Here is the block, showing a reward of 7678ETH: https://etherscan.io/block/13307440
From that 7676ETH was the fee by Bitfinex (see OP).
And here (around 10 hours later) is a transaction from the miner giving back 7385ETH to Bitfinex: https://etherscan.io/tx/0x85294effd53126b3bfa9e7f655267e00ac...
Wonder if they talked or just decided to do this as a show of good will. Either way, still kept around $800k so not a bad deal.
I'd be significantly concerned about coming into $27 mn, even if (according to the laws of Medes and Persians and smart contacts) it was mine to rights.
There's "I hate you $1,000 much", and "I hate you $1,000,000" much. I should be able to manage the first. The second? Not so much.
Not far off . Serial counterfeiting, fraudulent tax losses, shipping "a large block of wood" in a box supposed to contain memory chips.
Granted, no proven track record of violence. But most people in the illicit drug trade have no such record. And this one doesn't show evidence of good judgment.
- The transaction sender set both the max total fee and the max priority fee to above 10 million. Most UIs require at least two manual setting changes to do this.
- The sender is Bitfinex -- they're pros and not just a mon and pop.
Maybe it could just be a transfer from the sender to whoever the miner is...
Take a typical $23 transaction fee, which comes out to ~0.00775756 ETH
Of course, everyone knows you don't want to do math as floating point, you want to use an integer representation. 1 ETH can be divided into 1e18 "Wei" or 1e9 "GigaWei".
So that 23 USD could be expressed an an integer "7757560", with the expectation that the decimal point would get moved 9 points <- thataway to become 0.00775756 ETH
If somewhere in your code you do some kind of money formatting that turns 7757560 GWEI into 7757.56 ETH, you've got your $23,000,000 USD mining fee.
So instead of a bug in converting gwei to eth, I bet somebody thought they were specifying the raw price in wei but the input box assumes gwei and does a x1000000000.
The software that interacts with it does.
For instance, Numpy provides array-language  capabilities to Python, but because it isn't a first-class element in the language Python is not thought of as an array language, and using it as one would be a bit clunky.
How are rationals used to represent decimals?
Decimals are just the subset of rationals where the denominator is always a power of 10, so the representation and arithmetic operations are simple if you already have rational support (though if you need to preserve decimal results, you need approximation logic for division, since dividing two rationals with denominators that are powers of 10 may result in a rational with a denominator that is not a power of 10.)
This is also true for adding, subtracting, and multiplying, though in those cases it is always trivial to convert the result into a form where the denominator is a power of 10.
How could they know who the miner was going to be before the block was mined?
Am I understanding correctly that Bitfinex is subsidizing DeversiFi transactions? How does this work? And why does Bitfinex do this?
But also Biftinex/Tether benefit if people lock up their USDT into earning schemes rather than trying to redeem them for fiat. It reduces withdrawal pressure and allows Tether to keep the game going.
(This is assuming the common theories that Tether is unbacked/poorly backed are true. In a ponzi, managing withdrawals is paramount, and all the crypto high yield earning on stablecoins provides a way to discourage withdrawals)
I haven’t thought through the trading aspect though or why that would be subsidized. I guess it does soak up USDT as well.
Edit: a couple other facts came forward.
Deversifi was originally called Ethfinex, a Bitfinex spinoff
The miner that got the fee is owned by Christopher Harborne, Bitfinex shareholder: https://protos.com/bitfinex-tether-digfinex-shareholder-harb...
Oddly enough I looked at DiversiFi’s twitter right after reading your update and they re-tweeted someone mentioning DiversiFi’s founder, Will Harborne. Are they related?
When you sell USDT for USD on exchange, someone is providing that dollar. If no private market participant willing, then peg slips. You would expect fiat withdrawals in downturns and peg slippage absent support.
An open question. Several attorneys general have ongoing investigations regarding the tether peg.
A really grim and cynical person might make the case that exchanges want something like tether to exist, and are incentivized to fudge the public-facing numbers regarding tether trade volume and its order book.
