Bitcoin Forum

Posted by Vitalik Buterin on June 17th, 2016.
An attack has been found and exploited in the DAO, and the attacker is currently in the process of draining the ether contained in the DAO into a child DAO. The attack is a recursive calling vulnerability, where an attacker called the “split” function, and then calls the split function recursively inside of the split, thereby collecting ether many times over in a single transaction.

The leaked ether is in a child DAO at https://etherchain.org/account/0x304a554a310c7e546dfe434669c62820b7d83490; even if no action is taken, the attacker will not be able to withdraw any ether at least for another ~27 days (the creation window for the child DAO). This is an issue that affects the DAO specifically; Ethereum itself is perfectly safe.

The development community is proposing a soft fork, (with NO ROLLBACK; no transactions or blocks will be “reversed”) which will make any transactions that make any calls/callcodes/delegatecalls that execute code with code hash 0x7278d050619a624f84f51987149ddb439cdaadfba5966f7cfaea7ad44340a4ba (ie. the DAO and children) lead to the transaction (not just the call, the transaction) being invalid, starting from block 1760000 (precise block number subject to change up until the point the code is released), preventing the ether from being withdrawn by the attacker past the 27-day window. This will later be followed up by a hard fork which will give token holders the ability to recover their ether.

Miners and mining pools should resume allowing transactions as normal, wait for the soft fork code and stand ready to download and run it if they agree with this path forward for the Ethereum ecosystem. DAO token holders and ethereum users should sit tight and remain calm. Exchanges should feel safe in resuming trading ETH.

Contract authors should take care to (1) be very careful about recursive call bugs, and listen to advice from the Ethereum contract programming community that will likely be forthcoming in the next week on mitigating such bugs, and (2) avoid creating contracts that contain more than ~$10m worth of value, with the exception of sub-token contracts and other systems whose value is itself defined by social consensus outside of the Ethereum platform, and which can be easily “hard forked” via community consensus if a bug emerges (eg. MKR), at least until the community gains more experience with bug mitigation and/or better tools are developed.

Developers, cryptographers and computer scientists should note that any high-level tools (including IDEs, formal verification, debuggers, symbolic execution) that make it easy to write safe smart contracts on Ethereum are prime candidates for DevGrants, Blockchain Labs grants and String’s autonomous finance grants.

https://blog.ethereum.org/2016/06/17/critical-update-re-dao-vulnerability/ (https://blog.ethereum.org/2016/06/17/critical-update-re-dao-vulnerability/)

So the hard fork to recover the ETH means Ethereum is not decentralized. It is a top-down controlled fiat system.

I don't know if "top-down controlled" is the right description, its more like a democracy where the majority can vote to strip the minority of its rights.

No upside for any non-DAO involved ETH holders.

Considerable potential downsides for ETH.

Shouldn't the hardfork distribute some of the recovered funds as free ETHs to bagholders by way of compensation for this?
Otherwise we will start to see effects of 'Moral Hazard' in blockchain technology.

Yes it's called communism, where the piss poor try to steal the money from the rich ones.

And in the meantime Automated Transactions (AT) is working on two blockchains without issue (and has been doing so for over a year now).

:D

And in the meantime, Ripple has been successfully operating a distributed ledger for over five years now. A ledger that has supported an unlimited block size and five second confirmation times from the beginning: https://ripple.com/

AT isn't a ledger - I was comparing smart contract systems (i.e. "apples and apples").

(but if you want to add AT to Ripple then you are welcome to do so)

The amount of money involved in the DAO/ETH has attracted high level hackers.
The same can't be said for NXT/Burst : therefore, we can't conclude easily their smart contract features are more safe.

AT doesn't run on Nxt (it runs on Qora and Burst), and sure I do accept your point, but I am pretty confident that the design (being much simpler) does not have any similar flaws (the Crowdfund AT is about as minimal as such a thing could ever get).

I would also be happy to take a "bet" in regards to being able to hack one of the existing ATs that have been created by the CIYAM team (we literally spent months testing each one we created).

That's true

Sorry, but this has nothing to do with decentralization. It's like saying: "We could, if we wanted to... but we are going to ask the community first to see if they agree"

that's what it looks like, disappointing moment for crypto, vitalik is making a big mistake with this one ...

nobody voted, VB just decided this around his Cabinet Politburo table ... dictatorship, not a democracy

1 Billion USD down the toilet isn't good for marketing crypto

the hacker loves money  ... Vitalik shouldn't play like a dictator here, let the code chips fall where they may, you CAN'T have a decentralised crypto if one guy and his buddies can do a hard fork & roll back when they deem it ok.

If you do not agree with him, you do not download/run the new code and use the old code to validate the hacked eth.

Democracy is a top-down structure because it is a winner-take-all power vacuum (http://esr.ibiblio.org/?p=984).

Well, what was he supposed to do - that was a massive amount of dumpable ETH that DAO thief was (still is!) accumulating

The amount of coins stolen by the thief will be invalidated. There will be no loss to the DAO owners according to the developers.

But the ETH holders who have nothing to do with DAO could suffer huge potential downsides like loss of confidence (Hard Forks), moral hazard.

If I were a non DAO bagholding ETH bagholder I would be pretty pissed if ETH did this.

!??!?!

The WORST thing they could do.. I'm sorry lads, but that is really VERY bad. Anyone could be next.. don't piss the ETH devs off.

'Too Big To Fail'.. in our own back yard..  :'(

Plus dilution as people dump ETH and say bye to crypto - including all the new blood that was drawn into the DAO/ETH these past few weeks.

ETH looked "clean" compared to tarnished BTC. That was a huge part of its brand/premium. Well, now? Not so much...

This response by Ethereum is completely against their stated ethos, but compared to letting scammers run off with $50 million, probably worth it.

Decentralized technology and decentralized governance are two very different things.  There's no question that Ethereum is based on decentralized technology, but their response to this incident (taking away someone's money by reversing a bunch of transactions) proves that Ethereum isn't decentralized in the same way that Bitcoin is - I cannot imagine the Bitcoin core team reversing a bunch of transactions to a particular Bitcoin address in response to a bitcoin scam.

Exactly, what would you do in this case?  I am going to leave it to Buterin to figure this one out.  Someone does not want ETH to go where it is inevitably headed.  This is going to be an interesting weekend...but again, please submit your proposals of a solution since you know.

The money isn't lost. It's only transfered.

It depends on the thoughts of the miners. If the miners decide to freeze the funds and do a reversal, the money is not lost.

 A little art fast....... (https://bitcointalk.org/index.php?topic=1506140.msg15296320#msg15296320)