Security Risks in dApps & Best Practices for Developers

DApps have gained unprecedented success in recent years with the popularity of blockchain-enabled products; they are becoming unstoppable. Started from a decentralized finance (DeFi) protocol to an NFT marketplace, and now it has found its uses even in supply chain management, healthcare, real estate, identities, etc. 

Smart contracts, for example, which are the core of any dApp, are like any other piece of software; they are packed with their own vulnerabilities that pose threats that can be unethically exploited, leading to financial loss and system failure. 

In the first half of 2025, crypto hacks have already wiped out more than $1.6 billion, continuing the sharp rise that has been going on for years, posing a significant risk to end users.

In this blog, we will cover all the risks associated with decentralized applications and the best practices for app creators to avoid them. Without further ado, let’s dive into it.

Understanding the Architecture of DApps

Before examining the risks associated with dApps, it is essential to first understand what is a decentralized application; to achieve this, we need to explore the architecture of dApps, which typically consists of several components that work together. Some critical parts of the dApp architecture are:

• Frontend Development

The front end of a dApp is its user interface (UI). It is often built using popular technologies, like HTML, JavaScript, and CSS. Frameworks like React, Angular, and Vue.js are commonly used to create responsive and dynamic UIs.

• Hosting

Hosting is the process of storing and providing an application’s files, allowing users to access and interact with them over the internet. The majority of dApps distribute application files across a network of nodes, with each providing storage and bandwidth resources.

• Wallets

Wallets hold users’ private keys and make it possible for transactions to happen with the help of underlying smart contracts. 

• Nodes

Nodes are special servers that help blockchain networks by checking transactions and sending them back. The frontend needs to establish a connection with a blockchain network node in order to communicate with a dApp

• Smart Contracts

Smart contracts are the backbone of any dApp. They are written in programming languages like Solidity or Rust, and they set the rules and logic for how the dApp works.

• Indexing Solutions

As blockchains grow in size and complexity, retrieving specific data from them can become slow and resource-intensive. Indexing solutions address this challenge by creating structured, indexed databases that enable faster and more efficient data retrieval.

• Data Storage

People often store dApp data off-chain using decentralized storage solutions like IPFS or Filecoin, which offer a more efficient and cost-effective storage option. These services protect data with encryption and sharding.

• Oracles

Many use cases rely on data from outside sources such as weather, stock prices, or sports scores to function correctly. Oracle addresses this need by securely transferring off-chain data to smart contracts.

Top Security Risks in dApps and their Mitigation Strategies

• Private Key Theft Attack

The theft of private keys through phishing, clicking on bad links, keylogging, clipboard hijacking, or poor key management is one of the most significant security risks for dApps. If an attacker gets a user’s key, they can take complete control of their money and access their wallets and contracts without permission.

Mitigation: Programmers must implement strict security measures to prevent attackers from obtaining private keys. Decentralizing key management requires hardware security modules (HSMs) for hardware wallets or multi-party computation.

• Smart Contract Vulnerabilities

Smart contracts are what make dApps work, but even a small mistake in the code can cause significant problems since they are immutable once deployed on the blockchain. Integer overflows and logic errors have been the target of many exploits.

Mitigation: Software engineers should employ automated techniques for vulnerability identification, implement tried-and-true coding frameworks, and do thorough code audits. 

• Reentrancy Attacks

When some malicious contract calls back into the origin contract before completing the initial execution, it can cause the first contract to lose funds. The famous DAO hack on the Ethereum blockchain is a prime example of a reentrancy attack.

Mitigation: It is advisable to limit external calls, be strategic about the order of state changes, and use the checks and effects interaction patterns. Remember that securing any smart contract against reentrancy will be one of the initial steps in deploying any dApps.

• Sybil Attacks

The defining feature of a Sybil attack is a single malicious user creating multiple fraudulent identities in an attempt to overwhelm the network of systems and manipulate outcomes. Such an attacker can gain disproportionate influence over dApp voting, governance, or consensus mechanisms.

Mitigation: Software designers should use proof-of-work (PoW) or proof-of-stake (PoS) to protect against sybil attacks. It is found beneficial to implement identity checks using reputation systems that increase the cost of creating fraudulent identities for attackers.

• Phishing & Social Engineering

These attacks primarily target end users, not the code itself. Users are tricked into giving away private keys through phishing websites, malicious wallet apps, and fake transaction notifications.

Mitigation: Within the dApp, programmers can add warnings to add cautions to each transaction and notify for doubtful activities. Furthermore, promoting the use of two-factor authentication (2FA) and verified wallet applications can further reduce the risk.

• 51% Attack

A 51% attack occurs when one entity controls over 50% of the blockchain network’s mining power or staked tokens, allowing them to double-spend or halt transactions. This is more of a problem for dApps on smaller, less decentralized blockchains.

Mitigation: To secure their projects, deploy proof-of-stake (PoS) or hybrid consensus models and utilize blockchains with strong decentralization and a solid security track record. Furthermore, using layer-2 solutions can further mitigate the risk associated with 51% attacks.

• Front-Running Attacks

Front-running is the practice where any malicious actor takes advantage of blockchain’s transparency by watching the mempool and submits their transaction with higher fees to be executed first.

Mitigation: Implement a transaction-obscuring mechanism like commit-reveal schemes, batch auctions, randomized ordering of transactions, and using private relay tools like Flashbots to prevent the chances of front-running attacks.

• Rug Pull

Imagine you walk into a store, pick up items, and pay using some unique digital currency, only for the creator to close that currency’s exchange overnight. That’s the essence of a rug pull attack, where the developers abandon a project after raising assets, leaving participants with worthless tokens.

Mitigation: Before joining the project, customers need to do a lot of research on the team, technology, and community. Unknown teams or a lack of transparency are red flags. If the project was audited, check the report for vulnerabilities. Avoid unrealistic returns, excessive marketing, and pressure to participate quickly.

• Oracle Manipulation

Smart contracts often utilize oracles to retrieve external information like asset prices. If the oracle itself becomes compromised, then an attacker can easily influence the data and exploit contracts, disrupting their intended behavior.

Mitigation: It is advisable to aggregate data from multiple oracles to achieve consensus and consider using decentralized oracle solutions.

• Development Library Supply Chain Risks

Third-party libraries and dependencies are often used in blockchain apps. If these are out of date, hacked, or not well-maintained, they could be dangerous. The best example of this kind of attack is the 2018 hijacking of the event-stream npm package, which added harmful code that targeted specific user wallets.

Mitigation: Use tools such as OWASP Dependency-Check, Snyk, or npm audit to conduct dependency audits. Use reliable repositories and lock dependencies to particular versions.  Use supply chain security solutions like Dependabot to identify potential vulnerabilities.

By following these mitigation strategies, you can avoid the risks associated with dApp during the building process itself and launch your first dApp the right way. 

Conclusion

The rise of dApps highlights the benefits of blockchain technology, but it also presents unique security vulnerabilities that require undue consideration. A programmer faces a large and expanding list of dangers at every level of the building cycle, ranging from front-running attacks, oracle manipulation, the theft of private keys, and the exploitation of smart contracts.

If you are building a dApp, then your best bet is to partner with a firm in the business of making secure decentralized applications. Technoloader has been in the market for creating dApps with an excellent track record.

Contact them today!