Dao - The Hard Decision To Make, On How Much More To Lose Beside 60 Million Dollars.

The moment I saw the issue that THE DAO is being drained by an attacker, I immediately checked their homepage and saw that it is worth roughly 260 million dollars, due to the rates of Ethereum, DAO and Bitcoin as of that moment.

Today this is the content of the Ethereum address of the DAO, when I looked it up the Ethereum blockchain explorer:

Containing a rough dollar equivalent of 103 millions.

Therefore, what the attacker has done has a multifaceted effect.

• Loss of some Ethereum investments put into the DAO (approx. 60M $)

• Loss of momentum of DAO and Ethereum rise. ( from trading rate of 0.02775189 minutes before the knowledge of the attack, down to today's 0.01686441 about 40% downtrend which means a substantial loss for Eth holders even to those not involved with the DAO)

• Loss of reputation of the DAO project and the people behind it. (from trading rate of 0.00025357 minutes before the knowledge of the attack, down to today's 0.00010232 about 60% downtrend which means a substantial loss for DAO holders )

• Loss of reputation of Ethereum and the people behind it. (unquantifiable at the moment)

Therefore it is safe to say that as a result of the DAO attack, there is a loss of more than a 100 million dollars involved.

Now the people behind these two projects are stuck in a very difficult position on deciding HOW MUCH MORE THEY SHOULD LOSE.

Why?! Because whatever direction they take, whatever action they do-- will eventually result in more losses.

These are their options and their immediate effects:

OPTION 1:

Leave the state of Ethereum as it is. No fork whatsoever.

EFFECTS:
a. The attacker will eventually be able to take the 3.5Million Ethereum he transferred to a child-DAO and do with it whatever he wants, like distribute it in whatever manner he wants. To miners, giveaways, sell in the exchanges, or even send it to a burn address.

b. Ethereum will be further dilluted in the market pulling the exchange rate further down. (MORE LOSSES).

c. Ethereum will further lose confidence from users that will result in dumping in the market pulling down the exchange rate further. (MORE LOSSES)

d. The attack method will still be available, giving way to copycat attacks. (MORE LOSSES)

e. When letters a to d happen, Ethereum will lose whatever is left of the market's confidence. (MORE LOSSES)

OPTION 2:

Change Ethereum code; That will the change the behaviour of smart contracts eliminating this kind of attack and the possibility of the attacker withdrawing the Ethereum from the child-DAO(3.5M Eth)

EFFECTS:
a. People will lose confidence as to the decentralized nature of Ethereum, because if the code of Ethereum can be altered to change the behavior of the smart contract in order to deny somebody the access to the funds he got in his wallet. (In this case the wallet of the attacker is the reason). What will stop ANYONE else to do the same to deny ANY OTHE USER the access to the funds in his own wallet in the future??? Like government agencies may want in some point in time in the future?? (MORE LOSSES)

b. DAO will lose integrity as a smart contract platform (so will Ethereum and everything else based on it)- By showing to everyone that an APPROVED BY SMART CONTRACT TRANSACTION can be reversed or denied if some people with enough influence want to. (MORE LOSSES)

c. DAO investors have this supposed right to vote to any proposal that will affect the funds(Ethereums) within the DAO smart contract. Yet on this very critical issue that will definitely affect the FUNDS, there is no mention nor any proposal to handle the situation in the manner that the DAO IS SUPPOSED TO OPERATE, i.e. by investors consensus. (maybe they would start making one now??), Changing Ethereum is actually bypassing THIS BUILT-IN FUNCTION OF THE DAO. But if they choose to do it now, copycat attacks may happen while they are in the process of doing so and then the problem will be complicated in a head spinning manner (MORE LOSSES).

d. The revised ETHEREUM code will have the same posibilities of flaw, although everyone behind it may attest that the code has been checked thoroughly by the code security professionals on the field like how they did regarding the creation of the DAO. It means that a fork(changes) will have ZERO effect on the confidence upliftment regarding Ethereum or DAO at the moment. It will only give the impression that ETHEREUM and the so called smart contracts built on it are in fact ARBITRARY. (MORE LOSSES)

So there you have it folks. My heart goes out to the people who are caught in this crypto limbo. I can understand the difficulty and the pressure they are experiencing at the moment. Unfortunately they are in between two evils and it is unquantifiable at the moment which one is LESSSER. -east

D'OH!.