The recent $1.5 billion hack of Bybit — the largest in crypto history — has raised alarm across the industry. The attack, attributed to North Korea’s Lazarus Group, led to the theft of over 401,000 ETH, showcasing the vulnerabilities that exchanges face from sophisticated cyber threats.

After the hack, Bybit’s response was crucial. They have managed to re-establish a 1:1 asset backing for clients and closed the so-called “ether gap.” This situation highlights how users may need to consider limiting their assets on centralized exchanges (CEX) and lean towards self-custody strategies.

Potential Staking Losses: The loss of approximately 400,000 ETH could result in a drop in yearly staking rewards of around 16,000 ETH. This loss presents a substantial risk for retail investors who might not withstand such financial impacts.

Declining Staking on Centralized Exchanges: In response to the hack, a shift is already observable as the amount of staked ETH on centralized exchanges shrank from 8.6 million ETH to 8 million ETH from September 2024 to February 2025. Notably, following the hack, staked ETH on CEXs declined, while non-custodial staking methods saw a rise.

Institutional Adoption at Risk: Vulnerabilities exposed by high-profile hacks impact institutional investors, potentially causing delays in crypto allocations and price transitions. To protect their assets, both retail and institutional investors must embrace secure self-custody methods and decentralized alternatives.

The entire cryptocurrency community must collaborate to enhance security measures and foster confidence among users. Establishing a secure ecosystem will ensure that both individual and institutional participants can engage confidently in the crypto market.