🔹The origin of Ethereum
Just today#EthereumSpotETFwas officially approved for listing and trading, let’s briefly talk about the origin of Ethereum #ETH.
If Bitcoin#BTCis the cornerstone of blockchain development, then Ethereum is the ladder of blockchain development, helping blockchain development to a new level.
Ethereum was first proposed by Vitalik Buterin (V God) in 2013. V God was originally a programmer who participated in the Bitcoin community. He once advocated to the Bitcoin core developers that the Bitcoin platform should have a more complete programming language for people to develop programs, but did not get their consent, so he decided to develop a new platform for this purpose.
Vitalik Buterin believes that many programs can achieve further development using principles similar to Bitcoin. In 2013, he wrote the Ethereum White Paper, which explains the goal of building decentralized programs.
Although it is a cryptocurrency, Ethereum’s primary purpose is not simply to transfer value. Instead, Ethereum is intended to be a platform that allows peer-to-peer contracts and applications to be built and run without any control, permission, or third-party interference.
These applications, known as decentralized applications or DApps, are powered by Ethereum's own cryptocurrency, Ether (ETH). In other words, Ethereum is a programmable blockchain that allows developers to leverage the blockchain's infrastructure to build their own projects, something that is not possible with Bitcoin.
🔸The DAO incident - the largest smart contract vulnerability incident in history
The DAO incident refers to a major event that occurred on the Ethereum blockchain in 2016. DAO stands for Decentralized Autonomous Organization, which is an autonomous organization based on smart contracts and is designed to operate without a central manager.
The core concept of DAO is to manage and distribute funds through smart contracts on the Ethereum blockchain, allowing participants to directly vote on internal affairs of the organization.
The DAO incident was caused by a decentralized autonomous organization called "The DAO". It was initiated by a German startup called Slock.it. They introduced the concept of distributed autonomous organizations, which used contracts to bring together a group of stakeholders (investors) to put their money together. If someone came to seek financing with a business plan, everyone voted to decide whether to invest. If successful, everyone shared the profits.
The whole process works like this: users submit proposals to it hoping to get investment. After the proposal is publicized, if more than half of the users vote in favor, then this virtual "VC" will take out a sum of money and invest it in the project. The invested project needs to guarantee that its business will continue to return to this institution through this contract, including principal and interest, in the future, and each LP in the "VC" can share the corresponding income.
The DAO, which completely relies on smart contracts, has been welcomed by the community. The project started fundraising at the end of April 2016. In less than a month, it attracted 11,000 investors to participate and successfully raised 11.5 million Ethereums. This amount of ETH accounted for 15% of the circulation of the entire Ethereum network at that time, with a total value of over 150 million US dollars. This also made The DAO the project that raised the most Ethereum in the history of cryptocurrencies.
However, by exploiting a loophole in the contract, the hacker successfully transferred more than 3.6 million ETH from The DAO main contract to a child DAO. This was a recursive split method that ultimately transferred all the collected coins in a single transfer.
This incident has sparked widespread discussion and controversy within the community and industry. Many people have advocated that the Ethereum blockchain should take measures to prevent hacker attacks and address the losses of the victims. However, due to the decentralized nature of the Ethereum blockchain, the consequences of reversing transactions or changing smart contracts also face complex ethical and technical challenges.
Eventually, the Ethereum community decided to modify the Ethereum blockchain in a divisive hard fork to undo the hack and return the stolen funds to DAO investors. This decision led to the split of the Ethereum blockchain, forming two competing blockchains: Ethereum Classic, which retains the original transaction history, and a new Ethereum that performs a hard fork. This is why ETC and ETH exist at the same time.
The DAO incident not only profoundly affected the development and governance model of the Ethereum blockchain, but also became one of the important cases of smart contract security and blockchain community governance, providing valuable lessons for future blockchain projects.
