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> Mixin Network confirmd on Monday that it has "temporarily suspended" all deposit and withdrawal services after hackers broke into a database and stole about $

by xur17 3y ago

> Mixin Network confirmd on Monday that it has "temporarily suspended" all deposit and withdrawal services after hackers broke into a database and stole about $200 million in funds from the Hong-Kong based cryptocurrency firm. > Mixin, which is a decentralized exchange, These 2 statements seem to contradict each other. If they are a decentralized exchange, how were funds stolen by hacking into a database?

Arainach 3y ago
"Decentralized" isn't a magic word. They're still an exchange, and there needs to be a way to extract funds. The database doesn't need to contain account balances or funds so long as it contains credentials necessary to access them.
- xur17 3y ago
  If they are storing credentials to access funds in a centralized database, they are by definition not "decentralized". For example, Curve.fi meets the common definition of "decentralized exchange", and as such does not store credentials, etc in a centralized database. Their code is deployed to Ethereum and runs on Ethereum, so users are able to make trades against it, deposit funds into trading pools, etc, all without having a central actor hold credentials. That said, Curve.fi can still cause users to lose funds if they have bugs in their code, but they do not have the risk of someone stealing passwords from their server and walking away with the money.
  - nico 3y ago
    > they do not have the risk of someone stealing passwords from their server and walking away with the money So if they get hacked and the credentials to upload code get stolen, what happens? Wouldn’t the hackers be able to deploy code that steals users crypto?
    - dotnet00 3y ago
      Probably requires some sort of consensus to accept newly uploaded code.
      - siftrics 3y ago
        Why? Why do you speculate? The answer is easily accessible information. Smart contracts can be made immutable.
        lxgr 3y ago
        So are they? Not everybody here is an expert in smart contracts.
        siftrics 3y ago
        The purpose of Hacker News is insightful discussion; it is not a place to pipe your stream of consciousness into the comment box. Refrain from speculating about things to which we know the answer. Just look it up and post the answer, instead. This is easily accessible information. Google it or ask an LLM. Don't just spew speculation into the void. You don't need to be a "smart contract expert" to use Google.
        dotnet00 3y ago
        Yet you're the one not contributing to the discussion while someone else provided a much more interesting response to my speculation.
        siftrics 3y ago
        In my very first reply to you, I wrote the answer: "smart contracts can be made immutable."
        deleted 3y ago
        [deleted]
- OsrsNeedsf2P 3y ago
  bisq.network[1] seems to be doing it fine, and non-fiat decentralized exchanges have existed longer. They just don't get the hype. [1] https://bisq.network https://bisq.network
pluc 3y ago
Can't spell decentralized without central
lxgr 3y ago
> how were funds stolen by hacking into a database? Sometimes "decentralized" really means "running on a theoretically distributed network, but practically we host all the nodes/have emergency root keys/exclusively provide the software running on them and the clients used to access them – only for now, we promise!" This particular project also seems to heavily lean on Intel SGX, according to its most recent public whitepaper from 2018 [1] and also seems to offer wallet recovery using only a user's mobile phone number and a 6-digit PIN [2] – combine that with not too many actually administratively distributed nodes, and it's not too hard to imagine what could have gone wrong... Edit: Actually the entire proposal sounds ridiculous, unless I'm missing something: The protocol claims to offer secure, yet recoverable device-local keys, but it all seems to boil down to a trusted and independent set of signer nodes (see above for problems), as well as users being able to store a "per-device ephemeral secret" securely and locally, with backup considerations basically left as an exercise to the reader, and the reference implementation seems to just upload that backup to a central API... [3]?! [1] https://mixin.one/assets/Mixin-Draft-2018-07-01.pdf https://mixin.one/assets/Mixin-Draft-2018-07-01.pdf [2] https://tip.id/ https://tip.id/ [3] https://github.com/MixinNetwork/ios-app/blob/9e11dd02953297facd20ac7b4d54317382584481/MixinServices/MixinServices/Services/API/TIPAPI.swift#L20 https://github.com/MixinNetwork/ios-app/blob/9e11dd02953297f...
- dboreham 3y ago
  That white paper reads like the blockchain equivalent of a The Onion article.
cypress66 3y ago
Only few projects (like uniswap) are truly decentralized. Most projects are not, and only claim they'll eventually become decentralized once "they finish development".
- xur17 3y ago
  It's a spectrum, and storing credentials in a database is much closer to centralized than decentralized.
  - klabb3 3y ago
    Yes it’s a spectrum. Devil is in the details. Still though. If funds can be stolen by accessing a database hosted by a cloud provider, then what’s the point of decentralizing any part of the project at all?
phire 3y ago
Because most decentralised exchanges are "fake". Realistically, a decentralised exchange can only operate within a single blockchain, only trading tokens on that blockchain. Works fine for trading between (for example) eth and its various tokens, but you can't do proper eth to bitcoin trades. [1] The single-blockchain decentralised exchanges are typically real [2], but every multi-blockchain "decentralised" exchange platform cheats. Some are literally just centralised exchanges that pretend to be decentralised with a slick software interface. The more common technique is to run their own blockchain and have valid decentralised trading on that. But you are only actually trading tokens that represent real coins. They then run a centralised holding entity that holds the real coins and implements deposits and withdrawals just like a decentralised exchange. There are so many flaws with this scheme. The holding company could literally run away with your funds. Bugs and exploits (and even normal blockchain behaviour like re0orgs) can result in the three seperate sources of truth (the real blockchains, the holding entity's internal database and the trading blockchain) ending up out of sync. And just because the trading blockchain is a blockchain doesn't mean the company that controls it doesn't have the keys and power to rollback trades and otherwise change the contents. [1] Yes, atomic swaps are a thing. But they are resource intensive and slow. I'm not aware of much decentralised trading that uses them. [2] Though, the topic of wrapped coins complicates things.
- dboreham 3y ago
  There are non-custodial bridge schemes that have been proposed (but afaik not yet proven). The idea being that the holding company you mention is replaced by an L1 escrow contract. This trust minimized approach is not trivial to implement but at least I think I see how it could work.
  - phire 3y ago
    The idea of non-custodial bridges runs straight into the oracle problem. How does the smart contract on one blockchain know the state of the smart contract on the other blockchain. One common workaround is to make the miners/validators of the trading blockchain cross-validate transaction on the other blockchains. But that's inherently one-way, the smart contracts on the other blockchains have no true visibility into the trading blockchain. It's still impossible to get 100% right. You still have a massive surface area for bugs and exploits. And even if it's free of exploits, people forget that blockchains are only "eventually consistent". Just because escrow validated that the two blockchains were constant at the time of the cross-chain swap doesn't guarantee both blockchains have reached their final consistent state. This will eventually result in the two blockchains getting out of sync. I've seen smaller blockchains do re-orgs over a week worth of blocks. Finally, many popular blockchains don't even have powerful enough smart contracts to even implement a bridge contract (bitcoin certainly doesn't).

