Category Archives: smart contract

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Oyster Protocol Smashed Open and Sucked Dry

The Oyster Protocol has allegedly been compromised by its founder Bruno Block, who generated 3 million Oyster Pearls (PRL) without permission, crashing the PRL market cap from USD 20 million to less than USD 3 million in a day. Oyster Protocol is a hybrid between IOTA and Ethereum, and is used for data storage, but its reputation has been severely impacted by this event and trading volume has fallen to less than BTC 5 per day.

Block is actually a pseudonym and his real identity is unknown even to the Oyster Protocol team members. The founder apparently installed a transferDirector function in the Ethereum smart contract which generated the PRL cryptocurrency. Oyster Protocol was audited three times and this function was noticed but Block assured the team it was necessary to adjust PRL’s peg.

The transferDirector function ended up being used as a hack in this incident, with Block creating PRL 3 million and quickly transferring them to KuCoin, before selling them for other cryptocurrencies and withdrawing the proceeds. This incident occurred only days before KuCoin, the primary crypto exchange which PRL is listed on, was due to implement know your customer (KYC) procedures, which would have prevented this from occurring. In any case, KuCoin has frozen PRL trading until the code is fixed.

In total there are PRL 98.5 million in circulation, so the 3 million tokens created and dumped by Block should not have been the main reason for the market crash. It is believed that PRL’s damaged reputation is what caused most of the 80+% decline in price since now traders and investors know it can be created at will by an anonymous bad actor.

The CEO of Oyster Protocol, William Cordes, is planning on revising the smart contract to remove the transferDirector function exploit installed by Block. Cordes says a token swap is likely, asserting that all PRL is safe and will eventually be exchanged 1:1 for a new token called PEARL “or something to that effect”. Beyond this, Cordes is asking for the community’s help to track down Block.

 

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Australia Tests Blockchain ‘Smart Money’ for Disability Insurance

A federal research branch of the Australian government has partnered with a major national bank to conduct blockchain testings for disability insurance claims via a smart contract-backed token.

The Commonwealth Scientific and Industrial Research Organization (CSIRO) and the Commonwealth Bank of Australia (CommBank) announced details of the ”Making Money Smart” project Tuesday, saying they are currently testing the proof-of-concept.

Together, they will investigate the usability of blockchain in creating what they describe as “smart money”, using Australia‘s National Disability Insurance Scheme (NDIS) as an initial case study.

Through binding smart contracts encoded into tokens, the project is attempting to solve the issue of NDIS funds being spent outside of the scheme’s preconditions, such as on banned items, outside of the restricted time frame, and by the wrong people. These ”highly personalized payment conditions” were the reason it was chosen for the first proof of concept, to ensure that blockchain technology could meet all of the necessary requirements.

So far, a prototype app has been developed for participants in the NDIS scheme, which aims to give users improved management over their plans by giving them a direct, paperless method for finding, booking, and paying for NDIS service. The proof of concept has received input from government officials and industry leaders, right now being tested by NDIS participants and carers.

Several external participants helping collaborate on the project are cited as the Digital Transformation Agency, the Department of Human Services, FinTech Australia and the Australian Digital Commerce Association.

Sophie Gilder, Head of Experimentation and Blockchain at the Innovation Lab, CBA said that due to the complexity of the project, she recognized a substantial amount of feedback from different organizations with a variety of expertise would be most beneficial. Gilder said, “We threw open the doors and the response has far exceeded our expectations,” a press release reports.

A further more detailed report on the Making Money Smart trial will be shared with the public in November, including information regarding the design, benefits, limitations, and viability for the token to be used in other cases.

 

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Manhattan Apartment Tokenized on Ethereum Blockchain

A USD 30 million apartment complex in the East Village of Manhattan, the center of New York City, has been tokenized on the Ethereum blockchain. This is the first major asset to be cryptographically tokenized on a blockchain in Manhattan’s history, and was made possible through a partnership between Propellr and Fluidity, two companies that facilitate compliant digital securities trading.

