So in this article I’m going to discuss how Ethereum transpired. Now I have been invested in Ethereum for a while now but in all honesty I have never known how it actually came about.
I know it is a fork of Ethereum Classic but how? and why? Maybe in my mind I thought it was pretty similar to the Bitcoin fork with it being related to block sizes (BTC > BCH) but I hadn’t researched the actual reasoning behind it.
So here is a high level summary of how it played out…….
Background
The goal of Ethereum (When only a single Ethereum crypto existed) has always been the same since its inception back in 2015 by our slim crypto entrepreneur Vitalik Buterin.
The aim to be more than just a ‘currency’ as this was Bitcoin. Ethereum being a decentralized blockchain platform which allowed anyone to build decentralized applications onto it using ‘smart contracts’
Disclaimer: If you are reading this I’m already expecting you to know what is a blockchain and a smart contract.
So let me continue…..
So it all started by a creation of DAO ‘distributed autonomous organizations’
Decentralized Autonomous Organization, sometimes labeled a decentralized autonomous corporation, is an organization represented by rules encoded as a computer program that is transparent, controlled by shareholders and not influenced by a central government.
‘The DAO’ was created by ‘slock.it’ and it exceeded all investment expectations $500k but actually raised $150m.
Just to put this in perspective, now a few years later it is sitting 7th on the highest-funded crowdfunding projects and naturally this brought a lot of attention to the project.
The DAO Hack
At the start of June one of the community developer had noticed a flaw which could lead to an attack. Now this was not related to this particular project but the overall ‘Smart Contracts’ on Ethereum.
The general Ethererum community was made aware of this problem and worked tirelessly to patch the flaw.
Now everyone thought this issue was resolved, However, this flaw was still exploitable in the splitDAO function for the ‘stock.it’ smart contract and the attacker managed to trigger this exploit and withdraw 3.5m ETH with the value at the point of time was $50 million.
However, due to the manner the smart contract was written the hacker did not have immediate access to extract the funds into a wallet the attacker controlled and had to wait 30 days.
It became a waiting game for the hacker and the community had a month to notice the vulnerability and look at viable options……...
Post Hack
When the Ethereum community had noticed the transfer and it has also been mentioned that the attacker actually contacted the community to provide them viable options on how to seize the funds that he had extracted. Maybe he was calling the community bluff and didn’t expect them to fork.
So what were the options being floating?
- Do nothing with the consequence of the attacker being able to extract the funds then it would be left to the authority to attempt to locate the hacker to recover the funds.
- Soft fork - This would allow the miners to be able to destroy the child DAO with the stolen Eth.
- Hard fork - overwrite the history and restore the stolen ethers. This would reverse the all transactions happened after the starting point of the work.
For most of the community they had agreed something must have been done.
Voting commenced to implement a soft fork but unfortunately this hit a roadblock as it would result in an additional security flaw, so this option was also disbanded.
Now there was only option 1 or 3 on the table due to the scale of the attack, momentum started to build by leaders of the community to conduct a hard fork. A decision was made to hard fork which would result in the attacker not being able to withdraw the funds in the childDAO.
Now it was a matter of implementing the hard fork in time before the smart contract lock expired.
A successful hard fork of Ethereum (ETH) took place which also resulted in the extracted funds being sent back to the original holders based on the token amounts.
Some of the community were against rewriting history with the hard fork and decided to continue with the original chain with the creation of Ethereum Classic (ETC)
So yes that is the high level view on what happened, I found it pretty interesting and my geeky nature. I would love to be involved in making a short film about the hack because it’s pretty interesting to be honest.
Hope you found this information helpful and see sources for more detail on the attack.
Sources
https://coincentral.com/ethereum-classic-vs-ethereum/
https://en.wikipedia.org/wiki/List_of_highest-funded_crowdfunding_projects
https://blog.slock.it/the-history-of-the-dao-and-lessons-learned-d06740f8cfa5
