EB134 – Emin Gün Sirer And Vlad Zamfir: On A Rocky DAO

Transcript

[Music] this episode of epicenter Bitcoin is brought to you by highme protect yourself against hackers and Safeguard your identity online with a first class DPN go to high. me/ epicenter and sign up for a free account today welcome to epicenter Bitcoin the show which talks about the technology projects and startups driving decentralization and the global blockchain Revolution my name is Brian Fabian Crane and I'm M Roy today our our our topic is is very interesting we are going to talk about the da and some of

the security challenges that were discovered with its design joining us to walk through this topic are blad zamir and EM goner both of them wrote a paper calling pointing out several security flaws in the da and calling for a moratorium on on proposals right now so uh Professor C is uh associate professor of computer science in Corell University and vad is a researcher the ethereum foundation who works on Casper and the blockchain and their blockchain sharding solution so before we start let's have a small intro from the two of them starting with uh goon hi thank you very much for having

me here uh let's see I'm an associate professor at Cornell University in the computer science department I work on Building self-organizing Systems in general and um I've also worked on all sorts of things related to cryptocurrencies going as far back as 2002 um you might know me from such epicenter Bitcoin episodes as selfish mining I was one of the two people who uh discovered the selfish mining attack on bitcoin and um since then I've done quite a bit uh on trying to make the Bitcoin ecosystem healthier better uh this includes building the new thing that we call covenants um and the Bitcoin vaults for securing money at rest Bitcoin coins at rest I've also

worked on bitcoin Next Generation which is a a new protocol that is based entirely on the same exact code uh s of underlying infrastructure as Bitcoin um but uses a trick to get around the blog size limitation so that uh it can achieve latencies for one confirmation that are as low as is on the order of a few seconds and throughputs that are limited solely by the underlying network not by any block size restriction so um that's I'm also a co-director of the uh what is it ic3 which is the initiative for cryptocurrencies and smart contracts hey I'm Vlad I'm a researcher at ethereum I'm I've been working on proof of stake for like uh over a year

and a half now and uh also started working on blockchain sharting and a few other things here and there cool so how how did you guys uh end up writing writing this paper pointing out the security flaws in the da why did you analyze the da at all so it first came to my attention that there might be like some security problems with the Dow when Dino Mark I had a conversation with Dino Mark who's like the third author on the paper and he uh he's the one who kind of uh led the charge by initially writing a documentation of like how the to works and a bunch of attack vectors uh that's like what eventually kind of turned into this call for a moratorium um so I I was speaking with with Dino about it and then I was also

uh hanging out at Corell uh to work on Casper and you know goon and I got to start talking about it and we realized that it was something that we wanted to work on in the short term yeah I mean I think the amazing thing here too is just the speed of which has happened know a few weeks ago this was well kind of started as this way for the slock guys to get some money and then all of a sudden it took on this massive life as of its own you know becoming the biggest crowdfunding campaign ever and and I was very skeptical to be honest um but what has been amazing for me to see and I've only sort of followed it a little bit as an outsider unlike the three of you is

how much involvement and how a community has arisen sort of instantly to you know dissected and criticize it and make other proposals and and it was particularly amazing to see for example that original security proposal that the slockit guys made and then immediately detailed analysis of all the things that were wrong with it on blog posts and readed it and and hundreds of comments and discussions so actually that made me a lot more optimistic about the project it's just kind of seeing all the activity that went into that from all kinds of different people so I entirely agree so it's it's a sign of help that these things are being dissected so quickly by by you

know a million eyeballs essentially and it's again a sign of help that people are taking this thing seriously looking at it carefully trying to make it better hopefully we'll come out out of this with a much better Dow that people actually understand and have some Assurance in that it it implements what they have in mind another thing that I find interesting here maybe worth mentioning is right so there was always this idea of you know what's the do like what is the best application for a doll where is it going to be used and it's interesting kind of right now that the doll or this first decentralized autonomous organization that's kind of

really getting traction and being used actually doesn't really even have so much of a function besides being a dentalist autonomous organization and making some decisions right and that that being completely vague uh what they are I mean okay there is the presumption that it's going to act a bit like a a venture capital fund with some similarities there although at the same time right you could imagine it doing other things as well so so I think that's just a it's an interesting thing to think about that maybe wasn't so clear right I think if you'd asked people before what is a d going to be what's the first successful D going to be I don't not sure if this would have been the one

well so that is true um on the other hand I'm not so surprised about the turn of events that the Dow turned meta uh and then that the one of the first proposals is all about managing the Dow itself and it seems like uh substantial effort is going to go into making the Dow better this is exactly what you would expect with any cool new technology that the very first steps you take are shaky and uncertain and uh people will go into it and try to make it better and and much more robust so uh you're absolutely right uh that we're in a sort of a funny funny situation right now Dow isn't necessarily funding uh big money-making proposals being brought in by contractors but is instead trying to

make itself better and that that's a good thing absolutely I think from that perspective it's also a positive aspect that they raise so much money because that allows them to kind of do that if they had raised whatever $3 million and they spent the first $2 million oning making the thing itself useful then that would have been a very unattractive thing for investors but you know if they if they raise $160 million to spend $10 million or $20 million on making the thing itself actually um useful then that could actually work yeah I mean I like that idea but I certainly don't I hope it doesn't cost that much money to make this thing work I mean uh I hope I hope that like you

know with a few relatively easy to when changes it would be a lot safer than it is now and then with a lot more changes it could be really just like orders of magnitude better than it is now but you know it's like we have to acknowledge that this thing already already is Al and we have to kind of um you know uh deal with that in the kind of short-term basis we can't just kind of put everything on hold for like a couple years while we do a lot of research into like the optimal dat architecture yeah so um so we'll be walking through now on kind of what are these kind of attacks and problems U that uh the two of you have identified with the da but before we start perhaps it makes sense to just have a broad

