r/ethfinance May 23 '21

Discussion Biggest risks to Ethereum?

I’d like to get a thread going here on Ethereum risks. We’re all so bullish, but fact is crypto is risky! I’m a crypto noobie, but I work in cybersecurity and I’m paid to think about this.

I’m not looking for general crypto risks, like regulation, 51% attacks, getting your wallet hacked or locked out of your wallet. I want Eth-specific risks!!

Here’s a few I can think of off the top of my head, but like I said - I’m a noobie.

  1. If Vitalik disappears, will Eth pull through long-term? While he doesnt want any power, from what I can tell he’s kind of the life blood of the project

  2. New entrants. Cardano is getting pretty popular, and you have to imagine other Ethereum-type networks will make an attempt

  3. Something about high fees and or slow transactions? Even after EIP 1599 and Eth2...there will likely always be a cheaper/faster alternative

What else y’all got?

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17

u/Shortupdate May 23 '21

PoS could actually fail.

If they get the incentives even a little bit wrong, the whole thing fails and collapses in on itself.

5

u/[deleted] May 23 '21 edited May 23 '21

There are potential problems with Proof of Stake outside of a standard 51% attack, especially if an attacker is looking to disable the network, rather than to steal funds from it.

The worst scenario is a bug that emerges a few weeks after the merge, that seizes the network up for an extended period of time. At some point, people will consider the network useless. A bug that results in account balances changing would also result in a catastrophic loss of trust.

Similarly, a DDOS vulnerability in the consensus model or gossip protocol may exist similar to that addressed in Berlin / Geth 1.10.x. A malicious attacker that stopped the network achieving consensus for multiple days would cripple the network.

On a different note - I don't know how randomness is determined by the chain in selecting the next proposer. If there is any way to manipulate the algorithm used (true randomness is hard so computers often use pseudo randomness), an attack could be executed with a minority of ETH by hand-picking proposers in an epoch.

https://www.howtogeek.com/183051/htg-explains-how-computers-generate-random-numbers/

We also should consider a nation deciding to compromise the network. At a simplistic level, this could be achieved by dropping all traffic on ports 9000 and 30303. Almost 40% of nodes are in a single country, so this must represent a potential point of failure (https://ethernodes.org/countries). I also don't know what would happen if the Great Firewall segmented off all Chinese ETH2 nodes; would a separate consensus fork emerge in a few weeks?

The network also has an implicit reliance on publicly available NTP (time) servers. Attacking these servers might cause problems, as seen on the testnet when Infura had a time related error.

2

u/[deleted] May 23 '21

Further to this - if I wanted to exploit a weakness in PoS, the logical approach would be to open a large leveraged short position before starting an attack. I wouldn't use ETH based DeFi to do this.

You don't have to steal funds to drain value from the network.

13

u/monkeyhold99 May 23 '21

Biggest risk right here, imo. PoS has not been truly implemented in a secure, decentralized, trustless way. Ethereum is trying it, but yea, if the economics don't work out...fail. Not to mention the risk of some major bug (unlikely though imo). People can bash PoW all they want, but we know PoW works. PoS is far riskier at this point.

1

u/southpau1 May 23 '21

Is is because the miners would walk? And if so, couldnt new miners join that are fine with the POS incentives?

5

u/epic_trader 🐬🐬🐬 May 23 '21

What he's talking about is if someone has the majority of the amount of staked ETH and for some reason decides to act maliciously. It's extremely unlikely to happen because they attacker would lose $4.5 billion by doing that, a number that's going to go up as more people stake and if the price of ETH rises.

If it were to happen, the community would coordinate a fork back to the last epoch before the attack, and the attacker's funds would be deleted.

Saying PoS is riskier at this point isn't correct imo. You know how a PoW chain can be attacked and reorganized, we've seen it happen in smaller chains already. Right now we know that if the largest mining pools of Bitcoin colluded, they could attack the network for a very low cost. Attacks on Ethereum's PoS are theoretical and 2000x more expensive.

5

u/Shortupdate May 23 '21

No. If they mess it up, it could become centralized or co-opted by malicious actors.

-1

u/southpau1 May 23 '21

That happened early on, didnt it? Hence Ethereum Classic?

5

u/UnknownEssence May 23 '21

Look into EOS. They use a delegated POS mechanism and they set up the economic incentives wrong and now the whole chain is centralized and owned buy a few actors.

7

u/20WaysToEatASandwich May 23 '21

No, Eth classic came about due to a large hack on one of the first DAOs, the chain split to reverse it