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Comment by rvz | Hacker News Reader

Another day another DeFi project rekt. What happened:

   > The front end to the BadgerDAO website was reportedly acccessed, according to comments in the project's Discord channel, and used to intercept transactions. One admin said it appears that an API key for Cloudflare was compromised.

   > One user had around 900 bitcoin ($50.8 million) worth of tokens stolen in a single transaction. Another lost $5 million worth of tokens in one go.

Once that BTC is gone, it is gone. DAOs seem to have a lot of trust issues beyond a simple front-end attack and not even you should trust that they can keep their own websites secure. Where are the regulations, audits and security checks for this thing?

Oh dear.

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> Where are the regulations, audits and security checks for this thing?

Missing by design. It is telling that a currency dubbed "USD tether" which (let's pretend) is backed by USD 1:1 magically excuses you from all regulations you need to abide by if you process actual USD.

900 bitcoin. Just sitting there in some fragile little exchange, or whatever this DAO is. If these people are so rich, why aren't they so smart?

Probably a 'business' account

It is possible that you make more money by taking this risks, 300% yearly yield in crypto is not unheard of.

So it could be just cost of doing business.

In general it takes years of education and years of real world experience to understand that almost 100% of code is going to have a bug or unintended functionality at some point.

The alternative is to learn this lesson the hard way, like these people have.

Regulations in DeFi would do nothing but turning it into traditional, permissioned finance but on blockchain. Nobody wants that.

Nobody wants to lose all their money because the frontend got hacked, and yet here we are.

Nobody forces you to put your money in DeFi protocols.

That's a non-argument. Nobody forces me to buy baby milk. Yet it makes perfect sense for the FDA to regulate what is allowed to be in baby milk.

Baby milk is a disingenuous analogy since it's not expected to be consumed by the buyer.

If consenting adults voluntarily went out of their way to get an unregulated product, without harming anyone but themselves, then why should they be stopped?

> Baby milk is a disingenuous analogy since it's not expected to be consumed by the buyer.

This is a disingenuous argument. FDA doesn't regulate only stuff that is not expected to be consumed by the buyer. GP could have said wine instead of baby milk.

And yet they chose baby milk, not wine. Why?

Because not everyone would agree that governments should necessarily regulate everything that you consume. Especially when it's advertised as "consume at your own risk".

> Especially when it's advertised as "consume at your own risk".

Yet alcohol is highly regulated, much more so than baby milk.

But does it make "perfect sense" to regulate it? No. Especially not when there is a large group of population who disagrees to those regulations.

There is always large opposition to regulations of any kind petty much by definition.

"There is always large opposition to restrictions of freedom".

That's a very poor rhetorical tactic since that sentiment could be applied to literally any law, since all laws restrict freedom.

Not every law is a restriction of freedom. My freedom ends where yours begins.

Sadly, some people are more than happy to force their worldview on others, "for their own sake".

What is an example of a law that does not restrict freedom?

A law that bans murder. There is no freedom to murder so it does not restrict any freedom.

Where there is no law against killing people, people are free to do that.

And when people who want to kill people and have been free to kill people get told they are no longer allowed to, they have also been unhappy about it.

No, there is no freedom to murder people no matter where you are. My freedom ends where yours begins.

The same is true for selling poisonous baby milk or wine.

If I want to sell a poisonous wine to an adult that understands the risks and still wants it, then it's none of your business.

So if you want to kill a mentally ill person with their consent, that's also none of our business?

Like was this guy [1] right in what he did and his punishment was unfair?

[1] https://en.wikipedia.org/wiki/Armin_Meiwes

Well that debate escalated very quickly.

You appear to be using the word “freedom” to refer to something other than the ability to act without constraint. The phrase “My freedom ends where yours begins” (and its many variations and false attributions to various famous figures) is one of moral considerations and generally used to argue for what the world ought to be, but it is not and never has been a fundamental — i.e. even when the law falls silent — truth of the reality we actually live in.

Murder means to unlawfully kill a person. Without laws against killing there is no such thing as murder.

So if the laws allow murdering people you would think that you have the freedom to murder people? Or that such laws are psychopathic and don't respect anyone's freedoms at all?

Laws "cannot allow murder"; murder is illegal by definition. For example, if two hypothetical killings take place under identical circumstances but under two different legal jurisdictions, the killing could be considered murder in one place but justified in another. This happens all the time, see Florida's stand your ground laws for instance.

I think that's the point. Regulations on finance are, in part, to avoid attacks, scams, misunderstandings... Blockchains only offer some security in a part of the transaction, but they do nothing for the "real world" part. If you want serious finance that people can rely on you'll end up looking like traditional, permissioned finance but on blockchain.

If you have regulations you'll realize that they're mostly sufficient to secure transactions as well, at which point the blockchain becomes unnecessary as well.

Not just secure them, but regulations and laws allow or require them to be overturned and reversed.

At which point the blockchain becomes a hiderance.

Not true! A lot of code written for financial applications, and a lot of the complexity in those systems, is there just to synchronize, reconcile and settle between the independent data silos maintained by the various entities involved in a transaction. Blockchains can do a lot to eliminate that complexity.

Also, there are interesting advantages to the transaction authorization model that blockchains have whereby a message is valid only if signed by the sender, enforced down to the data layer.

Traditional finance did settling just fine before. The only reason they are getting into blockchain now, is that it's a real alternative that people prefer to the banks.

Just because they did it just fine before, doesn't mean that there isn't a better way that will provide massive competitive advantages to companies that adopt them.

Big companies ran payroll 100 years ago without IBM machines, but IBM made it easier for big companies to run payroll, so companies that bought IBM machines were able to scale.

Company budgets were done just fine on big sheets of paper 50 years ago before PCs loaded with VisiCalc or Excel deployed to every desktop. What company that still did it the old way survived the 1980s?

Credit card transactions even 30 years ago were still often done with a physical mechanical impression at the point-of-sale. That worked just fine, didn't it? Yeah, there was some fraud, but the people who were given credit cards were few enough that it wasn't unmanageable. But online POS systems now mean that almost everyone today makes payments with debit or credit cards most of the time.

Is "things are working just fine" a reason to not innovate?

Or just put in what you can afford to loose. No hand holding from regulators needed.

"The future of finance" or "so unsafe you should only put play money in". Pick one.

DAOs are totally experimental and the future of finance is pluralistic, so reductionism is doing it a disservice.

Rockets: "The future of space travel" or "so unsafe you could die on launch". Pick one.

If you don't like DAOs or any experimental finance -- which I think is a totally sane thing to do -- then just don't use them. That's why traditional financial structures like banks exist.

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