EOS Security Vulnerabilities Exposed with 2.09 Million Token Hack

By: Patrick Conlin

     Last week EOS security vulnerabilities were exposed as a blacklisted account compromised 2.09 million tokens or an estimated 7.26 million USD at time of sale(Jessica Klein breakermag.com 2/27/19). EOS nodes failed to validate an account designated as a bad actor within there network of 21 block producers resulting in the hack. The assailant then transferred the stolen funds into a Huobi account, whose security team identified the missing tokens and froze the assets(Sheikh 2/27/19 Cryptopotato.com). This recent hack, combined with Dapp breaches in 2018(Berman cointelegraph 12/10/18) total losses in the millions. Let’s all hope this doesn’t develop as a pattern. Part of the flaw may rely in its structure. There are only 21 nodes that verify transactions. If any one of them were to fail to configure the blacklist it would make the entire network vulnerable to bad accounts(Klein 2/27/19). Despite this news EOS is holding strong < 3.50 USD trading more than 1.2 billion in the previous 24 hours, with a market cap of 3.2 billion USD.  

     The recent run rewarded EOS with a substantial increase in value, climbing more than a dollar in the month of February(cmc.com).  EOS has also doubled its daily volume this month from <600 million on 2/1/19 to 1.2 billion on 2/28/19. The news of the recent breach isn’t shaking investor confidence. But the project is still failing to meet its goals. The company secured 4 billion in funding from a year long ICO. The energy concerning crypto is centralized by the execution of smart contracts. It remains the most immediate practical use case, and EOS is hedging its execution rates in its limits of delegated nodes to process transactions faster. They’ve been located in the top 10 on CMC for a while now. However, it remains to be seen whether EOS nodes will be able to support the demand when markets eventually recover. A limited amount of block producers whom haven’t been financially incentivized to run full nodes have exposed network security. Either way, the recent security breach has not deterred it’s recent pump in a market climate that has, for some months, been stagnant.  

     

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