Mandala AMA with Zach Daniels, CTO

Blockchain/Security Focus


On July 27, 2018 — Mandala CTO, Zach Daniels hosted a live AMA (ask me anything) in the official Mandala Discord to discuss blockchain technology, cyber security and the Mandala platform.

The copy of the AMA is unedited.


Why will Mandala create its own hardware wallet, is it purely for security purposes?

Yes, the primary reason is security. Another reason is to offer our users the ability to hold their private keys. One of the major advantages of a DEX is that the user holds their private keys, not the exchange, we plan to accomplish this through the hardware wallet.

Will you be collaborating with the big hardware wallet makers to make a co-branded wallet? Since these companies have been in the space for so long, their names are trusted? I am sure they will be happy to go for a co branded wallet after seeing the success and be with the first SEC crypto exchange. That will help their brands as well!

At this time there are no plans to make co-branded wallets. We plan to manufacture our own hardware wallets to offer a unique and unparalleled experience and features to our users. Ous CSO has operated a large hardware manufacturing company in the past, so we’re well positioned to create our own hardware.

Looking at all these hacks on various exchanges and on smart contracts, can you tell us what measures have been taken to protect the exchange and MDX smart contract from external malicious threats? What manner of penetration testing is happening? Is this being covered by Modulus or have you contracted a 3rd party org to do the security audit?

We have engaged 3rd parties for both the smart contract audit and penetration testing. I also have extensive experience in this area, and Mandala’s internal security team will constantly be scanning for vulnerabilities and remediating them regularly. We’ve deployed state of the art threat detection and intrusion prevention systems to ensure we’re aware of any potential threats.

When do you plan to get the tokens accredited on Etherscan? There are 4 other scam contracts on there.

This will be done early next week.

With the nature of partnership with Modulus? Do they have security features built in place?

Modulus is our development partner for the exchange, both trading engine and front/back end. They do have security features built in by design and we’ll be layering on additional security features of our own.
Modulus features: Post Scripts, 2FA (google auth and yubikey), KYC/AML, DDOS Mitigation, Trade anomaly detection.

No full details please, but is there a plan for continuity in case of main infrastructure failure?

Yes, Mandala’s architecture is fully redundant, and geo/provider-distributed and a disaster recovery plan is in place for each node of our distributed systems.

Will steps be taken to proactively engage in red team / blue team exercises to protect the platform to ensure there is a continuous assessment of security functionality and protect from emerging threats?

The threat detection and intrusion prevention systems we’ve deployed are constantly scanning and testing our systems against the most updated database of emerging threats. Mandala’s internal security team, in tandem with 3rd parties will perpetually engage in red team/blue team style exercises.

What type of downtime should be expected if a critical security flaw is discovered? I realize time is a factor here but I am more curious on the details in the answer to examine the steps the CTO would take in this situation. Example being, a 9.0 Critical vuln is discovered in the GoLand codebase. Thank you.

Critical vulnerabilities must be taken seriously. In general, such a vulnerability in the codebase would provide access to the trading engine and its core functionalities, which would immediately compromise the security and stability of the entire exchange and by extension, its users. I’d be hesitant to put a timeframe on the resolution as the actual patch would be given to us by Google in this case(Google created GOLang), but in the interest of protecting our assets and that of our customers, all trading would be suspended until we could remediate the issue and run a full testing battery. Vulnerabilities discovered in programming languages can be some of the trickiest to deal with- they’ve been discovered in nearly every coding language in existence. The only silver lining there is, is that both the creators of the language and the community generally rush and collaborate to implement a resolution.

POW or POS!? Which has higher security and why?

To be honest, that’s a bit of a loaded question. PoW can be extremely fair if distributed enough and it requires actual investment into the mechanism that provides consensus. There are obviously some issues with collusion of parties and the dreaded 51% attack, which has been proven to be viable with smaller chains. PoS frankly has some of the same issues, both with collusion of parties, and of course with PoS, you give power to the “richest” members of the network. I think both consensus mechanisms are roughly equal in their pros and cons. In my humble opinion, we have quite a bit of work to do before a truly decentralized and fair consensus mechanism can be called a victor in that race.

Why are all the blockchains not trying for main chain and side chain structure rather than trying to do the entire computations on the main chain(which is not practical)?

There are a number of factors for this choice. In its current state, certain components of blockchain are either too expensive or frankly too slow for on chain computation. For example, data storage on the blockchain is quite expensive as compared to many traditional storage options. Also, if you look at most public chains, each member of the network is required to process transactions, participate in consensus and hold a ledger…this leads to a situation where scale becomes an issue. Many newer blockchain projects out there will say that they’ve addressed scale- I’d argue very simply that you can’t address scale until you actually have it.

Do you think blockchain can be and should be used by all the centralized bodies or are there any instances it is better to just keep using centralized body rather than a decentralized chain?

My motto in life for quite some time has been “decentralize everything.” This is something that I’m passionate about. While that’s a true sentiment, it’s also not practical to decentralize certain things. I think we can all agree that placing highly sensitive personal information on a public blockchain isn’t the greatest idea. Most projects that are doing things similar in nature to this employ encrypted links or some other mechanism coupled with an off chain or private chain solution. I think blockchain has a place in almost any organization, for the transparency and immutability factors if nothing else. I would, however, argue that many of the solutions that would be employed (private chains, hybrid on/off chain) wouldn’t exactly meet the specifications of true decentralization.

Can you please provide us an updated roadmap? Or tell us when you will be releasing an updated roadmap, with alpha, beta, and go live dates?

I’ll be providing a more detailed update on the roadmap and alpha/beta dates and processes next week, but we are well ahead of schedule.

Will the audit results be announced next week as well?

The audit is not something I’m directly involved with, but we’ll post an update regarding that process soon.

In regards to updates to the platform, do you guys have a plan to minimize downtime for upgrades? Binance and other exchanges have gone down for 48 hours etc for unplanned maint, do you have technical plans to minimize downtime so when you do go down its limited to an hour or 30 minutes?

Yes,our architecture has been designed so that we move traffic to a certain cluster of servers for regular operations, upgrade another set and test, then move traffic seamlessly to the next cluster. Of course, unplanned maintenance does happen, but every precaution will be taken to ensure minimal downtime.

Will Mandala support NEP-5 tokens?

We’ll be blockchain and token protocol agnostic. Any project that qualifies within our listing requirements and is regulated and compliant will have the chance to list on Mandala.

What’s the size of your DEV/IT team? Do u think u have the personnel to handle any jinx 24/7 when Exchange goes live, other than scheduled maintenance?

The size of our Dev and IT team is not something we are able to fully reveal for our security conscious approach to development and operation in this space. As is well known, blockchain platforms, users and projects are constantly targeted and in some circumstances, less is more. I will say that our team is quite large and is part of why we have been able to make such great strides in development.

How long will Beta testing be done before full deployment?

At this time we plan on 4–6 weeks, but that is a flexible number as we will be optimizing things as much as possible prior to full launch.

Wonder if u’re allowed to share what kind of filing u’re pursuing with SEC? Reg. ATS?

We are pursuing Reg A+, ATS, Broker Dealer License and Money Transmitter Licenses

Will u be using DLTs to store transaction records? Whether on-chain or off-chain?

To stay Complaint!

Yes, we will be using off-chain DLT technology to start for compliance and redundancy, and we’ll constantly be looking to use on-chain solutions wherever it makes sense in the future.