$34M permanently locked into AkuDreams contract forever due to bad code

The "oracle problem" is the reason why I lost interest in crypto after the 2017 boom, when I really got into the nitty-gritty of crypto.

The trust built into crypto is rock solid, the problem is that it's scope is so narrow and limited that even after a decade it's still searching for a major trust problem to solve. In this case you cannot reverse crypto payments because there is no oracle that can do it. You would need to find God's own API for reality.

I was however totally wrong about the future (monetary) value of crypto in early 2018. I guess sometimes it pays more to know less.

Edit: Also of course every single crypto org obfuscates and is opaque as possible about the oracle problem. I'd venture that most investing in the space don't know what it is.

My friend took a year, over 150 calls and legal intervention to get money back that HSBC stole. Obviously not the same but to say that banks are faultless just isn't true; their systems also have edge cases from which there is often little hope of return.

I agree completely. Even as a person who is extremely confident with using computers I would not feel at all comfortable putting my life savings in a place where one typo or bug could cause me to lose everything.

How is the average person expected to feel comfortable doing it?

It IS reversible. Just whine on social media until the primary stakeholders fork the blockchain!

The DAO debacle showed that it's not really irreversible.

Thought experiment: a bug is exploited tomorrow which locks forever $50 billion worth of ETH, including of prominent VCs/users/exchanges.

You will see suddenly how consensus crystalizes to do a hard fork reversion of the exploit.

Layer 1 is not for normies, but abstractions on that can provide any functionality that they need.

There are many thousands of contracts that work perfectly securing tens of billions of dollars. You have an anti-survivorship bias because only the failures make it on HN and in the media.

If you work in the space you realize only a tiny fraction of wealth gets lost to bugs. This $34M is roughly 0.02% of the wealth locked in smart contracts ATM.

I would agree in any free society, where you can trust institutions to fix such mistakes when they happen, this risk of irreversible transactions is not worth the reward.

But when the alternative is a dictator arbitrarily seizing/taxing your money, devaluing it through poor economic policies, the risk doesn't seem so bad eh?

> Most people do not have the risk tolerance to use a system where one typographical error can irreversibly lose your life savings (for example), the product of decades of work.

This might be true without mattering much -- most people don't have decades of savings. If you're not willing to lose the product of decades of work, but you never have more than a year worth of savings, what does your unwillingness mean?

While it's true, on the other hand, third parties can't confiscate crypto without interacting with you.

But crypto should become smarter for real world use case than just following "logically right" rules like some rescue protocol that without a receipt signal, it gets rolled back.

try to reverse a wire transfer

You could design a contract that could be bug-fixed and upgraded provided some % of stakeholders consent to the upgrade. These platforms are still in their infancy so upgradability or even just thorough testing and auditing is rare.

It also works the other way around: When in conflict, law (and force) will always have precedence over smart contracts.

Well:

> The unforgiving-ness and irreversibility of cryptocurrency are the reasons that it will never gain significant adoption by “normies”.

Exactly. Such that bank / wire transfer, didn't take off or gained significant adoption by normies?

> With fiat currency, we have many systems for dispute resolution and restitution. They are not all perfect but they work often enough that people still have faith in the system.

Chargeback fraud for both the consumer and the merchant is good as well? Is that why when the payment processor encounters tons of friendly fraud in a merchants account they lock up your account and you're unable to accept payments anymore, effectively killing your business.

The bank doesn't even know if the chargeback is fraudlent or not and will take the money from you regardless of you wasting time countering the disputes to prove that it is fraudlent. Thus, it hurts both the merchant and the consumer and that system can be abused.

> Most people do not have the risk tolerance to use a system where one typographical error can irreversibly lose your life savings (for example), the product of decades of work.

Yeah, most businesses and banks are doing just fine with the reversibility of wire transfers aren't they? [0]

[0] https://www.bbc.co.uk/news/business-59826345

I actually like this kind of naming nowadays, it tells you right away how trustworthy it is. Smart is becoming the Karen of the tech industry.

Turns out unfettered immutability isn't the holy grail it was made out to be

Really? I would have thought that a "bulletproof" contract is better than a vague one, precisely because the latter is more likely to be litigated. What's the value of having a contract, if you have to go to court to find out what it means?

