Last week, a book published by Laura Shin called “The Cryptopians” offered new insights into the craze surrounding cryptocurrency. She also talked about what drives people to invest and who the “attacker of the DAO” could be. The main reason this is such a big deal is that it is has had huge consequences for Ethereum.
A DAO is a decentralized autonomous organization, and it is an app on the Ethereum blockchain. It had the distinction of being the first to have traction on ETH and a VC fund. When a crowd sale was set up, it raised the most funds in history – $139 million, just a shade less than 15% of all ETH. A hacker managed to funnel 1/3rd of this ETH and got control of the network.
Due to the size of the hack and the lack of solutions, ETH decided to hard fork – this was a difficult decision for the company to make. This, just after a month of the incident. Not everyone was in agreement with the decision to fork because it created the possibility of another Ethereum version. This second version could be a competitor to the original.
The book lays out details about the hack, and how operators on the exchange tried to address the problem. These operators worked with the ETH team to find ways to handle the problem. News leaks to the community and the entire story unfolds to reveal players and their incentives.
A hard fork is a way to upgrade software to make it difficult to go back in time and ensure compatibility. Whoever chooses not to upgrade to the new version, would be operating in a new chain. ETH used this method to add new features which also acted as system upgrades. There was no pushback from the community as all of this was planned very carefully.