Barely a week after nefarious agents took control of the Ethereum Classic network, double spending $5.6 million worth of ETC, the 24th largest project by market cap is once again under attack. Earlier today (Aug 6, 2020), CoinDesk reported that 4,000 ETC blocks were “reorganized” in a classic 51 percent attack.
Ethereum Classic Advice: Raise Confirmation Times
Consequently, Binance—a major cryptocurrency exchange, and Bitfly—the parent company of Ethermine, immediately suspended all ETC related deposits, payouts, and withdrawals. Ethermine is a leading Ethash mining pool and concurrently mines ETH coin. The Ethereum chain remains secure largely because of its superior hash rate.
Ethereum Classic developers are now advising pools, ramps, and entities to significantly raise confirmation times of all deposits and incoming transactions. Raising confirmation times makes it harder for transactions to be double-spent.
“In light of recent network attacks, it’s recommended that all exchanges, mining pools, and other ETC service providers significantly raise confirmation times on all deposits and incoming transactions.”
$5.6 Million of Etc Stolen Last Week
It is yet to be determined how much damage the network has suffered.
However, given their control enabling the re-organization of 4,000 blocks, estimates place their thievery at over $93,000 from block rewards alone. For every successful block, a miner earns $23.44 at spot ETC rates. Therefore, if projections are based on last weekend’s theft, losses could be discouragingly higher.
A Bitquery report revealed that 807,000 ETC coins were stolen following a 51 percent attack on July 31 through to Aug 1. The $5.1 million loss was after 3,500 blocks were re-organized and transactions double-spent. Today’s attack saw 4,000 blocks re-organized making forecast gloomier.
51% Is a Hash Rate Game
A 51 percent is a game of hash rate and a crypto euphemism for on-chain theft. Hash rate is a measure of the network’s computing power.
Since Ethereum Classic is an open network secured by Proof-of-Work requiring miners to funnel their computing power for valuable ETH, the lower their participation rates, the more vulnerable the network becomes.
According to data from BitInfoCharts, Ethereum Classic’s hash rate has been declining despite a price revival.
After peaking on Jan 29 when the hash rate rose to 21.19 TH/s, its network continues to be susceptible to attacks. On Aug 5, its hash rate stood at 4.56 TH/s, a 78 percent plunge. During that time, ETC prices have more than halved after peaking at around $13 in mid-February 2020.
This becomes the third 51 percent attack on Ethereum Classic. In January 2019, Coinbase flagged what it termed as a “deep chain re-org.” Like what Binance is doing, it stopped all ETC-related transactions.