Of course, I don't want a bulletproof contract imposed on me. It's better if "our standard contractual terms" are vague, so that I can sue suppliers. But if it's a private, custom contract, then I really need to know beyond doubt what it means.

My problem with blockchain "contracts" is that they don't seem to be able to affect (or be affected by) the real world - fiat bank accounts, delivery of goods in working order, etc. They only seem to affect digital pictures of monkeys. I suppose that simply means I don't "get it".

Well, non-repudiation is not the same thing as non-reversibility. The former is part of a Smart Contract. Unfortunately, most (all?) cryptocurrencies make you take the latter too.

Approximately $300 billion of value is secured by on-chain smart contracts. What makes it to the front page of HN probably gives a distortionary perception, in the same way that watching sensationalist news makes you think kids are being abducted left and right.

Only bad news sells. A $35 million bug makes it to the front page, but how often do you hear about Uniswap processing $1+ billion in trading every day without a single hack in 5 years.

In general, there’s actually been a sustained improving trend of fewer hacks, higher likelihood of recovery, and lower losses as a percent of assets. The headline numbers may be higher, but that’s largely a denominator effect of the meteoric growth in on-chain assets. It’d be like judging New York City based on how many murders are in the paper instead of the murder rate.

This kind of code is usually contracted out to the lowest bidder because the people that want to pull the scam/MLM/NFT project/whatever you want to call it don't have the technical skill, but can do the marketing.

This leads to bugs or exploits often ending up in these "contracts". The concept is inherently flawed, as they can't be updated and can't be reevaluated or reinterpreted by e.g. a court. The money's just lost.

At this point I just want to know why it's considered news. This site is called hacker news, after all. The sun rises in the east, another smart contract eats people's money, another shitcoin goes to zero. Here's your coffee, sir.

> Since software will always have bugs, how do developers of smart contracts intend to fix this kind of problem?

They don't. I doubt most are even thinking about it, and of those that are, most probably think it can't happen to them.

Crypto tries to make financial programming more like web development, and less like writing code for a bank, but there's a reason writing code for a bank is such a pain in the ass: it has to work more or less perfectly, every time, at least on the backend.

If you trust your financial framework to someone who took a UDemy course last weekend, you get what you deserve.

> Some variant of this kind of disaster with smart contracts seems to do the rounds on Twitter every couple of days. Why does this keep happening?

Because it’s code which means errors are a fact of life, and the goal of crypto pushers was to spread the scam so instead of looking at formal methods in order to make “smart” contract ironclad, they started from ECMAScript so that any idiot could go from a frontend widget to deploying a smart contract with minimal introspection or reflexion.

I always wondered why aren't smart contracts developed strictly; proving them with Coq or some proof assistant, or making a formal TLA+ struct to define them before coding. As the siblings say, it smells like contractors that don't take it as seriously as (imo) they should.

Bar to entry is extremely low; copy-paste existing contract, change a few variables and launch. Yet, the contract must resist state-sponsored attacks, eg. https://rekt.news/big-phish/

Maybe one day there will be a sort of unhackable template that everything derives from, or an automatic software-prover.

The academy have developed tools for code verification, state modeling and formal proofs. The choice of using a javascript fork for financial contracts is deliberately dumb and will result in the craziest bugs we could imagine.

Probably because there are tens of thousands of smart contracts now and hundreds are created every day.

Companies get hacked every single day too, probably many that you use, it's just more opaque when that happens.

IMO the APIs are overly complicated and there's no proper dev tools to test and debug the code. There's a few testing frameworks out there but I'm not really sure how well they work considering how often this happens. I don't get why there isn't some straight forward way to build failsafes into these contracts.

They will certainly fix it if you give their startup another metric fuckton of money. ;-)

I know a lot of smart, professional software developers. Many of them, me included, have taken a look at this stuff, or even been recruited to join a cryptocurrency-related project. Some of them even tried it out. But very much on purpose, none of them are currently involved.

So my guess as to why it keeps happening is a sort of Dunning Kruger effect combine with a selection filter such that the people most eager to get involved are the ones least likely to be able to spot the problems.