The set of people who have inside information on how tether functions and the set of people who would actually tell the truth about it are entirely disjoint.
Last time I checked, there were significant "limitations" (to be charitable... that you could only redeem holdings above $100K, only if you were a non-US person, and subject to 90-180 day holding periods.
People have also offered bounties for proof of people having redeemed Tether, and those bounties are still outstanding.
My suspicion is that if anyone has actually redeemed Tether, they are either institutional (and Bitfinex doesn't want to piss them off) or an insider/"friend".
Yes, USDC and USDT are different "securities".
But that's like saying that in the regular market that because Charles Schwab and Fidelity are competitors, they don't have a whole lot of cooperation - they do, because at that scale (and with the amount of arbitrage and speculation in crypto), you need to cooperate with your competitors, or you will be iced out.
This means that Ethereum transaction fees for DeversiFi's end-users are extremely small because they use almost no marginal L1 Ethereum gas.
So, Bitfinex subsidizing DeversiFi's users' gas fees is not as expensive as it may sound.
In this case, the $23.7M fee was likely in error and unlikely to be money laundering because the fee was paid to a random miner.
If you're interested in Ethereum's state-of-the-art scaling technologies https://starkware.co
It never ceases to amaze me that blockchain aficionados on one hand praise the supposedly revolutionary transparency of the blockchain, while on the other hand extolling that the "state of the art" concept of a ledger that isn't on the blockchain, is going to be what finally makes crypto "scale" and become viable for the masses.
In a similar sense, blockchains with layer 2 scaling, result in all address balances being stored in the central blockchain, while people can transact with each other directly and instantly in a zero-trust, cryptographically secure manner. When either party in the transaction is "done", one of the parties will commit the address balances to the blockchain for the world to see. (The only model that makes sense, and actually allows for scaling, is a hub-and-spoke model, where everyone connects to a "node", much like with DNS, and lets the node handle the routing. This way users could keep accounts open while transacting with many different people / businesses.)
(This is a rhetorical question.)
EDIT: Why the downvotes? It's not okay to discuss the fact that in the possibility of human error (assuming this is one, and not a very wild —yet successful— bet on a laundering attempt), the incapacity to cancel transaction may be a problem?
(Of course, that rollback also demonstrated that Ethereum is a centralised coin with a controlling entity, and that 'code is law' is just a lie, but that's another story)
"This guy who we all hate now owns $100MM in ETH? Now he doesn't."
At best a cabal of miners could censor you by refusing to include your transactions into blocks, and refusing to mine on top of any block that includes your transaction. But only while they maintain a majority of hashing power.
But that's exactly what we were talking about: hard forks that change how the protocol works. The parent comment that you responded to is correct in that theoretically a majority of miners could fork Ethereum to steal $100M from a single person.
In the event of a contested hard fork both chains would continue to live, because some miners would mine chain A, and some miners would mine chain B. Yes, miners who mine the old chain would not accept blocks from miners who mine the new chain, you are correct about that, but the same statement holds true in reverse: miners who run the new chain would not accept blocks from miners who mine the old chain.
If a majority of miners decided to steal $100M by forking the chain, they absolutely could do that, even if the majority of users would support the old chain. In that event the tokens (which used to be worth $100M) would now exist on both chains, and it would be up to the market to decide how much the tokens are worth on each chain.
Nope, I was very clear that in this context there is more than one network, so expressions like your "by definition the network has rejected invalid blocks" doesn't make sense. Network A rejects blocks by network B, and network B rejects blocks by network A. There is more than one network. You don't need to look further than Ethereum Classic to see that this can happen in practice. The "minority chain" doesn't just disappear magically.
The original implication was you don't want to piss miners off otherwise they can unilaterally decide to take your money away. That is false.
If you are retreating your argument to that goal post, then we are in agreement: pissing off miners will not result in miners stealing your money. Your original argument was stronger, however. You were asserting that a minority-supported fork would not be able to steal money, which is not true.