Smart contract technology on the Ethereum blockchain allows a non-fungible token to be created for any physical or digital asset. The difference between a non-fungible token and a fungible token is a fungible token like Bitcoin can be interchanged with other Bitcoins, while non-fungible tokens are each completely unique. Perhaps the most popular use of non-fungible tokens so far has been CryptoKitties, a game where people breed cats and trade them for Ether. The tokenization of this apartment complex in Manhattan proves the true potential of non-fungible tokens though. Instead of something simple and relatively cheap like digital cats, people can now buy and sell non-fungible tokens representing multi-million dollar apartments in New York City.

Now that the apartments in this Manhattan complex are tokenized, they can be bought and sold without the help of banks. The smart contracts and associated legal paperwork allow the owners of the tokens to trade the apartments however they wish. Further, the tokens representing the apartments are cryptographically secure, and can’t be hacked by even the most powerful supercomputer. These tokens can be sent anywhere in the world instantly. Thus, the tokenization of these New York City apartments allows them to be traded instantly in a completely secure manner and cuts out the fees associated with using banks.

Ryan Serhant, the real estate broker listed on this deal, said, “The market in New York is always strong, but it can take some time to sell for the right price in a new construction building. With blockchain tokenization, we can remove the unruly pressure of traditional bank financing, which is much healthier for the project and all of the stakeholders. Tokenization is paving the way for a new forefront in real estate development.”

The CEO of Fluidity, Todd Lippiatt, said, “Traditional securities structures and issuance frameworks haven’t evolved in a long time. With blockchain technology, a transparent and trustless ecosystem can start to solve the information asymmetry that hinders the market’s potential for liquidity. This asset, structure, sponsor, and sales team showcase this evolution. With proper discipline and respect, the future is bright for tokenized securities.”

Perhaps the tokenization of this Manhattan apartment complex is the first taste of a future where real estate deals worldwide are conducted instantly and securely using blockchains.

 

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10% of Bitcoin Miners Merge-Mine RSK Smart Contract Sidechain

Rootstock (RSK), the first Bitcoin smart contract sidechain, has announced that 10% of all Bitcoin miners are now securing the RSK blockchain. This makes RSK extremely secure since that is a tremendous amount of hashing power.

Smart contracts are a major advancement in the cryptocurrency and blockchain technology world. They allow users to enter into conditional agreements and lock up a certain amount of cryptocurrency until conditions are met. This provides the building blocks for the development of decentralized applications that are directly integrated with the blockchain.

Ethereum has consistently been the second most popular cryptocurrency behind Bitcoin and currently has a market cap of over USD 70 billion. The reason for its popularity is that it has smart contract technology integrated into its protocol, used by many blockchain-based applications.

It is not possible to directly add smart contracts to the Bitcoin blockchain without controversial protocol changes. RSK founders found a solution in creating a sidechain which supports smart contracts and is directly linked to the Bitcoin blockchain.

RSK has its own native cryptocurrency called Smart Bitcoins, but they are directly pegged to real Bitcoins. When a user deposits Bitcoin for an RSK smart contract it remains on the Bitcoin blockchain and is locked up for the duration of the contract, and an equivalent amount of Smart Bitcoins on the RSK sidechain are put into the smart contract. This is done so that RSK smart contracts truly are Bitcoin-based, rather than using their own independent cryptocurrency which would compete with Bitcoin.

Currently, the RSK sidechain can handle 100 transactions per second, with block confirmation times of 10 seconds, but it soon hopes to release a version of RSK called Lumino that has Lightning Network technology and can handle 20,000 transactions per second.

The RSK sidechain can be merged-mined with Bitcoin, meaning that machines mining Bitcoin don’t have to use any additional power or resources to participate in securing and maintaining the RSK network. Miners are rewarded with transaction fees from the RSK network, so it is logical and profitable that every single Bitcoin miner would merge-mine RSK to get extra money. Due to this, the developers of RSK expect much more hashing power to join its network in the long term.

RSK is fully operational and can be used to build decentralized apps that use Bitcoin and directly interact with the Bitcoin blockchain. This gives Bitcoin capabilities similar to Ethereum and will help make Bitcoin use more widespread.

 

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