Decentralized autonomous organization The DAO hacked, Ethereum blockchain not

Ethereum developer Vitalik Buterin has confirmed that there is an attack on The DAO, in which cryptocurrencies are piped to a “child DAO” set up by the hacker. The DAO is a type of investment fund that became known through a large crowdsale.

The confirmation means that the problem is not in the Ethereum blockchain or Ethereum’s core codebase, but in the decentralized autonomous organization called The DAO. The DAO runs, as it were, a system of smart contracts on the Ethereum blockchain. The smart contract with which The DAO funded itself through a crowdsale a few weeks ago contains a flaw that makes it possible to steal the ether collected by the organization, a kind of bitcoins.

Friday morning, it emerged via the Ethereum blockchain that ether was leaking from The DAO, into which people poured money during this organization’s crowdfunding campaign. An exploit was used for this that was written about on June 9 by Peter Vessenes in a blog post.

The blog post Ethereum’s Buterin wrote about the issue states that it’s a recursive calling vulnerability, where the unknown attacker calls the ‘split’ function, applies it recursively or indefinitely iterates, and collects more and more ether that way. in a single transaction.

In order to halt the flow of trades and come up with a possible solution, trades in ether were halted Friday morning. Various ways have been devised for a possible solution, whereby making a soft fork of the Ethereum blockchain may be preferable. This makes a specific transaction invalid.

The DAO had already included in its system that a child DAO, such as a child theme at WordPress, is only fully functional after 27 days. As a result, there are just under 27 days left from Friday before ether can actually disappear from the The DAO system. After that, there should be a hard fork that will allow the holders of The DAO tokens to get their ether back.

Another proposal was to roll back to a few hours before the attack that would wipe out all recent payments. There was a lot of opposition to this idea, because it would “pull the whole of Ethereum, which is currently nothing to worry about, in this mess,” a community member on Slack said, according to Business Insider.

There are currently more than 3.5 million stolen ether in the child DAO. Since 1 ether is worth almost 16 euros at the time of writing, that is comparable to about 56 million euros. This means that the value of ether is rising again from the lowest point in the past 24 hours: more than 10 euros.

The DAO raised another record amount in both ether and dollars during the crowdsale. At that time, it was still worth $168 million. Interestingly, about half of that came from just 70 addresses, Wired wrote in a background on the voting system at The DAO.

Source: Cryptocompare