It is a common misconception that miners, because they are the ones who produce new blocks, have power over the network and set the rules. That is not the case. Miners determine the order and inclusion of __valid__ transactions. Deleting your money would require a fork. Even if a majority of miners mined their own fork but didn't get users/nodes on board they would be wasting their time on what is essentially an altcoin that they alone care about. The network would ignore them and your $100M has not been deleted because it still exists on the chain everyone actually cares about.
There are only so many different ways I can state the above idea (going-on 4 times in this thread alone). If you still disagree, then I'm sorry I wasn't able to explain it any better. I'm going to politely decline from responding any further to this thread because I think we are just wasting each others' time.
"I guess you'd better hope you're never on the wrong side, politically, from a majority of ETH miners."
I think it's not impossible to imagine miners and nodes voting to hard-fork a coin because some genocidal villain, Mr LiterallyHitler, had a large amount of wealth wrapped up in it.
Let’s not mention what Satoshi did in 2010 with the 184 billion BTC hack though ;)
If the downvotes were inappropriate, other users will usually correct them (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...), but off-topic, guidelines-breaking complaints like the one you added don't get garbage-collected when that happens, so they linger on, adding noise to the thread.
There isn’t anything to “fork” in USD since it isn’t a blockchain, but different USD settlement layers get out of sync and have to be manually reconciled. If you instead tried to “fork”/replicate USD in that situation, you’d probably be thrown in jail for life. I personally prefer the blockchain way of expressing my option through code and seeing if anyone wants to follow me and not having to ask for permission.
How much of this economic weight is real, at least in the case of Tether, is another story. I suspect we'll find out in the next few years as regulation ramps up.
Quiet, now. We don't want people to know about systemic risks to crypto.
Now, Ethereum has another way to fix this: forbid transactions that use a gas fee MUCH MUCH larger than the current average one.
If it's not included yet you need to send another transaction with the same nonce that sends yourself 0 ether but with a higher gas price asap, this is not a guarantee however because the miner would probably still go with the transaction that is more profitable for them and because the fee was so high it got included in under 1 minute.
So once this transaction landed in the (public?) mempool it was gg.
Here's an example of traditional finance screwing someone over for making an obvious mistake. Where's this ability to reverse transactions when you need it? https://www.livemint.com/opinion/online-views/a-fascinating-...
You're assuming there's some benevolent God who can arbitrate who's right and who's wrong. In reality, people get screwed by bad payment reversal decisions all the time and there's no objective way to decide in every case.
Literally nobody assumes this. Please don't invent strawmen.
The point is, even with all the failings of the courts, different interpretations of language, and every other flaw, it's still better than having no recourse at all.
> There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item.
And of course, the blockchain solves none of this. It just makes rectifying the problem far more difficult.
> And of course, the blockchain solves none of this. It just makes rectifying the problem far more difficult.
Web3 stores would use an escrow service for physical goods where the buyer's money goes into the escrow contract and gets released to the seller when the buyer receives the item. In the case of a dispute it would summon a Kleros jury of say 30 jurors who would look at the presented evidence and come to consensus on an outcome. A lot of these problems have already been solved in a decentralized way but it's still early days so higher complexity projects take a while to come to fruition.
If you just call the boss of reversals and say "sorry I made a terrible mistake, please reverse the payment", how can he trust that you're not the fraudster yourself? Even in the case in this article, how can any 3rd party truly know that it was a mistake and not just someone pretending it was a mistake so they can get it back?
Blockchain solves the problem of chargeback fraud. It's one specific class of fraud but it's solved by that technology even if other classes of fraud are created.
A blockchain can't solve that kind of problems. And it never will. It is not because something is written on a blockchain that it is true, except for cryptocurrencies because that is how they define truth. But as soon as you have something happen in the real-world (in your example, an item sent in exchange for a payment), then a blockchain is useless, or at least, it is not any more useful than any type of ledger.
A blockchain can solve "didn't receive the item" fraud because the merchant has the payment before they send the item and can refuse to refund it. Of course it creates a new kind of risk for the buyer, but that's not what we're talking about here.
