After the mass panic we saw in the crypto space the last few days, a huge recovery in the price of ETH and DAO suggests something is cooking this morning….
And it certainly is….Last night at around 7pm CET a group of people picked up on a new attack that was draining DAO funds…
The response? A team of top developers who call themselves ‘Robin Hood’ have been working in secret since the hack was first launched on Friday 17th, 2016.
“Today about 19h central european time Robin detected that there was a new attack going on. It was draining slowly, a few ether per round, but it had already amassed a few thousand dollars. It seemed to be someone testing the waters and seeing if it could drain more.” – Alex an de Sande
The group themselves consists of Alex van de Sande and other un-named participants whose goal was to secure the underlying ETH that the DAO tokens represent. Until last night, they were only testing their plan to attack. However, when a further attack was detected – Robin Hood decided to proceed with the Counter Attack:
“Having our hands forced, the group decided to go forwards with the attack. I donated 100k dao tokens to the process with the full knowledge that it could be burned in the process. The more tokens the Robin contract had, the faster it could syphon the ether to protect it. The attacker picked up the pace and other attackers joined in. Some of the most efficient hackers were able to do up to 30 recursions with up to 200 ether moved in each, so it became clear that if we didn’t do anything the DAO would be drained before anything could have been done.
We contacted some “whales” who were happy to donate to the effort and we were able to secure about 6M DAO tokens. We made it clear to everyone that we were not sure they would be able to recover these tokens, but these generous friends were happy to contribute to the effort. Thanks to this we were able to outpace the attacker, doing 4,000 and then at up to 40,000 ether per round, totaling up30 rounds of recursions.”
-Alex an de Sande
As the counter attack continued, taking most people off guard…. a successful end result was claimed. Most of us here in Europe, woke up to DAO prices +50% and ETH +25% wondering what had happened… while we were fast asleep..
“7.2M ethers from the DAO are now held in a child DAO and we hold the private keys of the curator. It’s important to identify the other 2 – but the risk has been reduced from 20 thousand attackers down to only 2. As soon as that DAO matures, we will try to move all the funds in a refund contract, that will be much simpler than the DAO was. Of course we still need to be very careful with that code and to analyze it for any possible exploit.” – Alex an de Sande
What does all this mean? Well, it looks like at least for now 7.2m of the funds (ETH) have been secured in a child DAO by the group, Robin Hood. The other 3.6m remain with the hacker. You can see that markets are slightly more optimistic about recovering the ETH that their DAO token backs by taking a look at what the DAO/ETH spread did overnight:
From a wide of 58%, the DAO/ETH spread has tightened to 30%. The spread tightened to as much as 20% early this morning.
A solution by the DAO to refund these tokens back to the existing DAO holders almost immediately would cause the spread to collapse completely. However, that would require both a soft and hard fork. If we were to wait for the Robin Hood DAO to mature, things could take a lot longer and bare a lot more risk.
All this time is added risk and time delay and therefore somehow justifies the risk premium of 30% that continues to trade in DAO.
A quicker and cleaner approach might be to soft fork…and then discuss how to proceed on a hard fork. Would it really be that terrible?! Probably not, and by the way, it wouldn’t be the first time either.