bugs and regular everyday software is
one thing but bugs in the software that
is used to extend one of the world's
largest blockchains with a market cap in
the hundreds of billions that is a whole
other story Jay Freeman who goes by the
name sarik online who you might know
from his work on Cydia which was an
alternative app store that you used to
be able to use on jailbroken iOS devices
I actually personally used it on a
jailbroken iPod touch that I had many
years ago and it was pretty cool it
worked kind of like F Droid on Android
devices although it was a little bit
more difficult to install because I'm
pretty sure that jailbreaking was always
a requirement in order to install it but
from Cydia you were able to install
pirated apps and more importantly you
were able to install apps that weren't
even available in Apple's App Store from
any developers that didn't want to have
to go through the whole rigma role of
being able to release applications in
Apple's App Store
now these days he works on a project
called Orchid which is a kind of
decentralized VPN that allows you to pay
per the bandwidth that you use rather
than doing a yearly or two or three year
subscription model that you see with
most other VPN companies now the
decentralized part of orcid it comes
from a few factors one that they use
cryptocurrency for their payments but
also the fact that these VPN servers
that you would connect to they're not
all operated by the same company they
are run by individual people so I guess
it's a little bit more similar to tour
nodes and then to incentivize people to
run those VPN nodes they have this
cryptocurrency called oxt that you have
to stake in order for you to become an
orcid node and then of course the more
that you stake the more likely that you
will end up getting a block reward and
then making more money that way and then
for the individuals that want to use
this service in order for them to
actually pay those small amounts for the
small amount of bandwidth because the
idea behind orcid is for it to be pay as
you go this team also created a nano
payment system which is kind of like a
layer 2 scaling solution for crypto
payments
now if you've ever dealt with buying
pretty much any kind of cryptocurrency
before especially if you try to buy a
very small amount of the cryptocurrency
you were probably shocked at the
transaction fees that you had to pay
you see the transaction fees on various
blockchains they work pretty differently
than the transaction fees that you'll
see with payment systems like Visa
PayPal or Mastercard because instead of
them just charging you a flat percentage
of the transactions like those different
Fiat systems do the fees for crypto are
based off of the amount of traffic that
the network is experiencing at that time
and this fee ends up being about the
same for everybody regardless of how
much crypto they're actually trying to
send or purchase so this is really great
if you're somebody who is crypto rich or
if you're just somebody who's doing a
very large transaction at a time like if
the ethereum network is very busy you
might end up paying something like 50 or
more for gas fees and gases the
transaction fee in this case
now that's not too bad if you're sending
100 F right the fee for that transaction
would actually be way lower than it
would be for visa and MasterCard I mean
100 death you're sending like three or
four hundred thousand dollars that's
less than one percent or I think Visa
Mastercard might charge around two or
three uh or more but if you're just
sending a hundred dollars in ethereum
obviously spending fifty dollars to send
a hundred that really sucks and that's
not something that almost anyone is
going to want to do you'll you could
easily end up losing money quickly doing
that uh now another one of these Layer
Two scaling solutions is called optimism
or optimistic ethereum
so as the name implies this is a scaling
solution for ethereum called a roll-up
now I won't go too into the details
about how these Roll-Ups work optimistic
ethereum is not the only one of these by
the way
but in order to avoid having to interact
with the ethereum blockchain and thus
take on these high gas fees as well as
transactions taking a long time to
actually complete
these scaling Solutions like optimism
what they do is they'll mint basically
ethereum ious called wrapped ethereum
and you can still trade this rapt
ethereum it's equivalent to ethereum
like if you have one wrap death then
it's equal to one real ethereum but it's
not actually ethereum
I guess it kind of works a lot like how
Banks do so say for example you want to
open a bank account with a hundred
thousand dollars and you go and give
them 100K in cash
and they're going to give you an account
that says that you have 100K in it there
you'll have that little number on the
screen but the bank doesn't actually
have your hundred thousand dollars okay
your 100K is gone uh Banks don't
actually keep your money in a vault they
loan it out with interest that's how the
banks actually make money but one
difference with these scaling solutions
to the bank is that they usually have
some kind of a smart contract that is
