Until the collapse, DAO represented the highest technological achievement achieved by the Ethereum blockchain and the upcoming wave of innovation.
Smart contracts and blockchain are interconnected ideas. In Vitalik Buterin’s early work, he described in detail the computer network that will become Ethereum. In terms of market value, Ethereum is the second largest network in the world, but ranked largest by developer activity. Ethereum proposed a completely decentralized autonomous company. Or organization (or DAC and DAO) ideas. .
DAO is the first coded version of the concept, hence its name, it is a testing ground where the destructive world of venture capitalism itself may be destroyed. Approximately $1
See also: A $55 million hacker almost brought down Ethereum
Then it was attacked. On a Friday morning in June 2016, a still anonymous hacker exploited a vulnerability in the code and confiscated tens of millions of dollars in cryptocurrency. The imitators followed closely behind. Investors withdrew their funds, the “dark DAO” was raised to protect the remaining funds, and there was a heated debate about when to properly hard fork or roll back events on the blockchain.
Four years after the DAO was hacked, veteran Bloomberg News reporter Matthew Leising was not sure what it meant. The obvious lessons about market prosperity and security have hardly been noticed, as evidenced by the ICO bubble that broke a few years ago and the rise of DeFi today.
Leising said: “This can be traced back to Vitalik’s vision of a decentralized platform where people can do whatever they want.” “When you give people flexibility and creative permission, you will get crazy project.”
In his latest book “Beyond Ethereum: The Amazing Story of Ethereum and the $55 Million Heist That Almost Destroyed It All,” Leising tracks events around the critical moment (excerpt here). CoinDesk caught up with him and discussed the DAO’s legacy and what Leising believed would be the next step in the blockchain.
What do you think is the most enduring legacy of the DAO hacker?
I think its effect is very short. At the time, I think people realized that smart contracts should have been capped and should not be allowed to grow to 150 million US dollars in Ether, especially because it is too new. Ethereum was only one year old at the time. There should be some emergency stop buttons or safety hatches to control in some way should any problems occur.
I like the idea of decentralized governance, but when you write code in a language like Solidity that has been less than a year old, it must be fail-safe. Special consideration is the number of errors found in the DAO before the hacking.
When you deal with other people’s money-you must be careful. I hope I can say that these courses are learned, I think they are not. I think what we are seeing now is an error in DeFi. Money wandering around is crazy. In some ways, the situation is even worse, people announce that they have not reviewed the code.
See also: DeFi Lender bZx lost $8 million in its third attack this year
At least they conducted a security audit with DAO, but there are still problems. When you compile with a language such as Solidity, you will encounter problems. When these projects come out, more scrutiny is needed so that real people do not lose money.
This seems to have caused a basic enthusiasm for encryption technology. People are attracted by risks and volatility.
You must not limit your enthusiasm, and I don’t think you want to. It can be traced back to the vision of a decentralized platform proposed by Vitalik, where people can do whatever they want. When you give people permission for flexibility and creativity, you get crazy projects. The only thing you can do is not to participate.
I think something interesting is being done to solve this problem. Fabian Vogelsteller is exploring “reversible ICO”. He is the one who wrote the ERC-20 code that allowed ICOs to use, and is now trying to solve this problem. He created a fundraising mechanism so that people can withdraw funds at any time. Therefore, it is not like you pour ETH into the pool, and the development team can go out and buy Rambo.
I would trust people like Fabian instead of anonymous people like Sushi Chef. These are the questions you must ask. Who is behind the project? Do they know the quantity? Did they live in Ethereum for a while or came out of wood products?
You decided to call the DAO hackers unambiguously in the book, and wrote in the full text that the multiple sources you encountered were suspicious, but also kept silent. Do you think cryptocurrencies respect pseudonyms?
I want to point out that there are several different DAO attacks, which few people realize. The $55 million attack that took place on Friday may be what people thought when talking about the DAO attack.
Then the attack was launched the following Tuesday. That’s where I can get some clues, make some reports, and track the people I think are involved. I believe this is an imitation. The code to attack the contract has been distributed.
