Ethereum Classic Resilience

Transcript

[Music] hi i'm terry culver ceo of ethereum cossack labs and thanks for tuning in as many of you may know the ethereum classic network was attacked twice last week so let's talk about what happened and why what steps we're taking how we'll prevent future attacks and what this all means for ethereum classic first and foremost ethereum classic labs is committed to the growth of the etc community since 2018 we've been dedicated to providing

technical support project management and funding for blockchain and digital asset projects through the etc labs accelerator we've also helped maintain the ethereum classic protocol through the etc core development team now let's get straight into the attacks between july 31 and august 1 etc suffered the first 51 attack this resulted in approximately 5.8 million dollars being stolen the attacker had been mining offline for 12 hours or so and when they came back online during the early morning of august 1 they introduced approximately 3 000 blocks to the chain a very large reorg now for a number of

reasons it wasn't clear at first that this was in fact a 51 attack the initial diagnosis was disguised by an unexpected side effect the attack caused a chain split actually because many of the open ethereum nodes were unable to process that larger block reorg as you can see from the reports that have been published since it actually takes several days to gather all the information to get a full understanding of what happened during the attack we were in regular contact with minors and exchanges to advise on what was happening to ask them to suspend deposits and withdrawals and to make sure they were using their core geth for baisu clients the second

51 attack occurred on august 6th this resulted in a theft of approximately 1.7 million dollars even though this attack was longer and inserted 4 000 blocks the theft was less because of our coordination with exchanges the method for both attacks was identical the attacker purchased enough hash power from a mining pool to take over the network now what were the causes there's been a lot of debate about the cause of the attacks as expected some are using the attacks to promote their own chains or products or even themselves and there are countless people who think they've built a better mousetrap so let's cut out that noise pollution and try to get to the real heart of the

matter here some have blamed the mining pool that sold the hash power i don't accept this while some mining pools can improve their systems to encourage honest behavior for sure they're not responsible for the security of the network and we don't want them to be they actually can play a valuable role in the ecosystem by aggregating hash power and redistributing it effectively some fault the ethereum classic blockchain itself i don't accept this either in fact the ethereum classic protocol operated exactly as it was designed to the blocks that the malicious miner presented were valid according to the consensus rules because they had greater total difficulty than the blocks they replaced

for that reason we're not going to roll back any transactions code is law the cause the weakness that the attacker was able to exploit is simply that etc's hash rate was too low this made etc vulnerable and it was relatively affordable for an attacker to achieve single minor dominance in response we're taking a number of steps which i'll share in a moment but first i'd like to highlight an important point for all of us and that is all proof-of-work blockchains are vulnerable to attack in fact we believe that various attacks occur frequently and most go unreported exchanges investors miners token issuers

even some developers have incentives to keep attacks hidden the etc attacks are visible because transparency is a core value of ours and we believe it is a strength so instead of focusing only on ethereum classic please recognize that this is a universal weakness we all rely on the idea that economic incentives for minors will help secure a proof-of-work chain however economic incentives are calculated subjectively or to put it another way attacks usually have a political or social motive in addition to a financial one and these attacks actually fit that profile based on our initial analysis i don't

think proof-of-work chains are actually well-equipped to mitigate the risks of interference from actors for whom economic incentives are secondary think about it state actors or many non-state actors could easily attack even the highest cap proof-of-work chains the cost to them is trivial no one likes to admit it but the blockchain sector is still tiny and no blockchain has yet proven its value or utility at scale now i believe they have value and they have utility but they haven't proven it at scale so these attacks make it difficult for any blockchain and they're actually a wake-up call to anyone concerned about the security of their networks

regardless of what community they're part of so i'd like to invite everybody to work together to mitigate their shared security risks our response we're determined to secure the network and to protect the integrity of the ecosystem etc is a small but vibrant and growing community what we lack in size we make up for and resolve we are implementing a number of solutions to address these attacks and to prevent future ones first we're establishing more robust monitoring and rapid response systems that way we can alert network participants to prevent single minor dominance and to prevent possible double

spins second we're actively developing several technical implementations that will reduce the likelihood of an attack and limit the damage should one occur among these ideas we're researching a new mining algorithm and other changes we'll share more details about our plans in the coming days and weeks third we're establishing partnerships with minors and mining pools to bring higher levels of hash rate to etc and to encourage honest mining fourth we're collaborating with the law firm cobra and kim and ciphertrace to assist in the criminal investigation we'll take strong action against criminality in this emerging sector

some people have said that the attacker is actually entitled to the funds because they abided by the rules of the system in my view stealing is stealing it's very simple and to put a twist on an old saying the means don't justify the ends if we shrug at a theft like this at this kind of behavior blockchain will never achieve wider adoption and about the investigation itself already there's a lot of information including about entities and individuals who've publicly threatened etc in the last few months while the attacks were technically proficient interestingly they were otherwise really sloppy there are clear digital fingerprints at exchanges and third parties

all over the place lastly and most importantly the other thing we're doing is we will continue our good work to grow etc as an ethereum based proof-of-work blockchain which is really the best way to solve the problem of low hash rate over the long term we'll pursue our mission to build high quality relevant and accessible technology to create a diverse and inclusive community characterized by financial and data self-determination you know our technical networks are designed to be censorship resistant meaning no one should be excluded from participating however blockchain social networks have a pronounced lack of diversity

etc labs is committed to making sure that our community fully reflects the values of social and financial inclusion that the technology is trying to create in practice this means we'll continue technical development and expand the etc core development team as planned we'll continue to grow our partnerships and collaborations in the ethereum community with unicef and the world wildlife fund and more than 35 promising blockchain projects in the developing world and emerging markets we'll continue to make the majority of our investments in female-led blockchain startups we'll continue to collaborate with other chains and communities as the opportunity arises and lastly we have a deep and long-term commitment

to the transformational potential of truly public blockchains etc isn't going anywhere but up thanks for tuning in