The protocol’s creators praised the victims as “early adopters.”
A new protocol that allows people to create and share digital objects on Ethereum has suffered a major setback, according to its creator, who said the main Ethscriptions marketplace has been hacked.
Launched last month by Genius.com co-founder and former CEO Tom Lehman, Ethscriptions is a novel way to create ethereum assets that uses transaction “calldata” to write non-financial data to the network’s blockchain.
Lehman said the Ethscriptions protocol itself and other applications that leverage the technology were not affected. However, Lehman said on Twitter on Friday that a large number of Ethscriptions listed on Ethscriptions.com had been stolen.
He said, “In this attack, about 123 addresses lost a total of about 202 addresses. Any young protocol will have a bumpy landing, but this is definitely not what I meant.”
In terms of value, it’s unclear how much damage the bug has caused. But according to data from NFT marketplace OpenSea, some inscriptions have sold for as much as 5 Ethereum, or around $9,600, in the past month.
Lehman told the outlet that "it's all bad" regarding the lost Ethscriptions, but he particularly lamented the theft of Ethscription #56, calling it "brutal" and noting the rarity often attributed to early artifacts.
The vulnerability also has a special sting because it’s intended to serve as an example that other marketplaces powering Ethscriptions can learn from, Lehman said.
“The purpose of the marketplace is basically to help show other people how to create a marketplace and help build the ecosystem, and unfortunately we stumbled in that area,” he said.
Lehman claimed responsibility for the failure, explaining that the vulnerability could be traced back to a smart contract he and Indelible Labs co-founder Michael Hirsch created, a piece of code that allowed people to withdraw Ethscriptions they didn’t own from the market.
“Part of the challenge with this new protocol is that you can save a lot of money by limiting the use of storage in smart contracts, but then you have to be more strategic about how the contracts are used in contexts like marketplaces,” he said. “You have to find a way to provide smart contracts with information or make it so that smart contracts don’t need that information.”
Lehman said the Ethscriptions.com marketplace will be relaunched once the necessary changes are made to the protocol itself, and he said he has been in touch with many of the people affected by the bug, whom he praised on Twitter as “early adopters” of the Ethscriptions protocol.
Ethscriptions differ from traditional NFTs in that they are stored in transaction-level data rather than tokens issued on Ethereum through smart contracts, as is the case with the ERC-721 token standard. According to the Dune Analytics dashboard, about 474,000 Ethscriptions have been created to date.
The protocol’s emergence follows the growing popularity of Ordinals, which are used to create NFT-like assets on Bitcoin, which has sparked a new wave of experimentation with cryptocurrency’s oldest coin.
Lehman Brothers drew attention to the vulnerability on July 14. Days later, a disclaimer about the affected status of the market remained. “There is a problem with the market contracts! Withdraw your Ethscriptions and do not create new listings!” the warning on Ethscriptions.com read.
