Why The DAO Panic Destroyed Ethereum

Rage Comment : The DAO's smart contract is automatically executed and autonomous. The code is the contract. If the code is changed, it means changing the contract, which violates the concept that the code cannot be tampered with, and the meaning of the smart contract is lost. However, the solution to the DAO hack is different from that of Bitcoin at the time. Bitcoin can only use forks when the protocol is damaged, not when the protocol results are not satisfactory. Therefore, we must be extra careful and calm when using forks to solve this accident, otherwise it will really put Ethereum in danger.

Translation: Nicole

On July 8, 2011, the first major Bitcoin bubble burst, and Bitcoin subsequently lost 94% of its value, eventually falling from $31 to $2.

As you can see, Bitcoin is now recovering nicely. Ethereum is in crisis right now, as The DAO has been hacked and a large amount of funds have been stolen. Just like Bitcoin, Ethereum can recover - but a panic reaction will ruin Ethereum forever.

Unfortunately, we seem to be heading towards this kind of panic reaction.

Ethereum is valuable for one reason only—its Turing-complete smart contract protocol. In other words, the value of Ether is a direct result of the value of smart contracts, and Ethereum is as valuable as the first smart contract protocol.

On June 17th, The DAO, a smart contract running on Ethereum, was destroyed. We must now resolve this issue in one of two ways: we can learn from it so that we can build more accurate smart contracts in the future, or we can reverse the buggy smart contract and remove it from Ethereum forever.

There is a problem that is even more serious than what happened with The DAO, and even more serious than what Ethereum faces: the concept that smart contracts cannot be tampered with.

The DAO perfectly demonstrates the core concept of smart contracts. Smart contracts are contracts that run "unstoppable code". The core concept is that the code is the contract, and no human intervention or interpretation is required or allowed.

This is automated and autonomous, and the decision-making results based on code are where the value lies.

This value is entirely dependent on the ability of smart contracts to run on a trusted protocol whose rules are written into the contract in advance. This is how Ethereum should be. The current proposal is to reverse the protocol rules because a vulnerability was found in an applicable contract.

This destroys the trust that makes the contract work.

Misleading history

Many people point out that Bitcoin also used forks in its early days. This is true, but there is a misunderstanding. Bitcoin only uses forks when the protocol is broken, not when the protocol turns out not to be what you want.

Another argument in favor of using a fork is that consensus is reached by the "community" and "miners can vote". This is even more misleading. Miners are not the final arbiters of transactions and contracts. They are, by design, dumb slaves to the rules of the protocol. It's a dumb lottery validating transactions according to the rules that have been decided.

If you want to hire good judgment, we can rely on their judgment.

It all comes down to this. If smart contracts must be interpreted by humans, rather than programmed into code, then they are not autonomous and self-executing, but can be reversed by communities, courts, and governments.

If this is the case, it’s hard to know what value smart contracts actually have, which means it’s also hard to see the value of Ethereum.

The only way for Ethereum to recover from this and thrive is to stick to its principles.

This is a difficult choice, but it is the only choice.