This past Monday marked the eighth anniversary of the infamous “DAO Attack,” not the first in the crypto industry but perhaps the most consequential. It laid the basis for many industry regulatory interpretations (through the U.S. Securities and Exchange Commission’s “DAO Report”), and changed the way the Ethereum community governs itself (through hard forks).
“This is a defining moment for Ethereum,” crypto legal expert and MetaLeX protocol founder Gabriel Shapiro told The Block in an interview. “Other chains weren't really tested similarly, or when tested, didn't respond in a way that strengthened the community but instead divided it.”
In short, the DAO attack on June 17, 2016 helped establish Ethereum’s “social layer,” which Ethereum co-founder Vitalik Buterin sees as the group of network participants who maintain and validate the network. Determine network priorities. This was demonstrated by the decision to hard fork the blockchain – a mandatory update that is not backward compatible – to recover nearly four million stolen ETH, worth approximately $50 million at the time.
How the attack happened
DAO, the first version of a decentralized autonomous organization, was conceived and established by the team behind smart contract startup Slock.it as a new way to invest in crypto startups.
More than $150 million in Ether has been raised, and more than 50 projects are expected to receive funding from this distributed investment vehicle driven by a smart contract that none of its 11,000 backers own. property. By the time the 28-day window to invest in the project closes, the DAO controls about 15% of all ETH in circulation. The attack caused the price of ETH to drop to $13 from $20 and brought a wave of skepticism.
Until it failed, the DAO represented the highest ideals of Ethereum that could be encoded in a working project and signaled a coming wave of innovation.
Ironically, the vulnerability that eventually brought down DAO was widely known and was about to be fixed. Several independent programmers examining its code discovered problems with “recursive calls” that could drain funds from the smart contract. On June 14, just three days before the attack, a potential fix was proposed, but the developers failed to implement it in time.
By June 18, the attacker – alleged by author Laura Shin to be former TenX CEO Toby Hoenisch – had withdrawn nearly a third of the project's treasury into an account he controlled. Throughout the two-day attack, the Ethereum community considered ways to minimize the damage and stop the attack.
War of ideas
On the day of the attack, Vitalik Buterin proposed a potential solution to alleviate that concern. In a one-off patch for a single event, Buterin proposed a “soft fork” update to Ethereum's code that would essentially prevent attackers from accessing his funds but keep the schedule intact. history of blockchain.
However, on the other side of the debate, there are people like Stephan Tual of Slock.it, who want to hard fork the Ethereum chain to recover all the stolen funds.
A third view, from the attacker himself in an open letter, is that the attack was valid – because he only used the code as written. Any attempt to roll back the chain or freeze his funds is “theft” of his assets and a “change” in the protocol's rules, he wrote.
To some extent, both proposals – soft fork or hard fork Ethereum – challenge the idea of blockchain immutability but represent different interests. Buterin's plan, and thus that of the Ethereum Foundation, is essentially to prioritize the protocol over users while the hard fork is an attempt to fully refund the early adopters of this new network.
In other words, serious questions are raised about whether a decentralized application should be bailed out at the expense of the community's founding ideals. But there is also a practical argument, considering that Ethereum was still finding its footing at the time, and an attack of such scale could derail the project.
Finally, on July 20, 2016, a hard fork proposal was put before ETH holders, and passed with 85% of the votes. Ethereum will return to the state before the DAO attack. This is the first time such a situation has occurred and is a challenge to the idea that code should determine how blockchain networks are managed.
“The DAO attack is important because it reveals a suppressed truth about blockchain immutability. In extreme situations, the social layer can eventually overthrow the technical layer, if there is a strong consensus,” University College Dublin lecturer Paul Dylan-Ennis told The Block.
Generative Ventures partner and former chief economist at Consensys, Lex Sokolin, agrees, saying that the response to the DAO attack has highlighted that “technology is still a tool used by community” and “governed by user requirements and group consensus.”
Legal and regulatory consequences
As the first operation of its kind, DAO operates in a gray area at best. That all changed after the attack. About a year after Ethereum's hard fork, the U.S. Securities and Exchange Commission (SEC) issued a report, now known as the “DAO Report,” confirming that the token sale violated securities laws. .
Although the agency did not pursue enforcement action at the time, the report became the basis for many of the SEC's interpretations of initial coin offerings and token launches. SEC Commissioner Hester Peirce, for example, said that the DAO Report's analysis at the time pushed back the chances of passing crypto-specific regulations by about a decade by giving the watchdog regulatory authority. assigned a large scope to monitor this industry.
“My impression is that the DAO attack was very important in shaping [SEC Chairman Gary] Gensler's belief that securities regulation of crypto was necessary,” said University of Kentucky law professor Brian Frye, told The Block.
Still echoing
Sokolin noted that it makes sense that deciding how to develop blockchain ecosystems is in the hands of the community, as any “product without a community is dead.” The main industry principle is “permissionless,” or the ability for anyone to access or fork a system. Ultimately, successful projects are those that are accepted.
“Another evolution of this is Uniswap/SushiSwap and the attempt to attack vampires in the early days of DeFi. The ability to fork a protocol not out of moral objections but out of economic objections has become a repeatable tactic,” Sokolin added, mentioning that Sushi started out as an alternative version of Uniswap equipped with governance tokens to empower the community.
Similarly, JokeRace founder David Phelps said that the response to the DAO attack helped establish that code is not always law in crypto. He mentioned the Celestia data availability blockchain with its “focus on social consensus” and the “relational subjectivity” system of the Eigenlayer staking platform, both of which allow the community to decide how the platforms development platform.
However, not everyone is satisfied with the current situation. Frequent Crypto Twitter commentator, Gwart, argues that the only way to truly understand the community's views is to see where they invest. “A lot of people really disagree with the whole concept of a social class,” he said. “Even if it exists objectively.”
Whether Ethereum should be governed by its code or by its community is certainly a matter of debate. Either way, the DAO attack raises that question.
Source: https://tapchibitcoin.io/day-la-cach-ma-quan-tri-cua-ethereum-da-duoc-tai-dinh-hinh-sau-8-nam-cuoc-tan-cong-dao- khet-tieng.html