That's an interesting way to think about it. No resources have been lost as it is a virtual thing and if we assume it to be worthless we haven't lost anything. Mind blown

Agreed. The $34M goes to all current ETH holders (in the long term of course).

so the ether went into the ether ;) & nothing is lost

Vitalik has said using 256-bit word sizes in the EVM was his biggest regret from the early days of Ethereum.

As others have mentioned, it was largely chosen because of the ubiquity of 32 byte hashes. But overkill for regular math. One pernicious issue is that it makes translating existing smart contracts into ZK rollups really challenging because 256 but arithmetic blows up the circuit size.

https://www.theblockcrypto.com/post/116413/vitalik-buterin-r...

It’s to prevent any possible chance of brute forcing the value. 64 bits is vulnerable. 128 bits is impervious, and probably won’t ever be vulnerable. But 256 bit crypto keys are common.

yes, its pretty vibrant for the past 2 years. claims get made in advance and paid out unceremoniously with no fanfare (just like outside of the crypto space) but there could certainly be more fanfare and articles around that experience, since you can tell by this thread that people who should know about it don't know about it. You can find people in the discords of most communities who have the claims after an exploit who are like "yeah they paid" and move on, and you can look at the insurance protocol's contract to see it paid out for your own verification of that.

not sure if I've seen it for NFT collection contracts, but they're pretty robust and actively cater to the DeFi category of services.

here is a list of insurance protocols that also use a token for any number of reasons. its a whole category on the "marketcap" sites.

https://www.coingecko.com/en/categories/insurance

there are likely many well capitalized insurance protocols without a token but I don't know about them for that specific reason, which is a fun irony when wondering "but does this need a token?"

Yes. I'm not going to name drop for fear of it coming off as shilling, but I'm familiar with a couple DApps that are two-sided marketplaces for insurance on other DApps.

If you lose your money to a smart contract bug in the insured DApp, the insurers will reimburse you.

If you really trust the code of a certain app, you can earn revenue as the insurer on the other side of the trade.

Correct, the project can just create another set of NFT's and "bless" them as the official ones.

> People keep claiming over and over that you'd not lose money like this with (non-smart) contracts because the court would always rule your way.

I don't think anyone is claiming that the court would always rule your way; that's a strawman. Courts do stupid shit all the time.

The point is that a court could rule in your favor. With something like this, what's the remedy? How is a court going to order some developer to undo a transaction posted to an immutable ledger? What do you do when the source of truth is wrong, and cannot be altered?

I don't think any "people" are claiming it will ALWAYS go your way, and if they are they are wrong. The point is at least you have a shot at some sort of remediation. You can appeal to courts and work it out. Sometimes there can be an error so egregious that you end up losing your money. But in general the intent of a contract is strongly considered with human decisions. Computers have no concept of intent. Yes incompetence is everywhere, but how often does one messed up line lose millions of dollars? Even skilled developers make mistakes. We saw it at the very dawn of smart contracts with the DAO being broken, and Ethereum forking which blew up the "irreversabilty feature", and showed that there is great potential for a contract to be not what was intended.

With crypto if the cryptography is secure you have absolutely zero recourse to get your money back. Ever. One of the selling points of cryptocurrencies and smart contracts is the non reversibility/mutability of them. However it has been shown many times that that causes harm more often then it has benefit. Loads of assets have been stolen/lost/rendered irrecoverable.

In this case ALL parties would agree that it is definitely not was desired when they went into the contract so it would not even have to go to mediation. They could simply write a new contract rendering the other void in the non crypto world.

> People keep claiming over and over that you'd not lose money like this with (non-smart) contracts because the court would always rule your way.

If people do it that much, surely you could give us links to 3 or 4 of them? I'm interested, as I've never seen anybody claim that.

It's Solidity: https://soliditylang.org/

https://cryptozombies.io/ may interest you

If you are wanting to read some code, here's a an "ERC20" contract (a "money").

https://github.com/Rari-Capital/solmate/blob/main/src/tokens...

I've worked with using formal verification systems to secure smart contracts. It's less useful than you would think, for two reasons:

1. It's extremely hard to come up with the correct rules for expected behavior. It's like making a safe wish versus an evil genie. It's also surprisingly easy to make a rule that doesn't check anything, or what you think it does.