by xur17 3y ago

Arainach 3y ago

"Decentralized" isn't a magic word. They're still an exchange, and there needs to be a way to extract funds. The database doesn't need to contain account balances or funds so long as it contains credentials necessary to access them.

xur17 3y ago
If they are storing credentials to access funds in a centralized database, they are by definition not "decentralized". For example, Curve.fi meets the common definition of "decentralized exchange", and as such does not store credentials, etc in a centralized database. Their code is deployed to Ethereum and runs on Ethereum, so users are able to make trades against it, deposit funds into trading pools, etc, all without having a central actor hold credentials. That said, Curve.fi can still cause users to lose funds if they have bugs in their code, but they do not have the risk of someone stealing passwords from their server and walking away with the money.
- nico 3y ago
  > they do not have the risk of someone stealing passwords from their server and walking away with the money So if they get hacked and the credentials to upload code get stolen, what happens? Wouldn’t the hackers be able to deploy code that steals users crypto?
  - dotnet00 3y ago
    Probably requires some sort of consensus to accept newly uploaded code.
    - siftrics 3y ago
      Why? Why do you speculate? The answer is easily accessible information. Smart contracts can be made immutable.
      - lxgr 3y ago
        So are they? Not everybody here is an expert in smart contracts.
        siftrics 3y ago
        The purpose of Hacker News is insightful discussion; it is not a place to pipe your stream of consciousness into the comment box. Refrain from speculating about things to which we know the answer. Just look it up and post the answer, instead. This is easily accessible information. Google it or ask an LLM. Don't just spew speculation into the void. You don't need to be a "smart contract expert" to use Google.
        dotnet00 3y ago
        Yet you're the one not contributing to the discussion while someone else provided a much more interesting response to my speculation.
        siftrics 3y ago
        In my very first reply to you, I wrote the answer: "smart contracts can be made immutable."
        deleted 3y ago
        [deleted]
OsrsNeedsf2P 3y ago
bisq.network[1] seems to be doing it fine, and non-fiat decentralized exchanges have existed longer. They just don't get the hype. [1] https://bisq.network https://bisq.network