Your example is a good one: that particular case was carefully scrutinized by the court and the judge decided that the outcome was reasonable, mainly because the creditors who received the money were owed the money. If the outcome was obviously unreasonable, e.g. Citibank had simply sent $1B to some random address, of course the judge would have reversed it.
It still exists, and note that the case did reach a court. It just happens that the beneficieries were also owed that money, and that allowed them to win the subsequent lawsuit:
As long as you understand that I don't see the problem. I use cash a lot myself. Of course, we basically did invent the entire banking system to get away from the many downsides of literally lugging bags of gold around, like theft and loss without recourse.
Meanwhile in this case the miner gave back the money so maybe the tech isn't the issue?
If they are lucky, they may be able to reach out to the miner and get a portion returned. Probably just tough luck though.
in limited cases you can perform another operation which makes the preceding operation illegal.
in normal cases, not being able to cancel is the entire point of the technology.
Your post is basically this, but less humorous so people are upset.
So to answer your question, how you revert this transaction is to buy $5 wrench and go have a conversation with the miner.
Just a few more zeros, and this could have been a company-ending mistake. Bitfinex should probably reduce the size of their hot wallets.
The minimum miner fee that is required for a transaction to be processed promptly is therefore constantly an open question / constantly changing, which gives rise to services like https://ethgasstation.info/ which attempt to tell you how much you should reasonably expect to pay.
In terms of how today's outcome is possible: when you are submitting a transaction, any amount of ETH that you have on your account could validly be spent as the fee.
So in this case, either by human error or a software bug, someone with a large amount of ETH in their balance essentially spent all of it on the transaction fee.
The miner _gets_ all of those ETH. So some lucky miner just got a huge spike in profit.
Previous situations like this have been the result of the transaction author (or their software) making a mistake.
1. "Your contract is executed exactly as it is written! No loopholes, no shenanigans!" Clearly this is a double edged sword. Since code is a lot more complex than written human language, expressing intent can be very difficult. In a regular contract, if your counterparty figures out a clever way to cheat you out of your money, you can sue them in court and the judge will very likely tell them to give the money back and slap them with damages too. Apparently in Ethereum Smart Contracts, you can accidentally/inadvertently allow for a gas fee that 230x the transaction value and there's literally nothing anyone can do for you.
2. "No need for expensive lawyers/bankers!" True! But you now need to pay expensive computer scientists to write/review your contracts, who are probably at least twice as expensive as the bankers. Oops.
3. "Not centralized! Don't be chained by unjust government regulation!" True, but also probably not optimal for 99.5% of people. Anyone who has been banned from Venmo for making a North Korea joke knows how annoying AML/KYC is, but by and large the regs (in the US at least) are written in a way that protect the average joe and society as a whole.
Smart executor does sound pretty grimy though :)
Like "A.I," a lot of people dream about the idea of revolutionizing or strongly improving on law via code, and I don't see it happening, ever. It's this well meaning and seductive idea that we can leverage the superior power of computery thought and ideas to "correct" the foibles of humans -- but I think "human disputes" are too slippery to be bound by code, and the beauty and triumph of "law" as a system is that it too is slippery enough to manage it reasonably.
To me it's strongly related to the complete layman fantasy of "well, they should have just written the law more clearly and everything would be fine."
That doesn't mean it's a good idea, nor that is bad. It comes from good intentions, is all.
(Very aware that those can be used for paving certain roads)
Sure, I get the impulse to try and that in many ways is the lovely thing about the spirit of tech and hackery... buuuut also I'm a black man whos seen e.g. entirely too much "oh they were well intentioned" when the AI thought the black folks were monkeys. So, yeaaaah, not holding my breath. :)
There is essentially a 0% chance of such an outcome with a regular contract (at least in US contract law). Intent is a cornerstone of contracts in the real world. Just because someone came up with a clever "exploit" doesn't entitle them to rip you off. This is a very good thing.
Makes it much easier to write safe solidity code.
