Last month, an unknown attacker drained tens of millions of dollars worth of the digital currency ether from The DAO, an ethereum-based smart contract aimed at functioning as a funding vehicle for projects in the ecosystem. The incident sparked an effort to effectively roll back the clock and undo much of the damage, a process that comes to a head this week as network-wide changes are set to be rolled out.For weeks, the impact has been largely confined to the pages of social media and, for developers, within the workspaces and private chats of those most closely involved with the so-called ‘hard fork’ effort. Now, however, with code for the changes completed and merged with major walletimplementations, that’s about to change.Major exchanges that offer trading services for ether have announced their plans to support the fork in the past few days. Generally speaking, the plan is to support the strongest blockchain, which will be determined by how much hashing power it draws from ethereum’s distributed network of miners.So far, digital currency exchanges Poloniex and Kraken (which comprise more than 50% of ether trading volumes) have both said they plan to briefly suspend deposits and withdrawals prior to the fork activation.Miners, signs indicate, have largely moved to adopt the hard fork measures, with major pool operators looking to their members to assess support for the plan, even if reluctantly.The stakes on the outcome of the vote are high. If the hard fork fails to be implemented, many early adopters of ethereum who purchased DAO tokens meant to give them voting rights in the new organization will be out $60m worth of the cryptocurrency, increasing concerns about potential regulatory involvement.On the other hand, if the hard fork is implemented, the ethereum blockchain, which is supposed to be an unchangeable record of all transactions, will no longer be seen as immutable. In sense, code may no longer be law.
How we got here
For those who may be unfamiliar with The DAO, here’s a quick recap of the story so far.Launched in April, The DAO was designed as a series of contracts that would raise funds for ethereum-based projects and disperse them based on the votes of members. An initial token offering was conducted, exchanging ethers for "DAO tokens" that would allow stakeholders to vote on proposals, including ones to grant funding to a particular project.That token offering raised more than $150m worth of ether at then-current prices, distributing over 1bn DAO tokens.Just over a month ago, however, news broke that a flaw in The DAO’s smart contract had been exploited, allowing the removal of more than 3m ethers.Subsequent exploitations allowed for more funds to be removed, which ultimately triggered a ‘white hat’ effort by token-holders to secure the remaining funds. That, in turn, triggered reprisals from others seeking to exploit the same flaw.An effort to blacklist certain addresses tied to The DAO attackers was also stymied mid-rollout after researchers identified a security vulnerability, thus forcing the hard fork option.
How the fork works
Much has been said about the ethereum hardfork and the idea that it constitutes a "rollback" of the network. While not necessarily false, the specifics of the hard fork proposal on the table are a bit more complicated – here’s how.The proposal doesn’t exactly unwind the network’s transaction history. Rather, it relocates the funds tied to The DAO to a new smart contract with the single purpose of letting the original owners withdrawal them.According to a recent blog post explaining the move, DAO token holders will be able to withdraw ETH at a rate of 1 ETH to 100 DAO.The extra balance and any ether that remains as a result of the re-entrancy exploit and the splitting mechanism will be withdrawn and distributed by the DAO curators, or individuals selected prior to the collapse of The DAO to provide "failsafe protection" for the organization.As part of an effort to help ensure the hard fork doesn't also include new vulnerabilities, ethereum co-founder Jeff Wilcke also announced a bounty program for those who test the hard fork code. Coders earned rewards based on vulnerabilities they discovered in the code.
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