overview like Brian mentioned that this is meant to be da is meant to be a sort of a VC firm right something that invests in in in projects it's a mix of between a Kickstarter and a VC firm but assuming that our listeners have that basic background let's kind of go into some of the details of uh of the Dow like you know what what is a curator uh and questions like that so maybe we should start with just describing the role of the token holders and the curators what what what what should token what are token holders of the Dow task with doing and what are curators of the Dow task with doing okay well at a very high level the Dow is something uh like a mix between a venture capital

firm and um and Kickstarter as you mentioned so what that means is like a venture capital firm it has raised money from uh the public and um it's going to invest it in projects of different kinds those projects come to the Dell in the form of proposals and they get voted Upon This Is Where It differs from a traditional Venture Capital firm where you would have a a professional fund manager make decisions um instead with the Dow the decisions are being made by the token holders by by participants investors in the Dow and uh these people vote and their votes carry as much weight as they have tokens in the so the more you invest in the Dow the more you have a say on how it spends its

money and the money then is allocated to proposals um the critical difference between Kickstarter and this is in Kickstarter you're putting your cash and your cash alone towards a project in the Dow you're voting with your share and you're committing other people's money for his projects if the votes are above a certain voting threshold okay and and Vlad what what do you think is the role of the curator out here can you describe that um so I mean at very least I can describe the uh the like the mechanism of the curator that's encoded in the dowo as like a contract um so the the the curator manages a white list of payment addresses to which proposals can

be made so the Dow can only basically like send calls and cryptocurrency to addresses on a white list and the curator contract manages that white list it can add things to the white list and it can remove things from the right white list um so the curator is just this contract that has this ability as far as the Dow Dow is concerned uh but in today's Dow the curator is Al is a a five of 11 multisig that uh you know has the ability to add and take away members from the multisig and also to change the threshold required um so uh and then and then what is the role of the individual curators or part of the multisig is something that um you know is still still kind of being defined as a little uncertain and

I think that is a you know a whole other rabbit hole that maybe we should save for after we talk about talk more about how the Dow works and the attacks against the Dow Etc okay so so we have walked through like the token holders the token holders are people who kind of invested money during the creation phase of the Dow now hold some tokens and then can vote on different proposals to spend money on certain projects then you have the set of curators which Define like higher level which addresses can claim money for uh for spending on on projects on the Dow so whenever a proposal comes in then it has to first get approved by the curator and then only can it really apply to the Dow and have a have a

voting phase in so allocation of money is decided by voting right so uh the final the final component of the Dow that we might want to work through is the is the notion of a split so goon can you explain to us the notion of a split and what it does sure um so so the purpose of a split is to allow people to take their money out and um uh the Dow follows a particular what we would call a pattern um in software engineering where you don't just get the ether out as soon as you demand it but instead uh the way the split works is the bigger Dow contract splits and creates a child contract and you become uh essentially

if everything goes according to plan you become the sole owner of the smaller da and uh your the rewards that were coming to you in the in the mother da uh start going to the child and in the child you are the sole curator and you can do whatever you want and in fact I if you really want your money out what you would do in the child is you would put up a proposal to take all the money out to pay yourself and then you would approve it because you're the only voter you have 100% of the votes and you would then get your money out it's uh thus a slightly complicated process it's not as trivial as just saying I want my money back uh you have to go through the Dow creation phase uh and then the proposal phase within the child um to get your

money out of the the mother doubt right yeah quickly say something about that as well um initially the the way that like Kristoff uh concept and like the soer team conceptualized splitting is as a way to uh defend against a malicious curator that like a lot of The Da would coordinate to kind of jump to this new this new Dow that had a different curator um but since then people have reconceptualized it as being like you know if I don't like what the Dow is up to I can take my money out and that's why we we've kind of left with this awkward withdrawal mechanism because initially it wasn't intended as a withdrawal mechanism and now it's being adopted as one because one one of the reasons that I could interpret this as Maybe I'm

Wrong here right is because like let's say you invest money in in this Dow and initially you should just able able to take the eer back out but now this has invested in a variety of different projects that over time will will pay back into the Dow returns there so I should have some way presumably right if I take my uh if I want to take my money out to then still receive the rewards so is that that but that was not the reasoning why you would have a separate do that then these rewards will get redirected to yeah so I mean you that that is like the the child the children Dow can claim rewards from the parent Dow uh for money they've already spent on proposals in the past I mean so for

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does I add flat that you said originally the idea of a children a child's doll was to replace the set of curators but now that it's being kind of used in a different way I mean so it's made it so that like the withdrawal process is complicated and that you need to start worrying about like this like soccer issue which we uh I guess we should talk about now that it's kind of come up which is the the concern that like any your attempts to uh split uh alone you might have someone follow you or also end up on the same thing and then you have wouldn't have a majority of the shares so that you couldn't pass proposals so to be to be very very clear about this uh the way

the stalker attack works is suppose I want to you I've had enough of the Dow I don't want to be part of it anymore and I want to to take my money out the recommended procedure is to split so I initiate a split and uh normally the expectation was that uh I would be the sole person who would uh go for this child da where I I alone I'm the curator but a malicious person can follow me and uh he can he can vote yes on my proposal to split he can enter my new DA my child da with me and now suddenly I'm no longer the uh the um the the sort of the uh the owner the complete controller of

the child da and this stalker that that's next to me that's following me around is now in my Dow and if he comes in with enough funds he can actually overpower me he can reverse my decisions and uh such a stalker with with large enough funds can actually just squat in my de now and uh and now I'm at a loss like what what do I do um and there are a bunch of things that have been suggested uh the SLA team has a a web page that says the stalking attack is a non- attack uh but there are two issues with it for one there is certainly the the potential for financial loss if I split again from the child down to a grandchild then I lose the rewards because the rewards don't carry down