They are sloppy and I cannot track them. To me, they were not very careful, and the attackers on Friday covered their tracks. You should see the way he disrupted Ethereum and Bitcoin. They know what they are doing and are very careful.
I pushed the ball forward a bit, but I didn’t go too far to find out who was involved in the $55 million theft.
If anything, the frequency and scope of attacks have only increased, but they seem to be becoming less and less important. Do you think that the industry’s acceptance of attacks is just one of the risks we must bear?
If you are talking about people losing a lot of money, I think people are as concerned today as they were in 2016. I can’t represent the entire industry, but considering the frequency of these things, it seems that the industry is understating security.
At this point, everyone who trades cryptocurrencies should know not to leave your coins on the exchange-this is your stupidest thing.
Despite all the politics and betrayal, the idea was so effective that Ethereum survived.
I’m not sure if anyone who has just entered space knows this. Coinbase and Gemini are like hackers’ dreams. You need to deposit funds in a wallet on the blockchain. What people should do is basic things. But is there enough education for this? Has anyone told them to take these steps? Coinbase certainly doesn’t tell people: “Now, you have bought BTC, take it out of our exchange and put it in your wallet.” That is not in their interest.
People laugh at the SEC and CFTC of the US regulators, but they are very happy to educate potential investors on how to keep their funds safe when buying and selling stocks in the market.
When researching this book, what do you know about Vitalik best?
Vitalik really shocked me after my father shared some of the contents of this document he wrote when he was seven years old. He was called the “Bunny Encyclopedia”. He wrote this 20-page Word document because he is absolutely obsessed with rabbits. It’s really impressive.
For some people, you can find certain details about their lives, which can unlock or encapsulate them. I think that is the rabbit book for him. We all know that he is very smart, but he is also very interesting and detailed. He devoted all his energy to this matter when he was seven years old. Once I have it, it can help me see him as a person.
I still don’t know that behind the scenes of the Ethereum Foundation is really a show. After six months of restructuring, someone was fired, and then more people were fired. They tried to straighten out themselves by setting up a board of directors and executive directors, but from the very beginning they were at each other’s noses.
I love the stories of all the people who created Ethereum together and the stories of the mismanagement of it since the beginning. It has never really gotten better. Despite all kinds of politics and betrayal, the idea is so good and effective that it survived all of these aspects.
Do you think they will be able to successfully manage the migration to Eth 2.0?
I agree. It’s been a long time. I interviewed Vitalik on Devcon3 in 2017 and he said that the proof of stake will come by the end of this year. Another thing I learned from Ethereum is that it never delivered on time. They thought they could crowdfund the Tuesday after the Miami Bitcoin Conference. It was six months late. They always have questions about the timetable.
Having said that, I have begun to see signs that Eth 2.0 is approaching. I have no reason to suggest that they will not be able to deliver.
See also: The “hot swap” plan to convert Ethereum to proof of stake is explained
It seems that you have really understood the vision of Ethereum. What are you most excited about?
I am interested in all the Web 3.0 applications developed on Ethereum, which enable people to control their data and privacy. We are beginning to see this maturity. Metamask has become movable. There are indeed scattered web applications.
From the beginning, it entered the core of idealism held by people like Gavin Woods, Vitalik and Neha Nerula. These people really think they can change the world, and they are working hard to help realize this world.
It is slow and fragmented. But now, this vision is clearer than ever. Ethereum, DeFi, and Web 3.0 will be alternatives, but they will not replace anything. Bitcoin will not replace the U.S. dollar as a global currency, but it is another option.
If done well, all these things can be a stable choice for those who want greater privacy. Most people want convenience rather than privacy, it depends on them. But now, there are not many options.
This commitment will drive this forward. It’s almost like returning to the original state of the Internet. Andreas Antonopoulos said that we need to redistribute the position of the network-it feels like what is happening here. Google will not disappear, but I want an alternative.
What do you think will be the subject of the next great encryption book?
I think the legend of Tether-if anyone could really tell this story and get all the details. I tried. This is difficult. I still think there is a Bitcoin story to tell. But the space moves so fast, it’s hard to tell.