As was to be expected in the DeFi space, true colors are being shown left, right, and center. Ocean Protocol has decided to “pause” its native smart contract. While this pertains to the KuConi incident, the approach raises some questions.
An Interesting Decision by Ocean Protocol
When a theft occurs, countermeasures must be taken. In the cryptocurrency and blockchain world, that is often a somewhat complex procedure. Even though all of these ventures are designed to be decentralized, they never really are. That point is illustrated by the Ocean Protocol team.
While their approach is justifiable, the means leave somewhat to be desired. Freezing the smart contract address associated with the funds stolen from KuCoin makes some sense. Considering how this value adds up to over $8.5 million, it can create significant market pressure if left unchecked.
As a first action to protect Ocean token holders, we have paused the OCEAN contract. We will update the community with more information in the coming hours.
Thank you for your support.
— Ocean Protocol (@oceanprotocol) September 27, 2020
As such, the team will keep the OCEAN contract paused until further notice. It makes sense to do so, yet it also erodes any semblance of decentralization. Smart contracts are designed to run autonomously, and not to be tampered with by their creator for trivial purposes such as this one.
In a recent update, the Ocean Protocol team confirms a hard fork will occur. More specifically, the contract will be forked to reverse the hack. It is not entirely the same as what the Orion Protocol team has done, as their approach seemed a lot more elegant.
Allocating Stolen Balances
As part of the forked contract, the new version will allocate stolen tokens to a contract held in trust in Singapore. Individuals affected by the theft will seemingly be able to benefit from this approach. An interesting option, as KuCoin already confirmed it will reimburse affected users across the board.
The Ocean Protocol Foundation cannot force exchanges, wallets, and other providers to recognize the new contract. As such, it may take days before everything is back to normal. It seems unlikely anyone will oppose this change, but one never knows how people will respond.
It is also worth noting this “pause” function was coded into the Ocean Protocol contract originally. Responding to emergencies often requires invasive measures. Whether that should come at the cost of sacrificing decentralization, is a different debate altogether.
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