ETC Labs believes regulation is the key to preventing future 51% attacks

ETC Labs believes regulation is the important thing to stopping future 51% assaults

Responding to quite a few 51% assaults on the Ethereum Traditional blockchain, ETC Labs mentioned that it is time to deliver regulation to hashpower rental marketplaces, citing the truth that at the least two of the assaults have been perpetrated by renting hash energy by way of NiceHash — a declare that has been confirmed by each NiceHash and ETC Labs. 

ETC Labs CEO Terry Culver additionally shared with Cointelegraph that based on the knowledge that was supplied by CipherTrace, which was employed to analyze the assaults, the attackers used proceeds from the primary assault to hire hashpower for the second assault. The latter value crypto trade OKEx $5.6 million in damages — the corporate needed to reimburse its customers.

The concept of utilizing a hashpower dealer to conduct an assault on a proof-of-work blockchain shouldn’t be new. As an example, at a latest Unitize digital convention, there was a panel devoted to this matter and an earlier assault on Bitcoin Gold was mentioned.

In an effort to find out about NiceHash’s response to the issue, we interviewed the corporate’s chief advertising and marketing officer Andrej Skraba. He advised us that whereas NiceHash’s crypto trade is a regulated entity and as such follows all correct Know Your Custome or KYC and Anit-Cash Laundering procedures or AML, its hash rental enterprise is unregulated and its customers aren’t required to reveal their identification. We requested if the corporate would take into account instituting such procedures in response to the assaults, Skraba responded:

It will rely completely on the European Union, what they’ll determine on this regard.

He additionally identified {that a} good analogy for NiceHash could be an Web Service Supplier, or ISP, that merely delivers information packets:

NiceHash can ship packets of information to mining swimming pools and these packets of information might be described as hash energy. <…> So if we actually need to be constructed a very decentralized world, we can’t impose limitations on this site visitors.

He added that it is rather troublesome for a dealer like NiceHash to detect such assaults as they occur. It’s much more difficult to stop them from occurring within the first place. Skraba admitted that instituting correct KYC and AML would assist scale back the dangers. Nonetheless, in his opinion, it will not remedy the difficulty:

You may all the time use faux KYC. So it will assist, however it will not cease. It might not cease in any respect.

At the moment, ETC’s hashrate stands at 1.four Th/s. In the meantime, NiceHash market has virtually 10 Th/s out there for rental, which is seven occasions the present quantity of hashpower defending the community.

ETC hashrate. Supply: BitcoinCarts.

Skraba mentioned that NiceHash has launched ETC Labs to their platform. Although they weren’t beforehand acquainted, ETC Labs now intends to make use of their companies for defensive mining:

We have now launched them to our service as a result of earlier than they weren’t conscious of how NiceHash works. They usually have additionally publicly acknowledged that they’ll use defensive mining.

The concept behind defensive mining is to make use of a dealer like NiceHash to extend the community’s hashrate so as to make potential assaults prohibitively costly.

Though regulation might scale back the probability of future assaults, that is extra of a long-term plan. Not solely does it take time for the suitable legislators and regulators to provide you with a correct framework, however within the case of hashpower brokers, it must be international to be efficient. For instance, NiceHash relies in Slovenia. If the native authorities or the EU enacted a regulatory framework affecting its enterprise, the corporate might simply relocate to an unregulated jurisdiction. The decentralized and digital nature of the enterprise makes bodily location irrelevant.

Different options which can be being mentioned by the ETC neighborhood embody a checkpointing system (that will manually stop future assaults), switching to a distinct hashing algorithm, and at last, strategic strikes just like the establishment of a decentralized treasury.

Some consider that the final assault was performed by ETH miners. As the 2 forks use the identical DaggerHashimoto hashing algorithm, and ETH enjoys a significantly increased hashrate, it will be somewhat straightforward for ETH miners to assault the much less lucky fork. Tomorrow’s ETC builders’ name might be devoted to discussing the checkpointing system proposed by IOHK.