A consensus has emerged in the cryptocurrency industry that security should be built on three pillars: writing test cases during development to catch basic errors; conducting comprehensive reviews via audits and competitions before deployment; and establishing bug bounty programs to reward researchers for responsibly disclosing vulnerabilities. While these best practices have significantly reduced on-chain exploits, attackers have shifted their focus to off-chain vulnerabilities like private key theft and infrastructure compromise. Despite undergoing thorough audits and offering substantial bug bounties, protocols continue to suffer hacks. Recent incidents involving Yearn, Balancer V2, Abracadabra, and 1inch demonstrate that even well-established protocols are not immune. This raises a critical question: could these attacks have been prevented, or are they an inevitable cost of decentralized finance? Commentators often suggest that higher bug bounties could have protected these protocols. However, bug bounties are fundamentally a reactive security measure, outsourcing a protocol’s fate to white-hat hackers. In contrast, audits represent a protocol’s proactive effort to protect itself. Raising bug bounties does not prevent hacks; it merely doubles down on the bet that a white hat will find a critical flaw before a malicious actor does. For genuine protection, protocols must take the initiative to commission re-audits. **Treasury Funds vs. Total Value Locked (TVL)** Following some hacks, attackers agree to return most stolen funds, keeping a portion (often 10%) as a ‘bounty.’ This leads some to ask why protocols don’t simply offer equivalent amounts through their bug bounty programs to avoid negotiations. This reasoning conflates the funds an attacker can steal with the funds a protocol can legally spend. A protocol has legitimate control only over its treasury, not user-deposited funds. Users are highly unlikely to pre-authorize such spending, only permitting it during a crisis when faced with a choice between a 10% or a 100% loss. Consequently, risk scales with TVL, but the security budget does not. **Capital Efficiency** Even for well-funded protocols, allocating security resources efficiently is challenging. Compared to investing in re-audits, increasing bug bounties is, at best, highly capital-inefficient and, at worst, creates misaligned incentives between protocols and researchers. If bug bounties are tied to TVL, researchers are incentivized to withhold critical vulnerabilities if they suspect the protocol’s TVL will grow and the bug is non-recurring. This pits researchers against the protocol, harming users. Simply raising critical bug bounty amounts is also ineffective. The pool of elite researchers capable of finding flaws in complex protocols is small, and they focus their efforts where the perceived return on investment is highest. For large, battle-tested protocols, the perceived probability of finding a new bug is often considered too low to warrant attention, regardless of the bounty offered. From the protocol’s perspective, bug bounty funds are reserved for a single critical flaw and cannot be repurposed unless the protocol gambles that no such flaw exists. Instead of passively waiting for a researcher to find one critical bug, the same funds could finance multiple re-audits over several years. Each review guarantees focused attention from top-tier researchers, is not artificially limited to finding a single issue, and aligns the interests of both parties, as both suffer reputational damage if an exploit occurs. **Existing Precedents** Annual expiry audits are a proven practice in software and finance, serving as the best indicator of an entity’s ability to handle an evolving threat landscape. Examples include SOC 2 Type II reports for evaluating vendor security controls, PCI DSS certification for payment data protection, and FedRAMP authorization for handling U.S. government information. While smart contracts are immutable, their operating environment is not. Configuration settings change, dependencies are upgraded, and code patterns once deemed safe may later prove risky. A protocol audit is an assessment of its security at a point in time, not a forward-looking guarantee. The only way to update this assessment is through a new audit. By 2026, the crypto industry should adopt annual re-audits as the fourth pillar of protocol security. Established protocols with significant TVL should undergo re-audits of their deployments. Audit firms should offer specialized re-audit services focused on evaluating the overall deployment. The ecosystem must collectively shift its perception of audit reports from permanent security guarantees to time-bound assessments that can become outdated.