holding the ethereum
now this solution for scaling crypto it
isn't perfect just like how Banks can be
robbed the contracts and the protocols
that create these Bridges between
blockchains between the wrapped ethereum
blockchain the real one they can be
hacked and this is usually where some of
the biggest crypto Heist come from
somebody is able to trick the smart
contract that is holding the funds to
redeem the ious which is basically the
wrapped ethereum in this case into
sending the actual ethereum to the
hacker
there was actually a hack very recently
on a cross Chain Bridge called Wormhole
that connects the ethereum blockchain to
Solano where the hacker was able to
steal a hundred and twenty thousand F
worth over 300 million dollars and The
Operators of Wormhole they had to
replace that stolenath so that the
wrapped ethereum on their Network would
still have that one-to-one backing
now even though a hack like this is
really bad it is not the worst thing
that can happen by any means like let's
say for example if a bank gets robbed
that's not going to be the end of the
world for the bank as long as they can
get the money replaced before everyone
tries to start withdrawing their funds
it's fine same case here with Wormhole
as long as they were able to get that F
back in to get the one-to-one backing uh
restored before everyone goes and starts
withdrawing their funds then it's fine
a much bigger problem would be if you
were able to steal the record of
accounts from a bank and then the if the
bank had no backup of this that would be
a huge disaster because without the
record of accounts the bank doesn't know
how much money is in your account who
owes them money who is behind on their
mortgage hell they don't even know who
has an account with the bank in the
first place so if you mess up their
record of accounts in some way then
that's it for the bank money can be
replaced but those records can't be now
the bug that Jay found in optimism's
network it was actually a bug in the
virtual machine that executes these
smart contracts that are supposed to
make sure the wrapped F or ious remain
equivalent to the amount of ethereum
that they keep locked so the full
explanation of it is here in his blog
called attacking and ethereum L2 with
unbridled optimism which I'll leave a
link in the video description if you're
interested in reading the full details
of it because it goes into a lot more
detail than I will in this video
but basically this bug that he
discovered in optimism would have
allowed anyone who was able to exploit
it to create an unlimited amount of the
wrapped ethereum without having to First
deposit real ethereum now this bug was a
lot more Sinister than the bug that
would let somebody steal all of the
locked ethereum because it actually is
letting you mint tokens and then slowly
drain the locked reserves with what
would look like legitimate transactions
instead of just taking it all without
trading eth for an IOU and of course
that would quickly get recognized and
then you could get the effect the um
Authorities on you and even if you try
to transfer that ethereum to another
wallet that wallet could get blackballed
and so it's pretty hard to get rid of
this would actually let you get money
out in a way that would be pretty
difficult to track
and because the bug effectively gives
you infinite Capital it can also let you
go to other decentralized exchanges that
are running on the optimism L2 and then
you can start mess up messing up their
economies by buying up all of the real
tokens with your fake ones and again
it'd be very difficult to differentiate
the real tokens that are being used in
legitimate transactions from the fake
ones
now luckily Jay disclosed this bug to
optimism responsibly they were able to
fix it and as far as we know nobody has
actually used the bug maliciously even
though it was present in the network for
something like 40 days Jay was also
awarded a bug Bounty of two million
dollars for responsibly disclosing the
bug which honestly I think is a little
bit small considering the gravity of the
situation now it's not a hack on
ethereum itself I've seen a lot of
Articles like this one for example that
uh are giving a kind of misleading title
right it doesn't allow you to print
unlimited ether it's only letting you
print unlimited wrapped ether The Ether
that is specifically running on the
optimism Network
and you know the optimism Network well
it is still small and it doesn't have a
whole lot of f on it so draining all of
the F that's locked up in optimism's
network is kind of a small fraction of
the entire ethereum blockchain
but optimism is still a growing Network
and we're probably going to see
different l2s like optimism continue to
grow since they are basically offering a
scaling solution for ethereum in lieu of
ethereum 2.0 which keeps on getting
delayed so the severity of this bug as
far as how damaging it would be to other
blockchains it would have grown along
with the optimism Network so I'm very
glad to have seen it patch before things
got catastrophic
but that's it for this video guys like
and comment to hack the algorithm and
have a great rest of your day