NEAR Protocol co-founder Illia Polosukhin stated on 20 July 2026 that artificial intelligence-assisted hacking capabilities now surpass the effectiveness of traditional code review methods for securing blockchain networks. Polosukhin identified formal verification as a necessary technological shift to protect smart contracts from this emerging threat. The NEAR token traded at $1.97 as of 18:31 UTC today, marking a 24-hour gain of 3.42% amid a broader market focus on blockchain infrastructure security. The protocol’s market capitalization stands at $2.57 billion with a 24-hour trading volume of $170.16 million.
Context — [why this matters now]
The last major blockchain security incident involving AI-assisted code exploitation occurred on 14 April 2026 when a Solana-based lending protocol lost $2.3 million to a smart contract vulnerability identified through machine learning analysis. The current macro backdrop features sustained institutional investment in blockchain infrastructure, with the total value locked in DeFi protocols reaching $170 billion amid rising Treasury yields at 4.31%. The catalyst for Polosukhin's warning stems from the proliferation of open-source AI code analysis tools, which security researchers have documented identifying zero-day vulnerabilities 47% faster than human audit teams in controlled tests conducted in Q2 2026.
Security firms began reporting AI-powered penetration testing tools achieving 83% success rates against testnet environments in May 2026, prompting reassessments of existing audit methodologies. The blockchain industry allocated approximately $480 million to security audits in 2025 according to Merkle Science data, representing a 22% increase from the previous year. This increased expenditure has not prevented approximately $1.8 billion in protocol exploits across 146 incidents during the same period, creating urgent demand for more strong security frameworks like formal verification.
Data — [what the numbers show]
NEAR's price appreciation to $1.97 represents a 3.42% gain against a relatively flat broader cryptocurrency market, with Bitcoin showing only a 0.8% increase over the same 24-hour period. The protocol's $170.16 million trading volume represents 6.6% of its market capitalization, indicating elevated interest compared to the sector median of 4.2%. NEAR's performance contrasts with other smart contract platforms: Ethereum declined 0.3% to $3,420 while Solana gained 1.2% to $142.60 during the same timeframe.
| Metric | NEAR Protocol | Ethereum | Solana |
|---|
| Price | $1.97 | $3,420 | $142.60 |
| 24h Change | +3.42% | -0.3% | +1.2% |
| Market Cap | $2.57B | $411B | $63.4B |
The blockchain security market has grown to an estimated $3.8 billion annually according to MarketsandMarkets research, with formal verification tools representing approximately 12% of that total. Projects implementing formal verification have experienced 92% fewer successful exploits compared to those relying solely on human audits according to a June 2026 report from CertiK. The average cost of a comprehensive formal verification audit ranges between $250,000-$500,000 per major protocol, approximately three times the cost of traditional code review processes.
Analysis — [what it means for markets / sectors / tickers]
The formal verification sector stands to benefit directly from increased security concerns, with companies like CertiK, Quantstamp, and Trail of Bits likely experiencing increased demand for their advanced audit services. Blockchain infrastructure tokens with strong security narratives may outperform, particularly those like NEAR, Cardano, and Tezos that have previously invested in formal verification research. The AI security sector could see increased investment in defensive applications, potentially benefiting companies like CrowdStrike and Palo Alto Networks that offer AI-powered threat detection platforms.
Acknowledged limitations include the significant computational resources required for comprehensive formal verification, which may create barriers for smaller development teams and potentially centralize security expertise among well-funded players. The counter-argument suggests that AI-assisted auditing tools might eventually surpass both human auditors and formal verification in effectiveness, particularly as large language models continue to improve their code analysis capabilities. Trading flow data indicates increased institutional positioning in blockchain security-oriented assets, with investment products focused on this niche seeing $47 million in net inflows during the past week according to CoinShares data.
Outlook — [what to watch next]
The Ethereum Foundation will present its latest formal verification research at Devcon VII on 15-18 September 2026, potentially establishing new industry standards for smart contract security. The National Institute of Standards and Technology plans to release its cybersecurity framework for artificial intelligence in critical infrastructure on 30 August 2026, which may include blockchain-specific guidelines. Technical levels to monitor include NEAR's resistance at the 50-day moving average of $2.05, with support established at the $1.85 level that has held throughout July 2026.
The Securities and Exchange Commission will conclude its comment period on cybersecurity disclosure requirements for digital asset platforms on 12 August 2026, potentially mandating more transparent reporting of security audits and vulnerabilities. If AI-assisted hacking incidents increase by more than 25% in Q3 2026 as forecast by Chainalysis, regulatory pressure may accelerate toward mandatory formal verification for certain classes of DeFi protocols. The Department of Homeland Security's cybersecurity review of critical blockchain infrastructure, initially scheduled for completion in Q4 2026, may be accelerated following recent warnings from industry figures.
Frequently Asked Questions
What is formal verification in blockchain security?
Formal verification uses mathematical methods to prove the correctness of algorithms underlying computer systems, including smart contracts. Unlike traditional auditing which relies on sampling and testing, formal verification attempts to mathematically prove that code behaves exactly as specified under all possible conditions. This method becomes particularly valuable against AI-powered attacks that can identify edge cases and unexpected interactions that human auditors might miss during code review processes.
How does AI-assisted hacking threaten blockchain protocols?
AI-assisted hacking employs machine learning algorithms to analyze smart contract code at scale, identifying vulnerabilities much faster than human researchers. These systems can test millions of potential attack vectors simultaneously and learn from previous successful exploits across different protocols. Security firm Halborn reported in June 2026 that AI tools can now discover novel attack methods in under 12 hours that previously took human researchers weeks or months to identify through manual analysis.
Which cryptocurrencies have implemented formal verification?
Cardano has utilized formal verification methods since its inception through its Haskell-based Plutus platform. Tezos implemented formal verification capabilities early in its development through its Michelson smart contract language. Ethereum has increasingly incorporated formal verification tools like the K Framework for EVM analysis. NEAR Protocol has developed its own formal verification system called NEAR Verifier, which Polosukhin cited as essential for the protocol's future security against AI-powered threats.
Bottom Line
AI-powered hacking necessitates formal verification adoption to secure $170B in DeFi value from sophisticated threats.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
