5 ms·

It looks like they were able to write themselves a check using or spoofing a legit signature. A traditional bank would put a hold on any amount over a certain t

It looks like they were able to write themselves a check using or spoofing a legit signature. A traditional bank would put a hold on any amount over a certain threshold to prevent this kind of fraud. I wonder if DeFi has some kind of option for an Oracle to a human verification step over a set amount. An attacker could flood transactions to avoid that limit, but maybe network delay and/or some kind of throttling would buy enough time to ensure some safety. I’m still bullish on defi but there is a lot of incidents like this that need to happen before these systems become resilient.

ineptech 5y ago
> I wonder if DeFi has some kind of option for an Oracle to a human verification step... "For safety, all transactions have to go through Dave" == "Free money to anyone who manages to hack/bribe/kidnap/etc Dave"
- l-lousy 5y ago
  Very unlikely to succeed if you choose someone with enough vested interest in the company. Also “Dave is the only one that could have approved this, he’s who we sue”
  - sobellian 5y ago
    If Dave owes you $600K, Dave's got a problem. If Dave owes you $600MM, you have a problem.
  - ineptech 5y ago
    I phrased this glibly for comedy value, but this is not a silly problem; it is part of the "Oracle problem" and it imperils the entire fundamental value prop of defi. If it's not clear why, consider: what keeps defi from implementing gambling (or as it's known in the financial world, "options trading") on real-world data outcomes, like stock prices? Answer: that data isn't programmatically available on the blockchain. You can make a smart contract that depends on the closing price of ETH, but not AAPL. So, what if it were? What if someone decided to publish AAPL's closing price to a ledger somewhere? Then people could make a smart contract that effectively implements options trading against AAPL stock, right? In theory, yes. But in practice, the people that trade options will say, "How can we trust that you won't screw up, get hacked, get bribed, go out of business, etc? Every dollar we entrust to a smart contract that relies on your data is a prize to be won by the first person to find a way to subvert your service's data integrity." And they'll be right. There are lots of people trying to find fancy solutions to this problem, but to my knowledge we're no closer to a real solution than we were the day Ethereum went live.
    - lazide 5y ago
      Part of the problem is in the nature of one of the ‘pluses’ of crypto - lack of the ability to roll back a transaction. If someone breaks into the fed and transfers a billion dollars to their account, it’s pretty pointless, because the next day or hour or whatever, it will be rolled back and except for them being in jail, it will be like it never happened. For it to be worthwhile, you would need to avoid having any of the oversight mechanisms step in, AND get the cash out in a way that is independent of the system AND won’t leave a trail for the army of slow and methodical investigators. And that is waaay harder. Providing an ability to do something criminal that will cause a non-reversible transfer of value? Ho boy. That raises the stakes a LOT - and it’s why you see so many bank robberies and why gold transports are guarded so heavily.
    - l-lousy 5y ago
      I think there are efforts to create oracles like LINK, but you’re right that the only trustworthy data is from within the chain.
PretzelPirate 5y ago
It’s easy to put these safeguards in place, the hard part is designing the right safeguards. I prefer cryptographic fraud proofs.
l-lousy 5y ago
Based on another link posted here it looks like the hackers just called the half of a cross chain transaction that does the Eth payout. Could they not just make sure that there is a corresponding TX in the other half of their handshake rather than trusting the caller is actually their other contract
X6S1x6Okd1st 5y ago
It wouldn't be too hard to make a smart contract only be able to transfer X amount out per time period and then still allow individual users to emergency exit. Then you can concentrate auditing logic on the emergency exit code as opposed to the entire surface area.
- warkdarrior 5y ago
  That's just censorship. Why would you do that in a decentralized system?
qeternity 5y ago
> I wonder if DeFi has some kind of option for an Oracle to a human verification step over a set amount. Sometimes I feel like crypto doesn’t stop to ask if the institutions and processes they seek to deprecate exist for a reason? I absolutely believe that blockchain/DLT have some very promising use cases. But so much in crypto land just screams out that people don’t truly understand the systems they oppose so strongly. Tether just froze a bunch of funds. Like a bank. Or PayPal. One of the most repeated slams against TradFi is the “PayPal locked my funds! Money belongs to the people! Self sovereignty!” But we’ve seen time and time again with the ETH fork, Tether freezings (they’ve had multiple), that we end up right back at these processes. People will claim that if everyone in a decentralized network decides to do something (like hard fork), that doesn’t violate the decentralization. But what do you think society is? We’ve all come together and decided on a bunch of rules we want to live by. Hack by hack we are seeing these same functions replicated in crypto.
- xur17 5y ago
  > Tether just froze a bunch of funds. Like a bank. Or PayPal. One of the most repeated slams against TradFi is the “PayPal locked my funds! Money belongs to the people! Self sovereignty!” But we’ve seen time and time again with the ETH fork, Tether freezings (they’ve had multiple), that we end up right back at these processes. Tether is one of many assets on Ethereum, each with their own properties. Some are centralized, some are decentralized, some are stable, some aren't, etc. It's about choice at the end of the day, and crypto actually gives you this choice vs paypal or your bank.
  - qeternity 5y ago
    ETH was forked because of a much smaller hack. So the most decentralized, stable choice in Etherium (the layer 1 itself) isn’t immune.
- miracle2k 5y ago
  > But what do you think society is? We’ve all come together and decided on a bunch of rules we want to live by. And whatever those rules are, a minority has to accept the decisions made by others. When it comes to the rules for a financial system, you now have many choices.

