EOS Hack Underscores Crypto.IQ Warning About the Soon-to-be-Launched DApp Platform

In recent weeks, we’ve seen EOS endure its first hack on the eve of its launch and be plagued with problems since, including issues with the mainnet launch and talk of the community scrapping the EOS constitution. It’s a good reminder of something Crypto.IQ’s Charlie Shrem brought up a few weeks back about the upcoming battle between EOS and Ethereum.

The two will certainly be dueling for top choice for platform seeking DApp developers and competing for the largest share possible of the skyrocketing initial coin offerings market. ICOs — almost all of them built on Ethereum — have seen total funds raised reach $8 billion from $380 million one year ago.

But the pre-launch hack tells us that untested EOS may have little on battle tested Ethereum that has seen the $150 million DAO hack and another $300 million lost through a coding mistake and user error, among other hacks and attacks.

“Ethereum has been around for a while now and has gotten hit with thousands of attacks and vectors, people trying to break Ethereum all day,” Charlie said.

EOS hadn’t launched yet, but already hackers were looking for cracks. Ethereum still has the “platform coin” market wrapped up, but EOS and NEO, among others, threaten to eat up market share. NEO has been ramping up a lot lately, and the platform will see several dozen ICOs launch in the next few months. But EOS is not battle-tested the way NEO and Ethereum are.

EOS sources have said the project won’t go live until they’re sure of the fix.

A Chinese company found a vulnerability just days ahead of the EOS mainnet launch. We always look for who benefits from any action to get a better handle on where an action might originate, and in this case, it’s NEO, another platform — built by a Chinese company — that stands the most to gain in keeping EOS off balance. We’ll let you draw your own conclusions on that.

One of the important differences between the EOS and Ethereum networks lies in the approach to staving off centralization, which is a constant battle for almost all blockchains. Vitalik Buterin, who founded Ethereum, has resisted centralization by switching Ethereum’s consensus algorithm to one that is a hybrid Proof-of-Work/Proof-of-Stake. It allows anyone with a laptop to participate in consensus.

Alternatively, EOS is operating under Delegated Proof of Stake in which all stakeholders vote on 20 witnesses who then hold all the power. Elections are continuous, and any witness can be unseated though voting.

We find it unsettling that the EOS community is considering scrapping its constitution, when that is its bulwark against centralization.

We maintain that this new platform is untested.

Only time will tell, after EOS has been the subject of multiple attacks, whether it’s indeed an answer to some of the problems Ethereum faces.