Veda CEO Highlights Key Management Risks in Onchain Vaults Over Smart Contract Bugs

Sun Raghupathi, CEO of Veda, a provider of onchain vault infrastructure, argues that the crypto industry needs to reassess its focus on security threats. He believes that the most significant risk facing onchain vaults today is not the smart contract bugs that have dominated discussions, but rather the individuals and processes managing access controls.

Raghupathi points out that as smart contract code matures and undergoes rigorous audits, the vulnerabilities shift from the code itself to the human factors involved in key management. Recent high-profile incidents have often stemmed from compromised private keys or operational security failures rather than direct exploits of smart contracts.

Veda has successfully routed over $16 billion through its vault infrastructure without any reported security incidents related to its smart contracts. The company’s infrastructure supports major clients, including Kraken, whose Earn vaults have accumulated over $600 million in deposits since their launch.

Raghupathi warns that DeFi users should not treat onchain vaults as if they are FDIC-insured accounts. Instead, he likens them more to hedge funds, underscoring the importance of understanding the risks involved in operational management and governance. As institutional interest in DeFi grows, Veda's approach to integrating compliance and risk controls into its vault infrastructure aims to address these critical concerns.

With the increasing flow of capital into products like Kraken's DeFi Earn, the stakes for misjudging safety are high. Veda's focus on operational security and governance structures is becoming increasingly relevant as the landscape of DeFi evolves.