through the generations of dows they if I leave the child child then I've left it behind as an empty shell and my rewards that I was getting from the mother Dow into the child I left them I abandoned them to my stalker and he collects a bounty so that's a big problem um the stalker could also follow me into the grandchild and then this is a denial of service attack now I'm unable to take my money out he could actually start to try to Ransom me and so that's a problem and uh and uh there are technical tricks that one could play they're all probabilistic they all rely on Race conditions and timing and so forth they're very complex and um and I think

that your typical investor is going to be hard pressed to to pull them off and um and so I don't think that this problem has been addressed uh sufficiently yet go ahead yeah so I mean uh I I completely agree with you go uh I just uh you know would like to go into just like a little more detail about like what these like tricks are basically the idea is that like if you can get your money into your Dow or into your split uh at the last block of the creation period of the Dow then you know the attacker won't be able to follow you because they'll have to get in at the next block um and basically to do this you need to like guarantee that like you're only going to get in if the attacker hasn't already got it in before you and you're only going to get in if

it's at the last block um and you're no the attacker also isn't going to get in at the same block as you um so like you can make sure of all of these things especially if you're mining your own block um but it's it's it's difficult and one of the the only way to make it work without like risking losing your rewards is to start many many many different split proposals and to split many many different times but only to follow one of them and uh the issue with this is that this is going to cost a lot of gas so it's going to be costly and it's going to require writing programs to monitor the blockchain and to inject the right transactions at the right times so uh personally I think this is a this is a noo this is not a reasonable way to

build a system in in when we build large distributed systems the kinds of tricks that we're talking about here to defend against a stalker we call them race conditions they are dependent on timing at being there at the right time um I'm sure almost everybody who listens to this podcast has experienced some race condition or another most of the time my windows box I don't have a Windows box anymore but when I used to run them most of the time they work okay on occasion you get a blue screen and that blue screen happen because the things ended up timing just right for some code to get messed up so um you don't want your the safety the security of your funds to be dependent on these kinds of of uh of

payment mechanisms so um so it's uh it's it's just not good system design and the other reason why this is a kind of a big a concern is because building in a solution to this would be very very easy um having a withdrawal function that you could call at any time in order to redeem your tokens for the kind of current share of The Ether and also claim future rewards would uh be a really elegant fix right so so you could have a very actually a very simple way that you should say okay I'm going to withdraw my ether and then have some address that all the other the rewards get redirected through in proportion to what I had and and that's and then

that's fixed and if you you mean if you don't have that separate step of creating a child to to withdraw money yeah then it can happen a lot faster because you don't need to wait like you know seven days to split 27 days for creation and then 14 days for your proposal you could just kind of have it happen that seems like a very straightforward fix so is is that something that there's kind of agreement on that that would be a way to solve this and that it's that's how it's going to happen or is there other problem like there's a strong agreement forming around it I I you know I can't say like 100% for sure that that's gonna happen but uh I haven't heard any I haven't heard anyone who like thinks it's a bad idea enough to like defend defend that like their

claim yeah so I mean the way the way we could think of it is like uh in any system you have you can have voice and you can have exit right like you don't you're living under a government you don't like it you can either speak up or if nothing good happens you can exit and the da kind of implements this by saying you have voice because as long as you're a token holder or you can vote on proposals and allocate money that's your voice and if you don't like the way the system is going then you can exit the problem here is um exits are complicated a they take a lot of time as currently defined um so they take something like 40 days to execute and then there's also a particular attack once you try to exit

that attack could in theory be surmounted but it requires a lot of technical provice which most of the investors won't have right so so uh that that is the that is the current situation uh with the stalker attack today's magic word is moratorium that's m o r a t o r IU M head over to Let's bitcoin.com to sign in enter the magic word and claim your part of the listener reward so uh uh what are the what are the other kinds of attacks you have come across so um so as as a token holder what I care about is that I'm able to

vote correctly and I'm able to exit correctly if if if if I need right so in this case what we saying is exiting has become hard and this has reflected Itself by uh having the Dow token price also go below uh below the book value so so today if you if you look at Dow tokens you can buy Dow tokens and if you can exit ex it out of the Dow correctly you will get back more ether than you put to buy the Dow tokens today and this is because like the exit uh the way to exit from the Dow is is really complicated as demonstrated by this attack the other side is like if I'm a token holder the other thing I care about is voting and um you've also

identified some of some problems with the kind of voting system that has been implemented so what what are these so the big problem with the voting in the Dow is that it's biased towards yes votes so think of a fund that wants to make decisions it needs to capture the true sentiment of the crowd that it's uh crowdsourcing from and uh to get the true sentiment what you really want people to do is they you want their incentives to be aligned that if they if they see positive expected value in a proposal they should vote Yes without thinking and if they see clear negative value they think that this contractor will waste money then they should vote negatively they should vote on no um the way it's structured right now uh the yes voters have every incentive to vote Yes

the optimistic happy crowd that's great the no voters the sort of the the financially minded careful crowd who who think that this thing is going to be a bad idea um they will lose certain rights if they vote no and in particular if they vote no they get trapped that is they are unable to split so you might you might have the Dow faced with a terrible proposal and uh and the yes voters will vote Yes on it you're looking at this you're thinking this is clearly a terrible proposal I want none of this but but it would be silly for me to vote no now because if I do I'm trapped and these idiots if they vote Yes if there are enough idiots around and if if most you know sort of clear thinking individuals are inactive today

