Developer Finds Loophole On MakerDAO For Stealing ETH From System

Developer finds a new loophole on the MakerDAO that he argued, could even empty all of the ETH from the system. In Ethereum today’s news we find out more about it.

There is about $300 million worth of crypto right now so having this loophole could potentially pose a threat to ETH’s price. By emptying it, the price could be cut in half or even by two-thirds. Micah Zoltu, the independent developer finds issues with platforms such as this one, and now he found one in MakerDAO. Zoltu is an independent software developer and one of the co-authors of the original white paper for the AUGUR prediction market.

Zoltu published a blog post on Monday describing an attack on MakerDAO that could empty all of the eTH from the system since the users lock ETH into the maker protocol just to generate the loans of the dollar-pegged DAI stablecoin. The problem lies in the governance of Maker:

 “Some group of plutocrats can control how the system behaves.”

The attack would only be feasible for a few MRK whales and they will want to act quickly. Zoltu said that about 40,000 MKR would be enough if the attack has some sophistication. As of this writing, 48,400 MKR based on the staking approach in the voting system could do it right now. Somewhere between $20 million and $25 million in crypto would have to be deployed to do it. This is of course if we assume that a person can accumulate MRK in a way that didn’t drive up the price. Zoltu stated:

 “It is worth noting that Maker Foundation could attack the system in this way right now if they wanted,” Zoltu writes. “What is worse, [venture capital firm] a16z has enough MKR on hand right now to execute the attack the patient way!”

Aside from the inside job by someone that is invested to see Ethereum decentralized finance applications (DEFI) survive which is enough for MRK to carry out the attack could be a strong risk:

“I feel like it’d at least double the price. You could probably get a lot of whales to sell to you OTC [over-the-counter] if you were paying double market.”