Ethereum’s $150 Million Blockchain DAO Fund Opens To Critical Analysis by Security Experts

445

Get Blockchain News Where You Are!

Join our Linked in Group Like our Facebook Page
Linkedin Group Blockchain Linkedin Facebook Group

Share with:


Three members of Hacking Distributed – Dino Mark, Vlad Zamfir and Emin Gün Sirer just released the first draft of a research paper that analyzed The DAO and its voting mechanism. This paper identifies problems with The DAO’s mechanism design that incentivise investors to behave strategically – that is, at odds with truthful voting on their preferences and then outline potential attacks against The DAO made possible by these behaviors.

In particular, we have identified seven causes for concern that can cause DAO participants to engage in strategic behaviors. Some of these behaviors can cause honest DAO investors to have their investments hijacked or committed to proposals against their interest and intent.

These concerns motivate a moratorium on funding proposals to prevent losses due to poor mechanism design. A moratorium would give The DAO time to make critical security upgrades. We encourage the community to adopt a moratorium until The DAO can be updated.

For expediency, we skip the background on The DAO and its mechanisms and jump right into the attacks. A primer on The DAO’s operation can be found in the full paper.

The funding closed yesterday on The DAO – a kind of cross between Kickstarter and a VC fund which runs autonomously with no human input on the Ethereum platform. The DAO (short for decentralized autonomous organization) raised over US $150 million worth of Ether, during the 27-day sale.

The DAO is basically an investment vehicle governed by a program, directed by investors’ votes, to seek out and fund proposals. Implemented as a smart contract on the Ethereum Blockchain, The DAO  raised 11.5 million Ether, which makes it the largest crowd-funding event in history. The DAO now controls 16 per cent of the total supply of Ether. 

Get Blockchain News Where You Are!

Join our Linked in Group Like our Facebook Page
Linkedin Group Blockchain Linkedin Facebook Group
SHARE
Previous articleMicrosoft Azure Blockchain as a Service (BAAS) Welcomes new partners
Next articleLoyyal Announces Blockchain-Based Tourism Program Deal with Dubai Future Foundation
Founder of Blockchain News and The Hackitarians Foundation, Richard Kastelein is an award winning publisher and editor, hackathon organiser and entrepreneur. He has written over 700 articles at Blockchain News, has a massive network in the Blockchain arena and is available as a speaker and consultant. (richard@the-blockchain.com) Kastelein has spoken (keynotes & panels) on technology at events in Amsterdam, Barcelona, Belfast, Berlin, Brussels, Brighton, Copenhagen, Cannes, Cologne, Curacao, Frankfurt, Gdansk, Hollywood, Hilversum, Geneva, Groningen, London, Las Vegas, Leipzig, Madrid, Melbourne, NYC, Oxford, Rio de Janeiro, Sheffield, San Francisco, San Jose, Sydney, Tallinn, Vienna, and Zurich. A Creative Technologist & Canadian (Dutch/Irish/English/Métis) his career began in the Native Press (Canadian Arctic) and he later spent a decade in the Caribbean media. Currently, he writes occasionally for Wired Insights, Guardian & Virgin and his articles have been translated into Dutch, Greek, Polish, German & French.