or whatever during throughout the voting period then then you'll end up losing your money through that very proposal so so suddenly the situation is no longer symmetric and uh and the happy go lucky might end up committing you to to very bad proposals and your best bet is to hold off on voting no so then that creates a secondary issue which is if you look over the timeline you will see yes votes start to come in and uh if we're using the Dow as a signaling mechanism which we are right we we want this voting um to pull the audience and you want to be able to watch as the audience sort of brings in their votes uh those votes will come in heavily weighted on the yes side and the

no votes will tend to come in towards the end if they come at all so this is this is a huge issue because it means that the mechanism is not incentive compatible it's not truthful and uh what we call these kinds of Voters we call their behavior strategic uh that is not the Layman's kind of like oh that's clever and strategic this is they are doing something that is that is not exactly um in line with what they should be doing and and this is bad behavior it it diminishes the th's ability to make sound decisions you're hearing from one crowd but not the other and so when you say strategic voting particular what it means right is that I as a do token holder it might not be in my interest to vote for example

against a certain proposal even though I think it is actually bad for uh you know the Dow fund and for the returns that the D will generate because I have you know some other concerns or some things I'm going to try to protect absolutely that's exactly right you you can clearly see that this thing is going to bring negative value but you're not voting that way in fact you choose to sit on the sidelines you might choose to split at some point if you if you see the yes votes pile up the sort of the uh the game theory behind what we will end up seeing is complicated but uh but we can all agree that the Voting is skewed that the yes voters there's no impediment to to their voting and the no voters there is some structural

impediment you will always hear from them late and uh if they're clever um they might not even vote at all and split out yeah and the the other the only thing that I want to add to that is to be clear that it's not just that you give up your ability to split but you also give up your ability to transfer your tokens so you can't sell either right uh and if you splitting is kind of maybe not great because you you have to like have a weak notice but you maybe would want so you have if you think that something might pass you want to split you'd have to like kind of speculate a week before it passes but for selling like you can you can potentially sell like even a few days before it passes um but you know the closer you get the more

the market will have already reacted to the fact that this thing will pass um so you know it's you can't split or sell if you vote and if you think that the Dow is doing great then you don't mind so much uh not being able to split or sell if you're concerned then you know you're more lik you to be a no voter and you and you're there and you're also more likely to want to retain your right to split or sell so this dovetails well with a second with a I guess we're on number three now there's another attack that comes from this um which is if you vote on a proposal whose voting period is long you know so I ask I think there is currently a proposal on the Dow that says do you believe in God you know it's it's I

think a zero cost proposal and uh you know you vote Yes or no um but what whichever way you vote you're trapped this we call a concurrency trap and a concurrent proposal trap so once I get you to vote on this BS proposal um you're now in the doubt for good until that proposal is resolved so one one vector of attack would be I would put up a zeroc cost goofy uh proposal that lasts a long time uh you feel instinctively sort of moved to vote on oh I'm an atheist I hate or oh my god this is my faith whatever um you know some some dumb thing that gets people riled up and moving and the moment they cast their vote vot um they're in for for at least the voting period the end

of the voting period and now you can start attacking them with other proposals that have shorter durations that come in so how how would that work what what could another like let's say a shorter duration proposal how could that be used to attack somebody that's been locked in sure so uh imagine that like you want to get money out of the Dow with like a a majority attack or surprise attack what you try to do is get a bunch of people to be locked in so that they can't sell or split because then you're more likely to be able to have your funds when you when you when your proposal gets passed so if I can lock imagine if I can lock down like 50 50% of the Dow and I have like some number

of the tokens I mean uh then and I can get a yes vote on a proposal then like some people who otherwise would be able to split like can't because they were because they voted on the long the long silly one so so that means I get my crazy proposal to pass and now all these 50% that have been locked in because they really wanted to assert their opinion on some stupid thing uh and you know my my dumb proposal passes now they can't get out so to the extent that they're invested right the proportional share is going to go into my proposal that's that's the scenario here right that's very much the scenario I would like to add one request if anybody does that after hearing this

uh uh podcast they buy us a drink all four of us and plus Dino of course five of us yeah like these are these are really interesting attacks like I I I would also like to make a restatement of the first uh attack which is uh the bias against voting no so let me let me just add one note before you do that um so uh if you if you get these people to vote then they they don't actually have an incentive not to vote in your shorter length proposal and so depending on your threshold it may or may not be a good idea to bribe them into getting locked because as soon as they're locked they don't have a no bias any a yes bias anymore so Vlad I think there are so many attacks against the da that some of

them cancel each other out yeah yeah but the but the fundamental problem I think here is um the bias against uh against vot so uh so so the way you can imagine biases like this this's this this the famous uh famous thing which is called a survivorship bias right a survivorship bias is that uh in the Middle Ages or even now there like you find people that said you know I I prayed to God I went to seea my sip shank sank but I was saved because I prayed to God you know I prayed to God some disaster happened and I was saved from This Disaster because I

pray prayed to God right but uh but you can't see people that are the opposite that that prayed to God that some disaster happened and they ended up dying because once they are dead they weren't there to popularize the notion that they prayed to God met with a disaster and died right so in society all that you're going to see is people that say I prayed to God and I was saved the whole uh like you know the natural system is sort of designed in a way to have us see only these kinds of people now what what you're saying out here is is because a no investor has a cost right once once he votes no he is locked in the Dow he can't sell his share he

can't exit the da Etc so um so we start to see that these these kinds of people don't do anything at all and uh and the signal that comes out from the Dow is always a positive signal that okay let's fund this proposal it gets reported in all of the news media let's say there's a huge proposal 20 million and there are lots of yes votes it gets reported in the news media it gets covered on epicenter Bitcoin it gets uh all of the publicity behind yes because everybody seems to be saying yes and ultimately that proposal passes just because the system is aligned that way in reality though there might have been many people that don't want for this proposal to pass right and that kind of selection bias makes makes the uh makes the whole

