And it's not the hack itself. Crypto projects get hacked every week. Multichain bridges are the target of the month, with eye-watering amounts and complex code running on different blockchains, and off blockchain. And a Solana bug like this one is to be expected.
What is surprising is to see a project promise to fully repay everyone, within two hours of the attack occurring. That size of cash for a "we'll fund it back up", and that kind of speed is really unusual.
In the immediate aftermath of the hack, people were commenting that the now unbacked Solana side eth was still trading near its normal prices, and it stayed that way until the announcement. This leads me to guess that insiders must have known that there would be a chunk of money coming to refill the coffers after the hack, which in turn means that the decision to send the project hundreds of millions of dollars must have been made at or before minutes had elapsed from the hack.
This part puzzles me to - immediately agreeing to plug the $320Million hole really makes you wonder how there is that much money freely available to just pay people back so easily.
You do realize there are a good number of crypto billionaires right?
I mean I get your point and it kinda stands, but the latest batch of crypo fueled wealthy people are less the pioneer/early movers and more the "I'll create a crypto product nobody understands and, boom it has a market cap of a couple hundred billion!". And since you can trade whatever crypto you want for eth, all you have to do is convince people your coin is worth something and you can do exactly the above thing.
There are a good number of startup billionaires too, so why not just make a Google?
I think you are falling prey to selection bias. Yes there are many scammy projects that made a few people rich, and a handful of non scammy projects, but the vast majority do not work.
Start a new stablecoin (or have connections with one of the existing ones) and promise everyone that you have dollars backing it, then mint $320 million of that coin even though you don't actually have dollars backing it.
The recipe for creating fake dollars in crypto is pretty well established at this point
Cuz there are millions of people buying nft's?
And the investors probably have some insurance or clause where they add another $€¥ against interesting valuation as a convertible or something
You _say_ that, but this wouldn't be the first player in this space to say they have billions of dollars to cover everything, when they actually had $0 after having siphoned all profits along the way.
This absolute reeks of the type of baseless claim that someone living in a bubble surrounded by NFT fanatics would claim. Be careful not to think that the trends within your social network are indicative of the population as a whole.
I think it's worth being mindful of who effectively owns the bridge.
Jump acquired certus one, who developed the wormhole. Jump has invested quite heavily in the solana ecosystem, so while $300mm is a lot of money, it's a small price to pay for a firm of their size.
It's a bit hard to tell how much money/assets they have as they are private but they employ 700 people on trading crypto. I imagine they have made a few bob.
It's not that surprising, nor unprecedented. Many exchange hacks were immediately refunded.
Trust is the most important thing in crypto, exchanges are making billions in profit, not covering a $320m loss could generate billions in damage by crypto prices plunging, so it makes a lot of economic sense to avoid that.
There are investors holding billions in Solana crypto, so it's in their interest to avoid a Solana loss of trust.
Cryptocurrency removes two pieces that you previously needed to trust:
Validity of execution and order of execution.
Without considering smart contracts that's basically enough. With smart contracts there are many valid states that are very undesirable (e.g. pegs breaking, manipulation of prices to liquidate positions) this one would be a peg breaking that subsequently would trigger a cascade of liquidations, at the current state of solana that would also flood the network in people racing to try and grab the liquidation fees[1]
[1]: (a quirk of all of the smart contract platforms I know is that there is no way to ensure that X happens under Y conditions, so instead what people do is set up there systems such that if Y there exists riskless profit for anyone who can make X happen. So once collateralized positions become undercollateralized (e.g. backed by 1.1x) anyone that can return the lended assets (which need to be liquid & fungible) gets the collateral)
> as an aside: hacker news comments become a dumpster on cryptocurrency
And replies like this make it no better. Comments like this
> the whole thread isn’t calling anyone who works for Google “shills” but that decorum is totally acceptable on these threads
are basically not true. This whole thread isn't saying everyone is a shill, there is ONE comment that said that.
Crypto is full of scams, just like traditional banking. Yes there are people who absolutely shit on crypto here, but there's also crypto enthusiasts who can't take ANY constructive criticism. Both extremes aren't warranted. Stop pretending that crypto advocates are being victimized here...they aren't.
