Ten years after Ethereum’s DAO disaster, it’s time to try again |
Ten years after Ethereum’s DAO disaster, it’s time to try again
It’s been a decade since I frantically pounded out a warning letter known as The DAO Moratorium. So urgent was the missive that we pushed the document live before it was complete, allowing anyone who was interested to read along in real time. Even as I and two colleagues typed out the finishing touches, hundreds of viewers appeared as Google’s anonymous wombats, aurochs, and chupacabras. They had come to read our message to the world that warned of critical early vulnerabilities in the codebase of an Ethereum project that left nearly $200 million exposed to hackers.
The message was clear: do not use The DAO. The term stands for Decentralized Autonomous Organization, what was then a new crypto-based governance structure, pioneered in large part by the Ethereum community. In this case, the DAO offered a crowdfunding mechanism, designed to let anyone contribute to a pool of capital, and share in a new pool of tokens.
At the time, many saw the Ethereum DAO as an inspiring alternative to venture capital. It was in theory. But in practice, it struck me as a system with enormous potential for failure.
By the time some of the vulnerabilities we warned about were exploited, 5% of all ether was in a wallet controlled by the attacker, with another 10% at continued risk.
At the time of the DAO attack, I was a computer science professor at Cornell University, teaching a cryptocurrency course during the industry’s infancy. The entire bitcoin market value was only about $10 billion, compared to........