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Saturday, December 4, 2021
Home News Ethereum's $150 Million Blockchain DAO Fund Opens To Critical Analysis by Security...

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

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. 

Richard Kasteleinhttps://www.the-blockchain.com
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, the Netherlands where he has set down his anchor to raise a family and write. Founder and publisher of industry publication Blockchain News (EST 2015) and director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He has written over 2500 articles on Blockchain technology and startups at Blockchain News and has also published in Harvard Business Review, Venturebeat, Wired, The Guardian and a number of other publications. Kastelein has an Honorary Ph.D. and is Chair Professor of Blockchain at China's first blockchain University in Nanchang at the Jiangxi Ahead Institute software and Technology. He has 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 at over 50 events in 30+ cities.
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