voting system of the da itself broken right absolutely so um we would like to have a truthful mechanism for voting uh that is symmetric on both ends and um that way you can count on people voting their uh you know what what they perceive and you can count on the outcome of the of the the vote to uh to then be representative of what the crowd thinks about the idea any kind of bias like this survivorship bias yes bias Etc skews that whole thing makes the Dow into sort of dumber dumber money uh that can be lost uh easily so with with the stalking attack

before there was an easy fix or at least it seems with that withdrawal functionality is there something like that here or is this much bigger problem that is hard to solve it's it's considerably more complicated here so there are techniques from game theory for how to solve it and uh um but evolving from where we are now to one of those is not this is not a twoe patch this is uh there is some thought to be given the game theoretic techniques for fixing this um they typically require some secrecy of of how things of at some point in the process and uh it's hard to

achieve that secrecy on a blockchain so um so I think there is going to be some research needed to come up with uh with uh mechanisms that are uh that are truthful and and are adapted well to to blockchains and uh and kind of like like like this this this problem this uh this Brokenness of um of of the voting system itself uh this this creates a very interesting Dynamic today right like ideally what we would want is that the voters that the Dow members be incentivized to upgrade the Dow right so we can always think that maybe okay the Dow has has certain attack vectors against it

okay that's fine and dandy um they'll just create a proposal somebody will say okay I'll build a new framework to upgrade the Dow submit that as a proposal maybe walk away with like a few hundred th000 uh that the Dow will sponsor and then this guy can build the next Dow framework and then all of the token holders can adopt that Dow framework or something like that so in theory you could you could imagine that the Dow itself becomes a principle and in order to upgrade it recruits an agent and then that agent allows the Dow to upgrade itself but if the voting system itself is broken then we cannot rely on this self- upgradation path of of the Dow itself right

because the basic thing voting that's needed for the self upgradation path itself is broken so that's that's why uh that's why this creates like a chicken and egg problem of how do you really upgrade something in which you can't don't even elicit uh the opinions of the community members efficiently yeah so I think this is like you know one of the reasons why moratorium is appropriate at the moment um but uh there is a couple of things that we can say one of them is that uh proposals that have uh you know spend zero ether um are less Pro to a yes bias although there still bias against voting it just no longer towards

yes or no it just so probably you know the participation won't be very high uh but there's not going to be a bias if it send zero if it spends zero either and so we could solicit the Dow's opinion uh without actually having a bias um and then uh in terms of the upgrade path there's uh there's there's a there's a there's a call in the contract where if we get 53% of the stakeholders to agree uh the Dow will be upgraded to a new contract and all of The Ether all the extra rewards everything will go over there regarding uh upgrading the the contract I guess another question here is what's actually the process here because right now there's there's a GitHub account

where the code of the D is on obviously the GitHub account isn't managed in a decentralized way right so they're managed by a few people who control that account who can control you know whether pool requests get accepted there uh how does that influence this whole process of upgrading the Dow I mean uh technically it doesn't I mean technically you know you can call the uh upgrade contract you know the upgrade contract call does doesn't know anything about the GitHub repost I mean um it just knows about like contracts on the blockchain right so uh the the question is more uh you know what would it take to get the community support to the

point where we have like a you know 53% of the tokens agreeing to the upgrade um and I think that's going to take take you know a lot of clear communication and good education cuz this reminds me a little bit of the the kind of situation in Bitcoin right we can say okay the Bitcoin core you know this doesn't have a necessarily particular status who controls those reposts but then it does have actually a very significant importance because that's where people look for and that's where people turn to and you have this kind of uh what do you call it a shelling Point uh and and then moving that somewhere else is actually really really hard not Maybe not maybe in a technical level this isn't an issue but on a

social level uh kind of you know coordinating everyone to to sort of start uh considering something else I mean maybe there's going to be nice tools developed here for the Dow that will make that easier but uh I mean I think if we look at Bitcoin that has been uh that has been a challenge yeah absolutely I think uh in the case of the Dow it's a little better there um but uh the sort of the the Frontline discussion the voting and so forth it's happening at consider. it what is dow. considerate do whatever it is it's it's happening at uh on different platforms and um you could you could it's also happening on Reddit as well it's partially

decentralized partially going through channels uh with uh you know managed by slet um but uh but I think you know as you said as as we move forward we're going to build other tools and um this uh this channel should be a little better than what we saw with Bitcoin so it's not possible for example with the Dow uh to have happened the same thing that happened to to you know block stream and all almost all the core developers so um it is it is its own thing now it has started it's live it's going it's sticking forward so uh there is no no worry that somebody could usurp the Dow um it it it in my opinion it's broken at the moment um it's it's

limping along but it's it's nevertheless its own thing and it's decentralized and uh and it's not uh you know short of taking over the entire curator set and so forth it's not going to be easy to take it over so so so it may it may be limping but at least it's decentralized yeah but but realistically I think you're right I think that like the cleanest most elegant way to do any upgrades is with stocking 100% on board and I think that you know uh that will very likely happen a few weeks ago we told you about the Gtech blockchain contest we asked you to submit your blockchain startup ideas for your chance to win 50,000 in grant money from rwe Gtech and gumbus well over 100 startups submitted their

ideas including 16 of you are listeners well the results are in and the winner of the grand prize is arcade City a project with the radical idea to cut the middleman out of Rod sharing and the runner-ups are cargo chain a blockchain distance to improve international trade especially in the shipping industry and Clippers a decentralized permanent document storage solution intended to guarantee intellectual property without a middleman congratulations to the winners and we wish you lots of success with your projects if you have a blockchain startup out year and think Berlin could be the home where you you are going to grow your company into a billion doll Behemoth then make sure you check out Gtech or the Gtech entrepreneurship Center Gtech has a lot of programs

