Blockchain
By Maheen Hernandez
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Emin Gün Sirer: Five years ago today, we started a fateful chapter in the history of cryptocurrencies.
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A DAO, or Decentralized Autonomous Organization, is a way of coordinating ownership, decisions, and capital with coded governance, rather than a central authority.
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The DAO, an implementation of the concept, was engineered to support a decentralized venture capital fund.
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It raised over $150M – 16% of the total supply of ETH then – in its 28-day funding window, as everyone aped into the DAO before apeing was really a thing.
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By any measure, The DAO was proving to be a success: Big raise? Validating the power of decentralization? Token listed on major exchanges? And then, the bug happened.
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The smart contracts controlling The DAO’s wallet had multiple vulnerabilities. I co-authored a paper called “A Call for a Moratorium on The DAO,” to warn the community that these…
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Specifically, The DAO tokens controlled an investment vehicle, and it is crucial for the investments to be performed in line with the wishes of the token holders.
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In addition, The DAO also suffered from a reentrancy problem, which allowed an attacker to make multiple withdrawals when only one should be allowed.
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Philip Daian and I had come across this issue, but we had incorrectly dismissed it as being exercisable.
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The DAO hack led to a lot of discussion around whether code is law, and under what conditions a mistake on a blockchain can be undone.
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The vast majority of the Ethereum community decided to undo the DAO hack and return the funds to the original depositors.
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Along the way, there was an interesting discovery. A high school student pointed out that the proposed “soft fork” fix to The DAO was flawed, and in fact, censorship on the EVM…
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The soft fork had been reviewed and vetted by every technical person we knew, so this blog post by a high-schooler caught everyone by surprise.
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