VETHER

DESCRIPTION OF EVENTS

Vether is a "strictly-scarce Ethereum based asset." "Vether is designed to be a store-of-value with properties of strict scarcity, unforgeable costliness, and a fixed emission schedule." It describes itself as "[a]n asset that stores value created by dreamers and builders. With limited supply and with technical properties that allow for even fairer distribution and transparent costs."

"There will only be 1,000,000 Veth ever." "No one can control it and there’s no blacklist. Every day a portion gets released to whoever burns Ether for it. This mechanism is called Proof-of-Value." "Every Veth in the world was paid for by Ethereum."

"Vether’s still in its infancy and its beauty is in its simplicity. At the same time, as with every major crypto (ETH, BTC, etc.), it has its share of growing pains."

"In the early days of Vether, a member of the Vether community (Blurr) discovered that Vether’s burn process had a potential exploit." "[W]ith this trick you get a discount on your ETH burned. You can burn gas for VETH and get some of the gas payment back for free."

"When burning a token without Uniswap value for VETH, the gas used is burned instead. In Ethereum, gas is a finicky thing and without going into too many details, Blurr discovered you can trick the Vether contract into crediting you with more burned ETH than you end up spending."

"While this does cost you something (can’t just spam for free), it also creates an unfair advantage for those who don’t know how to utilize this trick. This can lead to an unfair distribution of VETH."

"Strictly-Scarce (dev behind Vether), gave everyone the ability to use this gas method directly into the dapp. Burn some ETH as gas and get some of it back. This makes it fair since anyone can do it. This might throw off how much is actually burned and how much people value it in the marketplace (Uniswap), but there should be an equilibrium which forms."

However, this left "Vether at the mercy of changes in Ethereum gas characteristics which would affect its long term viability."

"Going forward, the plan was to release a new asset (Vether V2) that removed the ability to burn ERC-20 tokens. This would close the gas burning issue. In an effort to maintain fairness to previous owners, there was code written to allow for owners of Vether V1 to upgrade to Vether V2."

Vether was a stablecoin. This coin had a vulnerability which made the minting process confusing and unfair for different groups of users, which led to a protocol upgrade.

HOW COULD THIS HAVE BEEN PREVENTED?

There were no losses in this exploit.

Check Our Framework For Safe Secure Exchange Platforms

Vether Contract Upgrade (Jul 14)
What is Vether? - Vether (Aug 15)
Vether - A strictly-scarce Ethereum based asset. (Jul 13)
Ethereum Transactions Information | Etherscan (Aug 15)
Vether (VETH) Token Tracker | Etherscan (Aug 15)

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