pluc 3y ago

Can't spell decentralized without central

lxgr 3y ago

> how were funds stolen by hacking into a database? Sometimes "decentralized" really means "running on a theoretically distributed network, but practically we host all the nodes/have emergency root keys/exclusively provide the software running on them and the clients used to access them – only for now, we promise!" This particular project also seems to heavily lean on Intel SGX, according to its most recent public whitepaper from 2018 [1] and also seems to offer wallet recovery using only a user's mobile phone number and a 6-digit PIN [2] – combine that with not too many actually administratively distributed nodes, and it's not too hard to imagine what could have gone wrong... Edit: Actually the entire proposal sounds ridiculous, unless I'm missing something: The protocol claims to offer secure, yet recoverable device-local keys, but it all seems to boil down to a trusted and independent set of signer nodes (see above for problems), as well as users being able to store a "per-device ephemeral secret" securely and locally, with backup considerations basically left as an exercise to the reader, and the reference implementation seems to just upload that backup to a central API... [3]?! [1] https://mixin.one/assets/Mixin-Draft-2018-07-01.pdf https://mixin.one/assets/Mixin-Draft-2018-07-01.pdf [2] https://tip.id/ https://tip.id/ [3] https://github.com/MixinNetwork/ios-app/blob/9e11dd02953297facd20ac7b4d54317382584481/MixinServices/MixinServices/Services/API/TIPAPI.swift#L20 https://github.com/MixinNetwork/ios-app/blob/9e11dd02953297f...

dboreham 3y ago
That white paper reads like the blockchain equivalent of a The Onion article.

cypress66 3y ago

Only few projects (like uniswap) are truly decentralized. Most projects are not, and only claim they'll eventually become decentralized once "they finish development".

xur17 3y ago
It's a spectrum, and storing credentials in a database is much closer to centralized than decentralized.
- klabb3 3y ago
  Yes it’s a spectrum. Devil is in the details. Still though. If funds can be stolen by accessing a database hosted by a cloud provider, then what’s the point of decentralizing any part of the project at all?

phire 3y ago

Because most decentralised exchanges are "fake". Realistically, a decentralised exchange can only operate within a single blockchain, only trading tokens on that blockchain. Works fine for trading between (for example) eth and its various tokens, but you can't do proper eth to bitcoin trades. [1] The single-blockchain decentralised exchanges are typically real [2], but every multi-blockchain "decentralised" exchange platform cheats. Some are literally just centralised exchanges that pretend to be decentralised with a slick software interface. The more common technique is to run their own blockchain and have valid decentralised trading on that. But you are only actually trading tokens that represent real coins. They then run a centralised holding entity that holds the real coins and implements deposits and withdrawals just like a decentralised exchange. There are so many flaws with this scheme. The holding company could literally run away with your funds. Bugs and exploits (and even normal blockchain behaviour like re0orgs) can result in the three seperate sources of truth (the real blockchains, the holding entity's internal database and the trading blockchain) ending up out of sync. And just because the trading blockchain is a blockchain doesn't mean the company that controls it doesn't have the keys and power to rollback trades and otherwise change the contents. [1] Yes, atomic swaps are a thing. But they are resource intensive and slow. I'm not aware of much decentralised trading that uses them. [2] Though, the topic of wrapped coins complicates things.

dboreham 3y ago
There are non-custodial bridge schemes that have been proposed (but afaik not yet proven). The idea being that the holding company you mention is replaced by an L1 escrow contract. This trust minimized approach is not trivial to implement but at least I think I see how it could work.
- phire 3y ago
  The idea of non-custodial bridges runs straight into the oracle problem. How does the smart contract on one blockchain know the state of the smart contract on the other blockchain. One common workaround is to make the miners/validators of the trading blockchain cross-validate transaction on the other blockchains. But that's inherently one-way, the smart contracts on the other blockchains have no true visibility into the trading blockchain. It's still impossible to get 100% right. You still have a massive surface area for bugs and exploits. And even if it's free of exploits, people forget that blockchains are only "eventually consistent". Just because escrow validated that the two blockchains were constant at the time of the cross-chain swap doesn't guarantee both blockchains have reached their final consistent state. This will eventually result in the two blockchains getting out of sync. I've seen smaller blockchains do re-orgs over a week worth of blocks. Finally, many popular blockchains don't even have powerful enough smart contracts to even implement a bridge contract (bitcoin certainly doesn't).