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The math prodigy whose hack upended DeFi won’t return funds

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Re: The math prodigy whose hack upended DeFi won’t return funds

#141

Post by glerk »

woojoo666 wrote: post #131
glerk wrote: post #122

Earlier quoted context omitted.

They really don't have any leg to stand on. A smart contract is a piece of code running on a public permissionless blockchain. The developers who deployed that code do not own it. Medjedovic had as much the right to take money out of the smart contract using the contract's logic as Kellar and Day. Being blockchain developers, Kellar and Day know these facts very well, but they persist in their hypocrisy because it is…

By that token, wouldn't rugpulls be legal too?

Probably? A priori there is nothing wrong with someone who owns a large amount of a certain asset transferring it into a liquidity pool in exchange for a different asset.

It gets more murky if a founder explicitly lies to investors in order to get them to buy their token. Fraudulent misrepresentation is problematic in most jurisdictions, but this has nothing to do with the mechanics of the "rugpull" itself.

Re: The math prodigy whose hack upended DeFi won’t return funds

#142

Post by yobananaboy »

They were holding $17m in funds and only paid 2 unnamed security auditors?

Yes, getting a proper audit for a Defi Protocol is expensive (probably 8 person weeks at $20-30k/week or ~$200k), and every good audit firm has a 3-6 month waiting period. But when you’ve got 100x that to lose, it’s a drop in the bucket.

Re: The math prodigy whose hack upended DeFi won’t return funds

#143

Post by twox2 »

antisthenes wrote: post #124
knorker wrote: post #118

Earlier quoted context omitted.

Indeed it cannot be actualized, as it connects to the real world. This is why things like "land registry on the blockchain" will never happen. When a court decides that a sale of a house was unlawful, then the blockchain is wrong and irrelevant. Code isn't law. Law is system that ultimately sends people to your house and puts you in a locked house that you're not allowed to leave, and lets other people live in "your"…

Exactly. Law isn't law unless it's been enforced through courts, precedent and ultimately someone with authority to use force to force compliance.

In other words, "code is law" only if it complies within the existing framework of our laws. IMO, this still leaves a lot of room for creative applications of smart contracts.

Re: The math prodigy whose hack upended DeFi won’t return funds

#144

Post by tromp »

SamBam wrote: post #52
vmception wrote: post #13

> Medjedovic added that he'd taken on “substantial risk” in pursuing this strategy. If he'd failed he would have lost “a pretty large chunk of my portfolio.” (The 3 ETH he stood to lose in fees was worth about $11,000 at the time.) This is misleading, either intentionally or due to Medjedovic's incompetence. You can fork the current head of the mainnet blockchain to localhost and try infinite permutations for free to…

If anyone could perfectly predict what was going to happen in the next state then those with this ability would only ever make money and never lose it. Yet this can't happen. In the real world there are sniper bots and all sorts of other things that another agent could do in parallel with your own script, which would lead the outcome to be uncertain.

> would only ever make money and never lose it.

They'd at least risk losing the transaction fees...

Re: The math prodigy whose hack upended DeFi won’t return funds

#145

Post by turtledove »

randomhodler84 wrote: post #109
turtledove wrote: post #10

You love to see it. Love to see crypto taking Ls.

“Love to see your retirement 401k investments lose, eating away at your life’s labor and rendering it worthless.” This is a nasty position to take. You should never take joy at others losses.

Nope. Sorry. Those are not the same.

I'm cheering to see the grift coming apart. Yes, some people are losing. But the early the grift falls apart, the fewer future people get destroyed by it.

I'd rather cheer seeing crypto fail, then stand by and watch it suck in vulnerable person after vulnerable person in perpetuity.

Also, I absolutely do cheer the losses of bad people. If a scammer or ethnonationalist loses their hard earned winnings.... Good.

Re: The math prodigy whose hack upended DeFi won’t return funds

#146

Post by marcosdumay »

twox2 wrote: post #57
SamBam wrote: post #50

> But in our email exchanges, he argued that he'd executed a perfectly legal series of trades. In real finance, there is an understanding that technical loopholes can exist, since not every outcome can be foreseen when writing laws, but the legal system can frequently prosecute against a series of actions which are, individually, legal, but which together are taken in order to achieve something illegal. That is, mode…

"Code is law" is a dream that is not actualized. It's not actually law, it's just code. I'm pretty sure law enforcement will gladly prosecute for a lot of these "hacks".

If you widely publicize that "code is law", and get customers due to that promise, things are not that black on white.

Re: The math prodigy whose hack upended DeFi won’t return funds

#147

Post by vmception »

xur17 wrote: post #129
kristjansson wrote: post #84

Earlier quoted context omitted.

MEV is something different though? GPs (excellent) point is that anyone can play out the effects of their transaction locally ad infinitum, and chose to transact once they're convinced of its behavior. Of course, this can't account for the response of other actors, but the point stands that Medjedovic (should have) been taking far less risk than implied by that quote.

Medjedovic stood to lose all of the ETH he was paying in transaction fees (which could have easily been 3 ETH) if someone decided to frontrun his transaction. If that was most of his ETH, that does sound "significant" to me.

He used some kind of MEV shielding thing. But I'm not sure if it went directly to miners or did something else.

Re: The math prodigy whose hack upended DeFi won’t return funds

#148

Post by mathgenius »

motohagiography wrote: post #60

This isn't a hack, it was straight arbitrage. I distinguish them because there was at no time a transfer of administrative power or control over the contract or targets infrastructure to Medjedovic. In a smart contract, I'd make a legal distinction between syntactic parsing and calculation, which has to do with the purity of functions and data. An arbitrage would be fair game if it levered an unanticipated calculatio…

> This isn't a hack, it was straight arbitrage.

Yeah, but tradfi has this problem too: sometimes it's hard to tell the difference between straight up trading, and spoofing/otherwise manipulating the market. Maybe the moral of the story is this, that free markets are a myth, and crypto is just making this even more clear.

Re: The math prodigy whose hack upended DeFi won’t return funds

#149

Post by xur17 »

vmception wrote: post #147
xur17 wrote: post #129

Earlier quoted context omitted.

Medjedovic stood to lose all of the ETH he was paying in transaction fees (which could have easily been 3 ETH) if someone decided to frontrun his transaction. If that was most of his ETH, that does sound "significant" to me.

He used some kind of MEV shielding thing. But I'm not sure if it went directly to miners or did something else.

Yeah, typically MEV shielding == sending directly to a mining pool that promises that not frontrun it. It's not a guarantee though, the miner could decide to still frontrun, or a small reorg could occur, and another actor could replace the transaction.

Re: The math prodigy whose hack upended DeFi won’t return funds

#150

Post by antiterra »

faeriechangling wrote: post #24
iak8god wrote: post #18

Earlier quoted context omitted.

FTA: > In their complaint, lawyers for Kellar and Day argued that two particular steps of the attack violated statutes against market manipulation and computer hacking. One was swapping almost all the UNI tokens out of the DEFI5 pool, the otherwise irrational trade that distorted the pricing such that Medjedovic could buy tokens out from under Indexed users, who were forced by the algorithm to sell. “The only purpose…

If the law is held to have supremacy over “smart contracts” and implicit intent is held to be more important than explicit terms, than this undermines not just a major argument for smart contracts but a major argument as to why crypto as a whole is valuable. Enforcing a contract through a written contract & traditional finance vs a smart contract becomes a mere implementation detail since in either case somebody can…

Even then, a binding contract is still subject to what is contractually enforceable, which could break the functionality and purported benefit of a smart contract.
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