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

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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.

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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. 

About Richard Kastelein

Founder and publisher of industry publication Blockchain News (EST 2015), partner at ICO services collective CryptoAsset Design Group ($500m+ and 50+ ICOs), director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur.

He sits on the advisory boards of some two dozen Blockchain startups
and has written over 1500 articles on Blockchain technology and
startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat

Ad honorem - Honorary Ph.d - Chair Professor of Blockchain at
China's first Blockchain University in Nanchang at the Jiangxi Ahead
Institute of Software and Technology. In 2018 he was invited to and attended University of Oxford's Saïd Business School for Business
Automation 4.0 programme. Chevalier (Knight) - Ordre des Arts et des
Technologies at Crypto Chain University and on advisory board of Advisory Board Member of International Decentralized Association Of Cryptocurrency And Blockchain (IDABC) as well as Advisory Board Member at U.S. Blockchain Association.

Over a half a decade experience judging and rewarding some 1000+
innovation projects as an EU expert for the European Commission's SME
Instrument programme as a startup assessor and as a startup judge for
the UK government's Innovate UK division. Kastelein has spoken
(keynotes & panels) on Blockchain technology in Amsterdam, Antwerp, Barcelona, Beijing, Brussels, Bucharest, Dubai, Eindhoven, Gdansk, Groningen, the Hague, Helsinki, London (5x), Manchester, Minsk, Nairobi, Nanchang, San Mateo, San Francisco, Santa Clara, Shanghai, Singapore (3x), Tel Aviv, Utrecht, Venice, Visakhapatnam, Zwolle and Zurich

His network is global and extensive. He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe

He's written occasionally for Harvard Business Review, Wired, Venturebeat, The Guardian and Virgin.com and his work and ideas have been translated into Dutch, Greek, Polish, German and French.

A journalist by trade, an entrepreneur and adventurer at heart,
Kastelein's professional career has ranged from political publishing to
TV technology, boatbuilding to judging startups, skippering yachts to
marketing and more as he's travelled for nearly 30 years as a Canadian
expatriate living around the world

In his 20s, he sailed around the world on small yachts and wrote a
series of travel articles called, 'The Hitchhiker's Guide to the Seas'
travelling by hitching rides on yachts (1989) in major travel and
yachting publications. 

He currently lives in Groningen, Netherlands where he's raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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