A research paper from Dino Mark (Smartwallet founder), Vlad Zamfir (Ethereum Foundation), and Cornell professor Emin Gün Sirer outlines nine potential vulnerabilities in The DAO's voting system. The r
A research paper from Dino Mark (Smartwallet founder), Vlad Zamfir (Ethereum Foundation), and Cornell professor Emin Gün Sirer outlines nine potential vulnerabilities in The DAO's voting system. The researchers want The DAO to pause new proposals and strengthen its mechanics.
"We identify nine causes for concern that can lead DAO participants to engage in strategic rather than honest behaviors," the paper says. "Some of these behaviors can cause honest DAO investors to have their investments hijacked or committed to proposals against their interest and intent."
The DAO's voting mechanics create what researchers call Affirmative Bias and discourage negative votes. "YES votes will arrive throughout the voting period, while a strategic token holder will want to cast their NO vote only when they have some assurance that the outcome of the vote will be NO," the document claims.
The researchers elaborated: "Strategic NO voters will cast their votes only after gaining information on others' negative perception of the same proposal, so the voting process itself will not yield reliably signal information about the token holders' preferences over the course of the voting period. Preferences of the positive voters will be visible early on, but the negative sentiment will be suppressed during the voting process — this can result in an affirmative bias that can be a problem for a crowd-funding organization where YES results in funding projects."
This information gap distorts voting outcomes. Voters see mounting support but not opposition, so they believe approval is winning.
The Ambush Attack exploits this dynamic. A large investor deposits a massive YES vote as voting closes, pushing through a self-interested proposal that wouldn't have passed under normal circumstances. The Stalking Attack operates through withdrawal mechanics. When a token holder moves ether out of The DAO to their personal wallet, an attacker can block the transaction, trapping the funds indefinitely. The victim faces extortion and demands for ransom. The Token-Value Attack manufactures panic by creating false entities or spreading fear about DAO tokens. An attacker can combine this with the Stalking Attack, blocking someone's withdrawal and posting the trapped funds on social media as proof that the threat is real. The extraBalance Attack weaponizes accumulated value. An attacker frightens shareholders into exiting The DAO. When they leave, they forfeit all accumulated earnings. Remaining tokens become more valuable as a result, benefiting those who stay.
The Split Majority Takeover Attack exploits The DAO's inability to detect coordinated moves across multiple accounts working together in secret. The Concurrent Tie-Down Attack floods The DAO with a parallel proposal that runs on an accelerated timeline. Shareholders cannot mount a defense because their capital sits locked in competing proposals.
The researchers proposed two fixes. A grace period after votes pass but before funds move would allow token holders to exit if the vote damages the fund's value. "This would provide token holders with a period of time during which they can withdraw their investment in case they perceive the outcome of the vote to decrease the value of the fund," they state in a blog post. Allowing instant direct withdrawals of ether to personal wallets would block the Stalking Attack entirely and weaken the Token-Value Attack.
"The central take-away from our partial analysis and discussion is that it would be prudent to call for a temporary moratorium on whitelisting proposals so that reasonable measures can be taken to improve the mechanisms of The DAO," the post reads. "Therefore, we call on the curators to put such a moratorium in effect."
Slock.it, the group that created The DAO, submitted its own proposal to address the security concerns. Slock.it said the plan "addresses all current governance issues (and yes, this includes the much talked about 'Vlad Attacks')." The proposal recommends hiring a full-time security officer to monitor and prevent attacks whether social, economic, or technical. "This person will act as first point of contact for security disclosures: Having an official first point of contact for the channeling of security concerns will help maintain a calm, level headed way of addressing such matters, while ensuring a swift, professional reaction," the proposal reads.
The DAO operates as a venture fund where token holders vote to support early-stage Ethereum projects. The organization has raised $132 million in ether (12.07 million coins), setting the record for the largest crowdfunded operation in history. The scale of capital at stake has made security paramount.