2. In the areas that deal with the most money, DeFi, there may be thirty program involved, most of which were not made by you or under your control. Current formal methods can just handle a single program. The common way to handle networks of contracts is to test each in isolation, making assumptions about what the other contracts can do. But it's really easy to make a wrong assumption here.

Code is protected as free speech by the US Supreme Court. There’s no legal avenue by which you could prohibit someone from writing and publishing smart contract code.

At best the most you could do is setup a legal barrier to deploying that code to a block chain. Even then, this is legally iffy, since deploying chain simply involves broadcasting a message to the network. Most likely the court would interpret this as a form of published speech protected by the First Amendment.

But even if not, you can still publish the smart contract code on GitHub and say “I sure hope no one outside my jurisdiction or an anonymous address takes this code and puts it on-chain.

You could do that, it would still be up to the consumer to only choose to interact with those contracts and projects, just like it is now. But the consumer is undiscerning.

This has happened. It’s called Ethereum.

The original fork was mostly abandoned, and is known as Ethereum Classic.

They already do this whenever one of the developers fat fingers their code and loses all their own holdings. The whole thing is kind of a scam.

I am going to have your comment bronzed. It's such a perfect example of how in the crypto world the US dollar value is hyped in the good news. But once the news is bad people get all, "What even is money, man?"

The car did not crash. Rather the money you paid for it has now become worthless (unridable). But that money has not disappeared, it's on somebody's bank accounts. Such rhetoric is very deceptive.

I think this is a strange take, sure the $34M is in the ethereum account but it is not in someone's bank account, but the people that sent money to that contract do have an NFT right? or have a claim for an NFT that can still be sent to them manually right? I think those NFTs don't have to be worthless, there is just a temporary blip in confidence until the project proves they are still able to perform with less revenue/capital and also still motivated to do so.

Effectively identical.

Infinitesimal is right.

Since EIP-1559 went live in August 2021, over $6.3 billion worth of Ethereum has been burned since they now burn transaction fees instead of giving them to miners. They burn about $11 million per day!

This $34 million is a drop in the bucket and note that even though all that was ETH burned, the price is still below where it was when they started.

https://watchtheburn.com/

yep! one could make a "locked clock" that predicts the distribution of inaccessible Ether to support their bullish hypothesis

The reason why thats an odd take is that it scapegoats poorly run companies when we should be just shaming the specific project team and organization and doing post mortems to make it less likely to occur. Just like we do on this very forum when not talking about the crypto space.

Yes, if you can recover 51% of a bill and send it to the treasury they will make you whole. Not a perfect system and obviously can't help if both shred it and light it on fire but there is a recovery mechanism.

Crypto has none, it's a feature to some but a deal breaker for most.

Weird analogy because yes, if you put money in a paper shredder (at least in the US) the Mint will indeed allow you to send in your shredded money and receive cash in return: https://www.bep.gov/services/mutilated-currency-redemption/s...

Ah yes. When crypto works, even barely, it's the magic perfect future financial system. When it doesn't work, it's entirely the user's fault and they are stupid doo-doo heads who deserve the blame. Such a classic "heads I win, tails you lose," dynamic.

It seems to me like the comparison needs to be tweaked a bit (long before the possible recovery via the US central bank or treasury comes into play), this was a sort of guarantee/escrow, so let's imagine that you are told to put your 100 $20 bills into a safety deposit box, if you win the auction you give your key to the seller when you get the object, otherwise you can open the box and get your money back.

Only the deposit box has a sliding plate at the bottom that may (or may not) be randomly pulled out and when/if this happens your bills will fall into a shredder.

Would you make the deposit knowing how this particular box is made/managed?

Or would you think that this particular kind of deposit box is flawed?

Point is that you were told nothing in advance about the sliding plate and the shredder.

Unless this has changed in the recent times, then yes you will get your money back as whole. If you have all the pieces, the bank (at least in Finland central bank will) will trade it to a new one and the old one is demolished.

It is pretty normal for money to get damaged and reissued.

That’s a straw man. You’re giving your money to a vendor expecting a return, and instead your money is just unusable forever sitting in front of you as a monument to test coverage because of a bug in code. The thing that caused the problem is supposedly the key feature of the system (immutability). This is why people argue crypto is flawed.

More like a few thousand people putting in $1000 here and there just got shown reality.