workshops startup academies uh provide office space to help companies grow quickly work on really Innovative Concepts so make sure you check out their website check out g. Berlin that's GTE C.B L and we hope to see some of you in Berlin soon we would like to thank Gtech rwe and cumbas for their support of epicenter Bitcoin so one question I have here is like there seems to be a principal agent problem out here right so so if you think about it uh before the Dow existed there was just lock it

right now once the Dow exists though now now now you have like a principal which is like the da and then there's an agent which is like slockit and slockit really wants to become that become that agent because like uh they they coming up with all of these proposals that are security related and they might come up with with something that's also upgrade related right so um so now like you you have like two different entities right and uh and and because because they are like these two different entities and their U mutual interest may not may not may not be the same anymore right like uh they might be different right and there might be other

entities that come up with other upgrade mechanism so there might be like three or four concurrent proposal that that that that come up right so this upgrade mechanism could itself be more complex and lead the Dow to be forked just on how uh if there's a Discord in the community as to how the upgrade should happen that that might be possible in some sense so um but but hang on it's it's the the the principal agent problem is not as bad as one might imagine so the Dow is what it is and slockit is is at this point um kind of like any other contractor they have expertise over the code um and they propose fixes and uh now it's up to slockett to convince the

community that they're capable of of understanding the attacks on the Dow admitting them and then addressing them and if they can do this to the satisfaction of the community then they can move the the funds over to Dow 1.1 or whatever it is or maybe the 2.0 version which has a has a slightly different mechanism for soliciting votes so um so I hope that they can do this um and uh but we'll live and see if they're capable of doing this it's u i I'm a little a little worried that they were blindsided by so many attacks at uh at the game theory level uh but I hope that they will have uh they will they will quickly find the necessary expertise to to fix this yeah and I I think uh I

think there's another principal agent problem that we should kind of talk about which is basically um and it's not entirely clear what the relationship is but like you know between the curators and the token holders right are the curators meant to serve the interest of the token holders are the you know is the curators aren't exactly chosen by the the token holders the curators are you know initially they were selected by saki but now they get to they're kind of self- selecting they get to like use their multi sake to rotate the curators uh so it's not really clear like who the boss of the curators are I mean they're kind of like it's not clear how the curators will be paid for their work either right I mean some people would suggest that we uh the Cur curator get paid by the Dow in which case the

curator would be an agent of the Dow um but it's not clear that that has has happened or will happened or um or whether the curators today want that um so there's there's definitely like a conversation to be had about like what is the role of the curator so like in in absence of a of a salary for the curators right so so the so the curators like the original definition of the curators was okay this is like a multi signature account that is tasked with taking all of the people that want to send proposals to the DA and like filtering that list to a smaller list of uh of addresses that we think are coming up with genuine proposals right it was like meant to be

like a filter so now but is that right is that right you describing because because there's lots of different interpretations of this right so that's that's like that's an interpretation that I think is not the the most common I think there's there kind of there's like a few classes of of interpretations one of them is the one that you gave definitely not the most popular uh one more popular one is uh curators check bite code and identities so that like the people who have proposals are identifiable if if they say like commit fraud or something then maybe we could use we'll be able to like track them down somehow uh and then uh and just make sure that like the proposals that are being spent are really genuinely to

contracts that correspond to the proposals right the payment address is really correspond to contracts that are correspond to the proposals um so that's like one common view on what the curator should be doing and then another common view is that the the curators should be protecting the Dow against majority attacks uh now these two things are actually kind of incompatible because if you believe that the curators are only involved in this kind of automatic function then they they can't really Safeguard against majority attacks you know if you uh the question of whether or not it's their job to like you know take select some proposals based on their Merit generally people don't really don't really believe that that much um I've have heard a lot of token holders say that they believe that uh curators are kind of the human stop Gap measure in case something goes wrong

that we can't predict uh and that we haven't kind of Fort you know don't already have logic in the Dow deal with so like in light of all of these different interpretations like uh how does your role get defined right like ultimately you want like some kind of let's say Charter from the community yeah this is what we t with doing right H how do you go to that point and then if you're not being paid for it then how does the incentives of the curator and the da ever align yeah I mean those are those are great questions so I mean I think definitely we should try to solicit the opinion of token holders to De see what they believe the curators should do uh and then give the curators an opportunity to decide like okay is this something I'm comfortable doing or

is this something where I think maybe the legal liability might be too much and I should maybe uh step out of the monthy S um so I think uh you know and and then I think also yeah how the curators get paid will will will also be will kind of factor into this somewhat uh because like you know if the curators are there to make sure that the Dow earns a higher expected return by like being really careful that only really great proposals get in the white list then I feel like yeah like it would make sense for the Dow to pay to pay the curators um it depends on what the role is and you know whereas like perhaps if the role is just checking the identity perhaps it makes sense for the proposal uh person who makes the proposal to pay the debt pay the curator right because

it's like on a proposal basis as opposed to you know service for the Dow so it's it's how the question gets resolved about what the role is is going to feed into how the curators get paid um and I think it's it's kind of an unfortunate thing that's happened uh because of uh I mean I'm not exactly clear to me why I think that some people might have just like opened up the curator page and like uh just kind of trusted that the curators have their back because it say it's like on the top like the curators will safeguard the doubt I think some people who you know read the the white paper and are really involved in the community really think the curator should be doing almost nothing but also there's people who are in the community who like believe that the curators are

this stop Gap measure that like you know where it's just like the humans in the code in case that something bad goes wrong so let me chime in a little bit um the sort of the underlying one of the big underlying issues with the curators is uh that that they be in a position uh to have as legal as as as small a legal liability as possible so to that effect uh they are not this is I think in everything that slockett has produced it's fairly clear that the the curators are not in a position to uh should not be in a position to exercise business judgment they're not supposed to say this is a stupid idea um that is supposed to be left up to the crowds and uh so that makes sense and um so that's fine um but then slockett when they

