This Startup Lost $160 Million But Still Wants to Shake Up Ethereum

When life gives you lemons up to $ 160 million, it's not so easy to make lemonade.

But that's precisely what Pareity Technologies, Ethereum is trying to do after a difficult 2017 year, a year when it suffered one of the biggest violations of blockchain history . Far from a sinister hack, however, he had to face that his fortunes actually changed when a novice developer "accidentally" deleted a file, "freezing" the funds so no one could access it .

Worse yet, attempts to recover money do not look really promising .

By entering 2018, this could have an impact beyond just one startup. Far from a classic business, Parity provides support to one of the two most widely used clients on Ethereum, providing software about a quarter network .

And like other blockchain conglomerates (think of ConsenSys, the ever-expanding Brooklyn start-up), Parity has diverse interests. The Web3 Foundation, a non-profit organization that oversees the development of the Polkadot blockchain, was also affected by the incident. It is also headed by Gavin Wood, former CTO and Parity Technical Director.

The much-advertised blockchain for blockchains yielded about $ 150 million in an ICO last year, and as reported by CoinDesk funds lost in the parity freeze included profits from the OIC.

As such, Ashley Tyson, a spokesperson for the Web3 Foundation, acknowledged that the loss of her operations had been felt. Plans to deploy bonuses to address weaknesses in the code and to provide programs to boost development have been scrapped, she said.

Tyson tells CoinDesk:

"With the majority of our funds frozen, we are not sure of our ability to contribute financially to these initiatives, but we will certainly have to reduce them massively."

Yet affected businesses are rebuilding and continuing to develop their software, with some big projects taking place almost as if nothing had happened.

Technical progress

Up to now, the best example of Parity's ability to bounce is the release this week of its node software which improves the speed of its ethereum client while adding a range of bets up to date.

A larger and longer-term project, however, is their so-called "bridge" ethereum. Based on a secular blockchain idea, the technology was under development for some time, Wood having announced at CoinDesk in November that the project was 70% or 80% complete.

For now, the prototype can be used to connect the ethereum network with Kovan testnet, which means that users can send their funds to a special intelligent etheric contract and locks these funds for an experimental version of the ethereum

Unlike the main blockchain, Kovan reaches consensus through a mechanism called "proof-of-authority." Although it is not so decentralized, it is still designed to make sure that no one is doing transactions that they should not do, replacing the ethereum miners with a set of different items. approved authorities.

It's a first step. And if and when the project is finished, users will be able to send their money this way seamlessly to any ethereum network.

Eventually, this will be used to connect ethereum to Polkadot, an idea described in the " Polkadot White Paper " to link several blockchains together with the help of incentives and the game theory.

This is a pretty important step in itself, however, since the company is the first etheric "bridge" to connect two networks with different underlying algorithms.

To put the project in context, they are trying to get a similar functionality to the sidechains, a long-promised bitcoin technology that has been stuck for years because of security issues.

Despite the frozen funds, development updates show that the bridge is still in progress, developers having published a number of security enhancements a few weeks ago. One of the next big steps for the bridge is to move funds in a decentralized way.

"We all receive our ducks in a row, and it will soon be time to strafe them," said Wood

.

Put in perspective

And for Wood, the hack is less a debilitating waste and more of a growing pain dear.

In an interview, Wood and Parity Technologies' developer, Robert Habermeier, spoke in a way that hinted at the nascent embryonic state, Wood noting only "kinds of" works like that was considered today.

With this in mind, Wood is always confident. Parity can make progress on technologies that will strengthen the blockchain that it has helped to find. (Wood was the author of the Ethereum "yellow paper" and is responsible for most of his high mathematics concept).

"For Ethereum to continue its rather astounding success story, it will have to evolve," he said, noting that Polkadot, driven by the bridge prototype, can also help.

In this sense, the Web3 Foundation supports its projects to develop the rest of the world of decentralization, by joining a series of ethereum projects with the same goal of keeping the data between the users' hands.

He is organizing a workshop bringing together a number of emerging decentralized exchanges in Berlin, said Tyson at CoinDesk, and work plans with developers of encrypted peer-to-peer technologies that protect the data transmitted on them. blockchain networks.

Nevertheless, she pointed out that the Web3 Foundation will not be very clear on its budget for yet a few more months, and that it will not be able to contribute to the overall ecosystem of the world. Etheric as much as we hope.

And with technical ideas to recover the funds slaughtered by other ethereum developers up to now, there could still be obstacles ahead.

Tyson tells CoinDesk:

"We would obviously like to find a way to recover the funds, but the process for this is still not clear, we will take the time to share with the community its concerns, comments and suggestions. his suggestions. "

Lemons image bank via Shutterstock


Leader in blockchain news, CoinDesk is an independent media company that strives to achieve the highest journalistic standards and adheres to a very strict set of editorial policies . Do you want to offer your expertise or ideas for our reporting? Contact us at news@coindesk.com .

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