ineptech 5y ago

> I wonder if DeFi has some kind of option for an Oracle to a human verification step... "For safety, all transactions have to go through Dave" == "Free money to anyone who manages to hack/bribe/kidnap/etc Dave"

l-lousy 5y ago
Very unlikely to succeed if you choose someone with enough vested interest in the company. Also “Dave is the only one that could have approved this, he’s who we sue”
- sobellian 5y ago
  If Dave owes you $600K, Dave's got a problem. If Dave owes you $600MM, you have a problem.
- ineptech 5y ago
  I phrased this glibly for comedy value, but this is not a silly problem; it is part of the "Oracle problem" and it imperils the entire fundamental value prop of defi. If it's not clear why, consider: what keeps defi from implementing gambling (or as it's known in the financial world, "options trading") on real-world data outcomes, like stock prices? Answer: that data isn't programmatically available on the blockchain. You can make a smart contract that depends on the closing price of ETH, but not AAPL. So, what if it were? What if someone decided to publish AAPL's closing price to a ledger somewhere? Then people could make a smart contract that effectively implements options trading against AAPL stock, right? In theory, yes. But in practice, the people that trade options will say, "How can we trust that you won't screw up, get hacked, get bribed, go out of business, etc? Every dollar we entrust to a smart contract that relies on your data is a prize to be won by the first person to find a way to subvert your service's data integrity." And they'll be right. There are lots of people trying to find fancy solutions to this problem, but to my knowledge we're no closer to a real solution than we were the day Ethereum went live.
  - lazide 5y ago
    Part of the problem is in the nature of one of the ‘pluses’ of crypto - lack of the ability to roll back a transaction. If someone breaks into the fed and transfers a billion dollars to their account, it’s pretty pointless, because the next day or hour or whatever, it will be rolled back and except for them being in jail, it will be like it never happened. For it to be worthwhile, you would need to avoid having any of the oversight mechanisms step in, AND get the cash out in a way that is independent of the system AND won’t leave a trail for the army of slow and methodical investigators. And that is waaay harder. Providing an ability to do something criminal that will cause a non-reversible transfer of value? Ho boy. That raises the stakes a LOT - and it’s why you see so many bank robberies and why gold transports are guarded so heavily.
  - l-lousy 5y ago
    I think there are efforts to create oracles like LINK, but you’re right that the only trustworthy data is from within the chain.

PretzelPirate 5y ago

It’s easy to put these safeguards in place, the hard part is designing the right safeguards. I prefer cryptographic fraud proofs.

l-lousy 5y ago

Based on another link posted here it looks like the hackers just called the half of a cross chain transaction that does the Eth payout. Could they not just make sure that there is a corresponding TX in the other half of their handshake rather than trusting the caller is actually their other contract

X6S1x6Okd1st 5y ago

It wouldn't be too hard to make a smart contract only be able to transfer X amount out per time period and then still allow individual users to emergency exit. Then you can concentrate auditing logic on the emergency exit code as opposed to the entire surface area.

warkdarrior 5y ago
That's just censorship. Why would you do that in a decentralized system?

qeternity 5y ago

> I wonder if DeFi has some kind of option for an Oracle to a human verification step over a set amount. Sometimes I feel like crypto doesn’t stop to ask if the institutions and processes they seek to deprecate exist for a reason? I absolutely believe that blockchain/DLT have some very promising use cases. But so much in crypto land just screams out that people don’t truly understand the systems they oppose so strongly. Tether just froze a bunch of funds. Like a bank. Or PayPal. One of the most repeated slams against TradFi is the “PayPal locked my funds! Money belongs to the people! Self sovereignty!” But we’ve seen time and time again with the ETH fork, Tether freezings (they’ve had multiple), that we end up right back at these processes. People will claim that if everyone in a decentralized network decides to do something (like hard fork), that doesn’t violate the decentralization. But what do you think society is? We’ve all come together and decided on a bunch of rules we want to live by. Hack by hack we are seeing these same functions replicated in crypto.

xur17 5y ago
> Tether just froze a bunch of funds. Like a bank. Or PayPal. One of the most repeated slams against TradFi is the “PayPal locked my funds! Money belongs to the people! Self sovereignty!” But we’ve seen time and time again with the ETH fork, Tether freezings (they’ve had multiple), that we end up right back at these processes. Tether is one of many assets on Ethereum, each with their own properties. Some are centralized, some are decentralized, some are stable, some aren't, etc. It's about choice at the end of the day, and crypto actually gives you this choice vs paypal or your bank.
- qeternity 5y ago
  ETH was forked because of a much smaller hack. So the most decentralized, stable choice in Etherium (the layer 1 itself) isn’t immune.
miracle2k 5y ago
> But what do you think society is? We’ve all come together and decided on a bunch of rules we want to live by. And whatever those rules are, a minority has to accept the decisions made by others. When it comes to the rules for a financial system, you now have many choices.