realized that there were certain attacks possible they realized the majority attack was possible and and we kind of glossed over this and we should kind of mention this in the original Dow paper the way the curator abstraction comes about is or it gets introduced is uh they first talk about the following attack if there is somebody who owns 53% or more of the Dow then they can come up with a proposal that says I hereby award 100% of all the Dow FS to myself uh the 53% holder and then they vote with their majority then they take all the cash and then they go away and so that leaves behind 47% of the holders in a in a pretty terrible situation and slet realized this and then they introduced

the concept of a curator so um at a high level they did the right thing in some sense because there is going to be no mechanism that can foresee no automated mechanism that can foresee every eventuality um it would be a Folly to design a system with no human input at all so so I agree with with their sort of gut sentiment but they failed miserably I think in realizing how the majority attack could be waged if I'm a 53 percenter I would not go out and and come up with a single proposal for 100% if I did then their defense works just fine the way they envisioned it but I could just as easily come up with two proposals one for 50% the other for

another 50% and now I fly on the radar and if you think well that's also kind of obvious well fine what about I I divide it down to 10 10% proposals and uh then vote with 53% of the vote for each of them and you know if anybody I make them sound semi semi intelligent and semi make you can make a deal with a company that's already somewhat looks legit uh so that you don't need to you know you can have on a front that passes a smell test right so the curators at the moment are tasked with the impossible and this is one of the the attacks that we outline uh in our paper that uh just by plaintively looking at the proposals they cannot tell what's a majority attack what's not and so if I

may go Meta Meta for a second I think this also underlies a fundamental problem with the way slockett has been approaching these problems these issues so I I'm a professor right I teach people and uh one thing that I see time and time again when I talk to students and I try to teach them synchronization there a different difficult topic requires sort of writing correct code that can be invoked at any time kind of like writing smart contract code so uh you identify a problem to a student and if the student is a green student they just arrived they don't know anything you know or you know they're just a sophomore or whatever and you say look terrible event X can happen and then they immediately go into this mindset we're like oh X happens here I'm going

to make X not happen um and how does X happen well X happens because a happens then B happens then C happens I'm going to put a check in between B and C and they think this is a good way to to sort of handle a fundamental problem and I have to teach them it takes about a year of real hard work to get people out of this mindset out of this caseby casee thinking because then what you have are these you know they go into this voice it's like you know it's always a thin voice like this they start talking like this well that can't happen because then a would have to happen then B would have to happen but I put a check there so it can't get to see and therefore X cannot have this is crazy this is not how you design secure robust

systems secure robot systems stem from some Global invariant you just say X is not going to happen and I have safeguards for it everywhere pervasively not one of these like Case by Case by case things so the curator abstraction if you ask me came about because of this case-by case thinking uh some of the case by casee thinking some of the instincts the gut instincts of the developers are right you know when your your uh checks of that you have programmatically introduced are going to fail and they will fail then you need the human touch at some point you need to bring that in in some fashion or another um but the way it was done here is is strange if you're asking so so your point is that we need something

like a curator but their role would be different or should be different and do you have a a view on on what that should look like or where that h human intervention should be in the system all I can say is it needs to be defined and Vlad is working really hard to to sort of try to define the roles of the the role of the curators at the moment um I don't want to do thinking or re and research on the Fly here uh but I can certainly come up with different techniques if if if we sat down to to do this um but at the moment the curators I believe are Flying Blind and uh and they're in a tough situation when they're faced with a difficult decision what do I do is it my job to to comment

on this or do I ask the crowd which one is more in line with the Dow thinking which one is more in line with legal responsibilities uh even though most of us hate to mention that there are legal responsibilities that fall on the shoulders of the curators how do we do this it's not clear at all so we need a spec for the function of a curator a specification yeah and the the the interesting thing is that like you know um different different token holders have different opinions about you know you know what that should be and like you know ideally like everyone would be on board on exactly what it is right the token holders and the curators and you know socket um and I think that um you know one thing that we should maybe spend a moment thinking about is like

what is the power of the curator like what at most could the curator do right so like at very most the curator has complete control over the white list you know the order which things get wh list the duration for which things get wi listed when things get unwi listed they have like a relatively uh clear ability to control the order and frequency of proposals now I'm pretty sure that everyone agrees that like this isn't what the curators should be doing uh especially because like the order and frequency of proposals if the Dow wants to spend his money at a certain rate will determine exactly how the Dow spends money uh and you know I think everyone agrees that that's not the role of the curator uh at the moment like the curators are not at

all determining or aren't prepared to determine like haven't even begun to organize to determine the order of proposals to the down and I don't think that's something that ever we want to see but it's important to realize that the curators have a tremendous amount of power and so the scope that we have in defining the role of the curator is very large uh and I think that you know we need to be careful uh that like you know we don't have the role be so broad that the curators can do anything and be responsible for anything um but also we don't want to be so narrow that the curators can't uh prevent you know these kind of outcomes that we haven't been ENC counted for so like like this this ties into the

next section that we want to go is like path forward right like so we have all of these kind kind of complicated questions that are that that are coming up right like how how does the role of a curator get defined and the other the other big question is um like what do you think happens if the moratorium succeeds like like you are calling for a moratorium on any proposals to the DA at all now U what would you do once it succeeds and what do you think uh what kind of uh Avenue of uh opportunities does the moratorium open and on the other side if it doesn't succeed what kind of things does that open so um you know I think that like

