Popular software wallets Parity for handling of Ethereum cryptocurrency stopped working on 6 November. Smart contract containing library that defined functioning of the wallets was accidentally killed and wallets‘ owners therefore lost ability to send their ETH tokens. More than 500.000 ETH, or 150 million USD, is now frozen on the defunct Parity wallets.
Affected are all multi-signature Parity wallets created after 20 July 2017, when contract on Ethereum blockchain containing the library was updated in answer to previously discovered security bug through which tokens of more than 30 million USD value were stolen. But the updated contract also wasn’t flawless, as it allowed user known as devops199 to take full control of the contract and subsequently to kill it, all in the name of innocent research of smart contract functionalities. All wallets dependent on existence of the library thus became defunct. Some estimates speak of as much as 1 million of hereby locked ETH tokens.
Due to the gravity of the situation, speculations about unplanned hard-fork of the Ethereum blockchain already emerged. This solution was already applied once in a not so different situation in summer 2016 (the fiasco called DAO) and it lead to the establishment of today’s Ethereum blockchain and renaming of the original, legacy chain to Ethereum Classic.
Hard-fork solution means that the Ethereum blockchain would be ‚chopped‘ near the top and continue on from the block where all wallets were still usable, with a minor change embbed into Parity’s library contract so as to prevent the take over from being repeated. But the bug was only in Parity’s code and not in Ethereum’s code and so this hard-fork solution could likely be met with fierce community opposition and could eventually result in creation of yet another legacy chain alike Ethereum Classic.
No other solution was presented so far and if none will be devised in the near future, either are the users of multi-sig Parity wallets stuck with more than half a million ETH tokens unrecoverably frozen, or the Ethereum community is poised to split into two yet again.
Author: Vojtěch Bínek