I think you’re both right. Vitalik is not a shill; his clarification is useful. And there are, objectively, lots of crypto shills around, engaging in pump and dump etc. I don’t think the GP was necessarily saying that all crypto people are shills.
No it is not and neither should it be. Blockchains are 'supposed' to be trustless with no need to trust a particular group or some group of keyholders. Otherwise, what is the point?
There is no point in promoting decentralization when the whole chain was reversed due to a hack (The DAO hack) or users still resorting to using centralized exchanges rather than 'decentralised' ones or even running most of the nodes on a centralized server.
I hope you have not proven that you have misunderstood the point of their decentralization claims. It makes it very easy for them to dismiss your comment.
Is this realized profit in real cash, or book profit based on valuations?
Who puts real money into crypto by billions? I somehow doubt that enough actual physical people come to buy crypto. Is this money "invested" by funds?
This whole ethereum thing sounds like the old joke "we exchanged a dog worth 1 million for 2 cats worth 0,5 million each".. yet now they try to find someone who will buy this stuff at those bullshit valuations - to be the one left holding the bag.
Also if so much real money is generated then where are the billionaires? Actual ones who divested from crypto (to lower risk) and bought unsexy real world stuff.
I understand that in theory crypto is always growing, but who is coming to buy that 1 BTC for 36k usd? To get billions it would have to be a lot of people.
> Also if so much real money is generated then where are the billionaires
Same article:
> With $96 billion, Binance CEO Changpeng Zhao is closing in on tech titans including Facebook’s Mark Zuckerberg and Google’s Larry Page and Sergey Brin.
It's pretty easy to swap BTC and the like for USD on Kraken or Coinbase. According to Kraken's order book can buy or sell US$14bn of ETH at the moment and move the price less than 2%. We are not talking $1m cats. I've done stuff like $36k for BTC. That's a small trade really.
This is what I was thinking. The first players have made excess returns to patch the hole up and it's in their best interests. If everyone panicked due to the hack they would have lost a lot of the value/confidence of their assets that they didn't pay that much for. Whereas original asset holders would much rather keep the confidence/value in the asset.
It does create a morale hazard if that was indeed what happened - at this point just speculation.
So can we stop pretending that cryptocurrency is anything but an attempt to recreate the financial system in a way that facilitates ignoring banking regulations?
The value of WETH going to zero could cause a near system wide collapse. It is being used as collateral for a staggering number of loans. Bridges in the colloquial way of saying it, are too big to fail.
I wonder if network insiders had been prepared for the eventuality of something like this happening, and were just executing a playbook.
WETH (on Ethereum itself) is totally different. It's a pretty simple contract, doesn't require code on other blockchains or offchain code, and there are no Ethereum accounts with "special permissions" so the attack surface is much much smaller.
Crypto (and more so Solona) has an extreme trade deficit, it's importing way more capital then it's currently exporting (the primary export today is blockspace, I think as DAO's start running SASS services, that will increase the exports). The impact today would be nearly zero. As the deficit evens out, that might change. The local crypto economy is pretty young (it's virtually brand new). As it expands these capital flows will probably change.
I haven't read anything concrete that shows a clear contagion risk, but https://twitter.com/angela_walch is one of the people in the space to follow that is talking about it
Take a look at the internal transactions. Within the last 24h, there's been several transactions where new ETH has been wrapped and sent to the contract. The balance is ~120k WETH now which is around the same amount as the hack.
And it's not the hack itself. Crypto projects get hacked every week. Multichain bridges are the target of the month, with eye-watering amounts and complex code running on different blockchains, and off blockchain. And a Solana bug like this one is to be expected.
What is surprising is to see a project promise to fully repay everyone, within two hours of the attack occurring. That size of cash for a "we'll fund it back up", and that kind of speed is really unusual.
In the immediate aftermath of the hack, people were commenting that the now unbacked Solana side eth was still trading near its normal prices, and it stayed that way until the announcement. This leads me to guess that insiders must have known that there would be a chunk of money coming to refill the coffers after the hack, which in turn means that the decision to send the project hundreds of millions of dollars must have been made at or before minutes had elapsed from the hack.