There will, of course, be the more expensive brokers that can exploit loopholes, but even as a stretch this isn't vastly different to a bank account in the Caymans.
Of course, you don't have to participate - you can hold the 'cash' equivalent or concoct your own scheme, but you're not as protected from loss as you otherwise might be (provided there's an insurance package of sorts, in the absence of regulation).
: On many platforms smart contracts are stored in the form of high-level interpreted languages. On Ethereum, the blockchain stores EVM code (assembly), but contracts that haven't "verified" their source, typically by uploading the high-level code to etherscan.org, are seldom used (with some notable exceptions).
- GNU/Linux - GNU/Linux is open source but centralised. The userspace is the part that is distributed, via operating systems, and the source control is distributed, via git. But it's all for one Linux kernel. You can also build your own kernel, but that doesn't really make linux 'decentralized'. Similarly, Linux for a lot of people means 'Ubuntu'.
- HTML/JS - this is centralised under WhatWG/W3C, etc. Arguably, these days, it's actually centralised under Chrome, because what Chrome does eventually becomes the spec. You can freely build your own implementations of HTML and JS/Ecmascript but most likely, you are using the centralised implementation via webkit, blink, or gecko.
So, the fact that smart contract is open-source doesn't really mean anything. It'll grow big, then as a matter of convenience it will start to consolidate. git, for example, is decentralised, but git forges (github, gitlab, etc.) provide centralisation as a convenience.
Isn’t that the other way around? Natural language remains an unsolved problem, and formal verification of software is pretty much a requirement for compilers. Your example is evidence of that: intent in natural language is easy to distort and hard to prove, thus making it much more complex
A lawyer can review a contract, miss a loophole/backdoor, and then argue to the court that the backdoor was placed there in bad faith, recoup his client losses. You can't do that with code. If you load a backdored code, you can't argue "this is unfair" to a court of justice.
On the 3rd point, i think "good" crypto (and by that i mean non-obvious shitcoins) tend to centralize a lot.
Why not? Assuming the miner and you are in the same jurisdiction, what prevents you from suing them? Seems relatively straightforward.
There must be something of value in there that you're missing. And it's not speculation, as there are way better ways to speculate in crypto than by using DeFi (shittokens, NFTs, ...).
It's certainly true that there is activity in the DeFi space, and it's certainly possible that this activity is because DeFi is just so gosh darn amazing at solving people's need for basic financial products.
...at least in theory. But if you're going to make that rather extraordinary claim, I think you need to provide some extraordinary evidence.
It's not an extraordinary claim but common knowledge in the start-up investment land that when you see an ugly, flawed product get an unexplained amount of engagement, you become interested.
> Lottery tickets aren't a good investment, but people still buy them.
Lottery tickets solve the real problem of hopelessness about improving one's financial situation through work. It might not be a worthwhile investment in financial terms, but it has its use just like entertainment media or alcohol.
My explanation of the prevalence of DeFi is that it's currently at or near the peak of the hype cycle and there's a ton of money to be made either by trying to legitimatize the ecosystem or else via run of the mill pump and dumps.
People pay tens of millions of dollars everyday to use these on-chain platforms. They could avoid all those fees if they just wanted to speculate on token prices by using centralized exchanges, of which many have very lax KYC requirements.
"Speculation platform" is already a big, legitimate and very popular use case (the importance, influence and appeal of Wall-Street in the US and the whole world is evidence of this).
For example, anyone could have sold the equivalent of NFTs decades ago using a centralized ledger (perhaps using multiple trusted third parties for security). That didn't happen.
Likewise, it's pretty clear that if you have a startup idea that could be implemented with or without crypto, you get a valuation boost if you take the crypto route. (Hello Long Blockchain Corp.)
So: speculation-driven cryptocurrency prices rise -> entire crypto sector hyped to the moon -> startups move in to collect hype-driven investment -> smart contract activity observed -> this "proof" of utility drives more hype.
And of course there are other intersecting loops.
