Ethereum upgrade delayed again

The Ethereum network’s long awaited and already delayed Constantinople hard fork was due to arrive early Thursday morning (UTC), but has been pushed back once again following the discovery of a significant fault built into one of the core changes that came packaged with the upgrade.

The flaw would have let an attacker re-enter the same function on a smart contract an unlimited number of times without informing the relevant user, and withdraw funds forever. The loophole is similar to the one used in the 2016 DAO hack and may have had severe consequences for the future integrity of the network and Ethereum’s smart contract design.

Smart Contract Audit firm Chainsecurity informed a group of Ethereum core developers and Ethereum Security Committee members on a call that Ethereum Improvement Protocol (EIP) 1283 contained flaws that could be used to steal user funds. The call included Ethereum creator Vitalik Buterin and developers Hudson Jameson, Nick Johnson & Evan Van Ness.

EIP 1283 was designed to reduce the amount of ‘Gas’ (Ethereum equivalent to smart contract transaction fees) required for specific storage operations on the network.

The Ethereum leadership will meet again this Friday to decide on a new block height/date for Constantinople. In the meantime, GETH and Parity node operators have been given version recommendations to use until there is clarity surrounding the upgrade procedure. ETH holders do not need to do anything and tokens will remain functioning normally.

Community response to the delay was mixed, with many observers complimentary of the Ethereum leadership team’s swift action and immediate recall of the upgrade, despite what the decision may mean for the short term valuation of the ETH network.

Tweet thanking the smart contract audit firm’s work from Ethhub.io co-founder Anthony Sassano.

Commendations from Tezos co-founder Kathleen Breitman for the responsible action taken by the Ethereum dev team. The Tezos blockchain is considered one of Ethereum’s key competitors in the blockchain space.

Along with the compliments, however, there was disappointment from others, especially given that this is not the first time that Ethereum has had to delay Constantinople because of technical issues.

https://twitter.com/Solutions_Engi/status/1085274889840459777

Investors have also let their feelings on the delay be known, immediately dumping Ethereum following the news. The price of ETH fell nearly 5% during a 20 minute period of high volume selling activity while the total market cap for cryptographic asset markets fell ~1.5% in the same period. As a result price gains which began at the end of 2018 have almost been fully cancelled out.

The news broke around 8:30 pm GMT, which equates to 3:30 pm New York time and 4:30 am in Singapore. There may be a possibility that the short term effects of the hard fork delay may not be fully priced in with Asian traders arriving at their desks on Wednesday morning and potentially assessing whether to sell crypto holding based on this new bearish news event.

Price data from BNC’s Ethereum Liquid Index. Selling pressure arrives in a sharp wave on major exchanges Bitfinex, Coinbase, Kraken and Bitstamp.

The delay has added to short term uncertainty and negative sentiment permeating through the crypto ecosystem and increased selling pressure in the ongoing bear market. Another lingering issue is the looming threat of the Ethereum difficulty bomb which will continue to slow block times on the network. All that said, the decision to delay has likely minimized the potential damage of a smart contract flaw, that if allowed to go live may have led to the loss of millions of dollars worth of individual user funds.

More info on the future of Ethereum