In the last blog, I briefly introduced the DAO. Today, I am going to introduce the DAO attack and discuss what the DAO attack taught us about the future of IOT.
The DAO was launched on May 28th 2016 after raising over $150 million. On June 5th, an antipattern was found in the reward system of Ethereum, but it was quickly fixed and claimed not to post risks to the DAO. However, at the same time, a similar antipattern exited in the splitDAO function but was not discovered by anyone but the attacker. On the 17th, the attacker exploited this bug and moved $50 million to a child DAO. Despite that the Ethereum community quickly made it impossible for the attacker to cash out the Ether, the market value dropped from over $20 per Ether to $13. The attacker could have already benefited by shorting Ether beforehand.
While the idea of Internet of Things based on blockchain seems promising, the attack definitely taught us some lessons. Since both the Ethereum and the DAO are immature technologies, and it may be of benefit to take a conservative approach and launch new products more gradually. Reducing complexity of codes can also reduce bugs in the codes.
However, one thing I want to argue is to increase governance and probably create some centralized plans to address emergencies such as hacks, despite the main idea of the DAO and IOT is to eliminate central governance. Without central governance, it makes reaction to emergency very slow, since every decision takes time to vote and may not be passed by 50% of the users.
Source: https://blog.slock.it/the-history-of-the-dao-and-lessons-learned-d06740f8cfa5#.61xux96k5