Is it some sort of deniability thing to say your hilariously unreasonable miner tip was mined by a random miner who may or may not be you? Surely regulators/prosecutors aren't this gullible.
It's also important to consider the psychology of things like Ponzi schemes. A bright 12 year old can understand why a Ponzi scheme falls apart in the long run. But for most of the people running them, they aren't thinking about the long run. They're responding to short-term incentives. An investor wants money back? Well there's money, so let's give some to them. Low on money? Go out and sell more people on putting money in. People have concerns? Reassure them that everything's fine, better than fine, amazing in fact.
So the question of "do they think they can get away with it in the long run" is not really the right one to ask. 100% of their attention is on the short term. They carefully avoid thinking about the long run at all, because it's way too uncomfortable. As long as the problems are deniable enough in the short term, they're just going to keep going.
https://news.ycombinator.com/item?id=28673552 (HN: Tracking stolen crypto is a booming business) | https://archive.is/s1WvQ
Base Fee Per Gas: 0.000000058907049227 Ether (58.907049227 Gwei)
The paid gas fee for the transaction is: 0.053243669870735422 Ether (53,243,669.870735422 Gwei)
Perhaps they wanted to post the transaction for 53 Gwei but fatfingered it? Or entered Pwei instead.
Edit: This block was apparently mined by poolin pool: https://minerstat.com/coin/POOLIN-ETH
Their rewards almost doubled
("Fat finger" errors like this are not unheard of in the read financial system, but that usually allows reversal)
Anyway, be your own bank, I'm sure you can figure this out. /s
Yes I'm sure it's purely coincidence that the "random on the street" who mined this block is a major Bitfinex shareholder.
This reinforces by most miners being willing to join, to get a share in monopoly rents over miners-never-earning. The big mining pool(s) could let in enough to stay big enough. But not too many to spread the monopolistic gains by too broad a base.
From the article.
And as said, given previous dishonesty from Bitfinex about all sorts of unrelated parties (they claimed to be independent of Tether, until that was proven a lie, and they are heavily intertwined with their bank, Deltec, who says that they have "insight into every transaction and Tether"), I'm going to consider Occam's Razor, here.
Who does the fee go to? I would have thought the miner. But if so, how can you predict (or control) which miner will get your block?
That said, logging this might violate GDPR :)
Yes. For instance on etherscan there's a "Confirmed within x secs" indicator, which is "Estimated duration between time First Seen and included in block".
Say a colluding miner mines blocks including this unbroadcast transaction until they finally hit the block target with this transaction included.
Bitfinex then broadcasts the transaction to mempool. After some plausible delay (but a short enough one that no one else gets a chance to mine it), the colluding miner publishes a valid block including the transaction. No one can confirm that the miner didn't receive the transaction from mempool like everyone else, and then 'get lucky' shortly after.
I'm not saying this is what happened, I think user error is more likely. But it can neither be ruled out nor easily proven.
BTW the money laundering idea is complete nonsense. You dont do that by making large transactions so that mainstream media writes about it and investigations are triggered.
This is just the usual HN crypto bias that seeks for confirmation that everything cryoto is illegitimate.
It’s unlikely that Bitfinex was using a consumer-faci by wallet and they could easily build those checks into their systems.
They very obviously dont care because the problem is know since years and the sum of accidental fees could probably pay google whole software dev personnel to write 1000 different possible fixes but nothing was ever done about it.
1. make transactions that were valid at the time of creation suddenly invalid if the average moves, which is frustrating to all parties
2. not able to respond to rapid changes in demand
3. overcomplicate validation/consensus
There might be better ways but clearly doing nothing at all is worse.
And yes, I know ETH is in a uniquely bad situation on this because the range of legitimate fees is enormous.
Has 3% of miner power in the network it seems, fairly big. Seems to only been running since 2021-07-12.
HN irrationally loves to hate crypto.
Then there was monero and it seemed to scratch the itch a little easier
More and more, it is revealed that that majority of actors in crypto are either incompetent, scammers, or both.
Edit: Trying to determine if this is a bug or just a misunderstanding on my part.