PiedPiper isn’t the only one being 51% attacked
Issue: 038
Coinbase acquires decentralized exchange, rebrands GDAX
As discussed in previous posts, it seems Coinbase wants to offer both centralized products, like their traditional Coinbase exchange from fiat to crypto assets, and decentralized services like their wallet Toshi. Now, Coinbase has made their biggest statement towards supporting truly decentralized services with their acquisition of Paradex, a decentralized exchange and relayer using the 0x protocol. The goal for Paradex, according to Brian Armstrong, is to target international customers and eventually US customers — presumably once they have regulatory clarity.
Concurrently, Coinbase will be rebranding their GDAX service with a new service called Coinbase Pro. Coinbase Pro will improve upon the GDAX experience and integrate Paradex with the goal to allow its customers to trade 100s of ERC-20 tokens.
PoW chains take a big hit
Multiple PoW chains were attacked this past week, showing how vulnerable some chains are to the 51% attack.
Both Bitcoin Gold and Verge were attacked by miners who gained majority control over the hashing power to the network. These attackers can double spend their own transactions, prevent new transactions from happening, and prevent other miners from validating new blocks. Attackers are able to double spend the ‘stolen tokens’ on exchanges and steal millions of dollars. The Bitcoin Gold attack led to nearly $18M stolen in BTG. Verge attackers stole nearly $2M.
The biggest problem with smaller crypto assets is the reuse of the PoW hashing algorithm from bigger chains. For example, Bitcoin Gold uses an algorithm called Equihash that was first used by Zcash. Zcash is an older chain and has accumulated the majority of Equihash hashing power. It is easy for a portion of the Zcash miners to turn that hashing power towards another chain, like Bitcoin Gold, and gain greater than 50% of BTG network’s hashing power. Further, now that there are easy ways to short the price of different assets, the reward for miners to attack smaller chains has dramatically increased. Expect more attacks on smaller chains to happen in the future.
Ethereum centralization
In early developments, there are rumblings that the Ethereum network is centralizing and becoming too expensive for everyday full nodes to continue operating. A detailed article from StopAndDecrypt outlines what is happening and how this impacts the network. The problem, according to the author, is that unlike Bitcoin, Ethereum does not have a blocksize cap to regulate latency requirements for the network. Since the blocksize does not have a cap, the blocksize has become so big and exceeded the demands of everyday users’ hardware and bandwidth requirements. Many full-nodes have been forced to stop operating or ‘down-grade’ to pruned nodes or light nodes, meaning they are dealing with block headers instead of the full block.
Important to keep in mind, there are many who disagree with the article, including Vitalik — rebuttal here. However, it does appear that full nodes are declining across the Ethereum network.
Project Spotlights
- Preethi Kasireddy announces her new project, TruStory, including a fresh $3M fundraise. TruStory is a platform to for users to validate claims and statements made in media today.
- MIT and the Digital Currency Initiative are working on smart contracts for Bitcoin leveraging the lightning network.
- Need a loan? Dharma has you covered. Dharma launches Dharma Plex, a platform to create and make loans using Ethereum and the 0x protocol.
