy in the digital world.
That realization still holds true today. But as Web3 grows, so do the threats against it. And self-custody, while fundamental, is becoming increasingly difficult to defend.
The Rise of Cyber Warfare in Web3
Web3 has now reached a scale where the cost-benefit ratio of an attack makes it a prime target for state-sponsored threat actors. The Lazarus Group, a North Korean state-backed cybercrime unit, has demonstrated this time and again. In 2022, the Ronin Bridge hack drained $625 million, making it the largest DeFi attack in history. The FBI later attributed the attack to Lazarus, which used spear-phishing and compromised developer credentials to breach Sky Mavis' infrastructure (FBI Statement on Ronin Hack).
This was not an exploit of a smart contract. It was an exploit of human behaviour, infrastructure weaknesses, and operational security gaps. Just last year, the Atomic Wallet hack ($100M stolen) followed a similar pattern, where Lazarus used malware and phishing techniques to compromise user endpoints (Elliptic Research).
Web3 is no longer fighting off individual hackers. It is defending against adversaries who operate with the sophistication of military intelligence agencies.
The Cost of Sovereignty
Self-custody has always been the foundation of Web3. "Not your keys, not your coins" is more than a mantra; it is a first principle. But building for self-custody is hard and defending it is even harder.
Web3 is unique because we build in public, we build open source, and we build censorship-resistant systems. This is a feature, not a bug. But it also forces us to play defense in a game where attackers have an asymmetric advantage. Unlike Web2 security teams, which operate within controlled, obfuscated, centralized environments, Web3 projects must defend infrastructure that is inherently transparent and permission-less. This openness makes every smart contract, wallet interface, and device that are built on top of open protocols, a potential attack surface.
When billions of dollars in assets are secured by smart contracts, every single interface, device, and operating system that interacts with them becomes an attractive target. We have already seen this with:
Blind signing exploits, where users unknowingly approve malicious transactions (LedgerConnect Exploit, 2023).
Frontend hijacks, like the Curve Finance DNS attack, where attackers compromised the website and injected a malicious contract (Curve Post-Mortem).
Developer-focused social engineering, where adversaries target protocol maintainers and infrastructure providers to inject vulnerabilities into production code (Mandiant’s Securing Cryptocurrency Organizations).
This is a different kind of battlefield, and it demands a different kind of defense.
Security is Not About Being Bulletproof, It’s About Making Attacks Too Expensive
There is a general perspective in security that the goal is not to make a system impenetrable but to make the cost of an attack so high that it is not worth the effort. However, when the reward is billions of dollars, there will always be attackers willing to spend years, deploy teams, and burn tremendous resources to pull off a successful exploit.
Traditional cybersecurity models focus on reducing risk exposure through Zero Trust architectures, supply chain security, and layered defenses (NIST Zero Trust Guidelines). But these models often rely on surveillance-driven security, constant monitoring, logging, and behaviour tracking to detect threats. This directly contradicts the Web3 principle that privacy is a fundamental right, not a privilege granted by corporations or institutions.
The reality is that threat actors like Lazarus have been around for years, long before Web3. They have an extensive playbook for breaching organizations built on traditional security models, from financial institutions to government contractors. If these established models were enough, these adversaries wouldn’t still be executing high-profile attacks.
This is why Web3 must go beyond traditional cybersecurity. Copy-pasting enterprise security strategies into a decentralized ecosystem will only replicate the same weaknesses that have already been exploited time and time again. Instead, we must build a security model that protects without violating privacy, increases the cost of attacks, and removes single points of failure that centralized institutions still rely on.
Fortifying the Foundations of Self-Custody
The fight to protect self-custody is not just about security, it is about preserving the very essence of Web3. It is about ensuring that individuals retain true ownership over their digital assets, free from the risks of centralized control or censorship.
If we fail to defend self-custody, we risk undermining the very principles that Web3 was built on, i.e. permission-less access, trust-less transactions, and individual sovereignty over digital assets. The industry cannot afford to think of security as an afterthought, a compliance checkbox, or a last-minute feature request. It must be built from the ground up, at every layer of the stack, in every tool, every UI, and every contract.
We are not just defending code. We are defending sovereignty.
This is not just about securing code or smart contracts. It is about securing the right of individuals to own and control their assets without reliance on intermediaries.
Self-custody demands a security model that is adaptive, resilient, and built to withstand persistent and well-funded adversaries. If we are to succeed, we must build stronger, smarter, and more resilient systems than ever before.
How do you think Web3 security should evolve while preserving self-custody? Let me know in the comments.