Programmable policy is key to a more resilient DeFi ecosystem. Apps can set rules at the smart contract level to prevent and mitigate hacks like yesterday’s, without sacrificing decentralization. More below on Predicate’s programmable policy approach to hacks 🧵⬇️

Exploits will unfortunately always happen, even to the strongest teams like Balancer. But we as an industry can take steps to minimize their impact. The best way is with tools that let apps blacklist hacker addresses while everyone else transacts freely.

That means app-led policy enforcement at the smart contract layer. Why do that instead of just pausing or rewinding the chain when hacks occur? Because decentralization is DeFi’s core innovation. Without that, we’re just rebuilding web2 with extra steps.

Smart contract-level policy preserves blockchain’s and DeFi’s core openness, and gives every app the flexibility to set rules that fit their organization, while still making the ecosystem as a whole more secure.

How can we actually use programmable policy to mitigate hacks? One tactic: Prevention tools like @blockaid_ and @HypernativeLabs that detect suspicious transactions in real time. Apps can use these tools to set policies that block common malicious transaction patterns.

A second tactic: When an exploit occurs, use programmable policy to automatically blacklist all addresses involved, as well as their counterparties.

You can even leverage data from elite investigators and analytics providers like @_SEAL_Org, @trmlabs, @chainalysis, @MerkleScience, and @CipherOwl to proactively block addresses these teams identify as involved in exploits. The policy evolves with the data – any new high-risk address they identify is dynamically prevented from depositing in your vaults, swapping with your DEX pools, using your bridge, etc.

These are just a few of the ways programmable policy can fight DeFi hacks. The key point: Organizations and developers get a robust, flexible framework for preventing hackers from moving fundsat the app level, while chains remain decentralized. That’s the future we’re building at Predicate.

Lastly, we want to express our support for the Balancer team. Balancer has been an elite DeFi team for years and we’re confident they can weather this storm.