today we do de facto have a moratorium because like uh curators haven't started white Lessing yet although they enough of them haven't like agreed publicly that they will support the moratorium for it to be you know appr provably a thing that has happened um but I think that like the kind of Ideal case would be that like we in the you know as soon as possible come out with uh fix for some of these security problems that gets like the 53% threshold vote to upgrade the whole contract uh and like if that happens before any proposals to spend money I think that would be like an amazing outcome um that is like one possible thing and but that would require a consensus widely between token holders and you

know uh people who understand the dowo about like what the appropriate short-term solution is um and uh so like that's that's one potential kind of outcome um the you know but you're right like cators could decide that like they don't they don't want to hold a moratorium anymore and they can start whitelisting proposals and then basically the uh if they do that and there's still a yes bias then like it might be that they're determining by choosing the order of the proposals how the Dow was spending money um but uh you know so it's it's hard to say what what are all the possible things that could happen it's much easier to say what like we should aim

for which is that like we quickly form a strong consensus about what to do and execute it and have the you know a 53% quarm in the contract vote for an up um so in my opinion the road ahead is uh little complicated um it's not going to be an easy fix so we can we can patch certain things in the short term uh there are some immediate mostly non-controversial things we can do uh to make the Dow provide more reassurance to people that they can get their funds out when they need to um but in general the problem of building a good robust system that can ask the crowd and get healthy responses back is is far from a done

deal it's it's it's a complicated topic and uh it might well be beyond the reach of you know many small teams um so so there is a there is a lot of work to do ahead and uh um I was going to mention even the even the fact so for example um even on a good day you can have Strange Behaviors in a system like the Dow what's a strange Behavior well strategic behaviors people not voting what they think this can arise from the fact that there will be multiple concurrent proposals and people might have preferences like I want I want these two pro proposals to get funded only if they both get funded together and so that might cause people to vote in strategic

fashion even when there is no malicious actors even when everybody wants the best for the system um given their evaluations given their subjective Viewpoint they might be driven to vote no on proposals that will bring money to the DA so uh trying to curtail such activities is actually really really difficult the designing that kind of a mechanism is non-trivial and uh I think we'll live and see if uh if the slocked folks can pull it off or if some other team can come up and propose an alternative suggestion so just just to be clear I mean good and I are think are in complete agreement the the kind of narrative that I just gave has just to do with the short-term fixes rather than the long-term kind of let's make make

the voting system like you know our stateof the art voting system so what are your views on on how long that's going to take to to get to a system that's really robust and that goes maybe fixes some of these the yes bias and some of these other more fundamental problem is that a matter of a six months a year or is is that a much bigger project um I I think you need to be a little more specific about what fixes you want right so I mean we could I think we could have a withdraw function very soon uh I think yes bias will take you know so withdraw function on order of weeks yes bias on the order of a small handful of month uh but like some of the other things are I mean even

the yes buy thing and if under certain conditions is uh a quite tricky research problem uh so you know anything more than anything more than just the withdrawal I think is it's kind of unknown how long it'll take to fix entirely agreed with blad here those are the right Tim taes I don't think it's going to take more than a year um and uh but as vad mentioned there are some quick fixes possible which we should apply very very fast and uh and there's some medium term on the order of months kinds of issues uh that need to be addressed all right well uh thanks so much guys for guys for joining us that's that's really exciting and I think it's exciting to have this this new project where so much activi is going on so much

research and and another way of actually looking at what's going on with the doo is this is kind of the first real uh large scale attempt to decentralize governance no which is is a topic that we've often asked about in the context of Bitcoin and unfortunately it's it's hard to do in that context uh but this is is hopefully going to build a lot of the tools that will power all kinds of decentralized systems in the future absolutely this is a fantastic experiment so let's not lose sight of the bigger picture here um no such thing has ever been attempted uh we have never seen anything of this kind of this magnitude before uh we've never seen any Financial instrument with

these this these particular properties before it's decentralized it has a life of its own when we wrote the paper we were working against a deadline imposed on us not by any person but by a computer program we had to finish that paper and get it out the door um it was by the way it was one of the the worst papers I have ever written in terms of you know like the the amount of well in terms of presentation and so forth right it it for it to be an academic publication it needs much more but we had to go and publish it because the deadline was being imposed by this weird entity called the da you couldn't negotiate with it you couldn't push it back so uh so it's really odd these things have now entered our legal system

uh it's going to be a lot of fun for a bunch of lawyers to figure out how to how to integrate these with with what we the institutions we currently have um there's this question of you know if if corporations are people then what is the Dow right um there are a bunch of other exciting things coming up so this is going to be an A Fantastic Field for a whole lot of people but for technologists especially um this is a a fantastic new opportunity so let's not forget that in the you know while we talk about attacks and so forth the attacks are important they're significant um but but we kind of understand the process by which we address we can address them uh and we at least some of us are making efforts to try to move in that direction and

overall the big picture is this is fantastic it's just just so amazingly new Fe amazing uh features are embodied here that uh the the opportunities are really really exciting yeah I mean I completely agree I think it's I think it's super exciting and super fun and super interesting and you know I think that like a lot of people are having a really fun time kind of about like how cypherpunk this is I mean this is like you know uh super exciting by all like standards in terms of like you know people who are into like decentralization and uh kind of peer-to-peer crypto systems for managing like real stuff cool excellent well thanks so much for coming on guys this was great having you on again and I'm

sure I'm sure that will not have been the last time thanks Brian thank you Brian thank you mayor thanks mayor it's been really nice yeah so uh epicenter Bitcoin is part of the LTB Network you can find this show and and many other shows on Leto bitcoin.com you put out new episodes every Monday you can get those through your favorite podcast app or watch the videos on youtube.com/ Bitcoin and we are still running this uh t-shirt contest so if you leave us iTunes review just email show at EP bitcoin.com and we will send you a t-shirt so thanks so much and we look forward to being back next week [Music]

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