August 2020 Series of 51% Attacks
Ethereum Classic (ETC) network experienced a series of severe security challenges in August 2020, suffering three independent 51% attacks within a single month. These attacks all exploited the inherent characteristics of Proof-of-Work (PoW) networks, achieving deep chain reorganizations and double-spending by controlling over 51% of the network's hashrate.
- First Attack: Occurred on August 1, 2020. According to Bitquery, the attacker gained 51% control by renting hashrate, resulting in approximately 800,000 ETC being double-spent. Gate.io exchange reported a loss of about $5.6 million in this attack. The attacker spent approximately 17.5 Bitcoin (worth about $204,000 at the time) to rent the hashrate.
- Second Attack: Followed closely on August 6, involving a reorganization of 4,236 blocks, with an estimated loss of $1.68 million. During this attack, the ETC network's hashrate surged from approximately 56 terahashes to over 98 terahashes.
- Third Attack: Occurred on August 29, and was the largest, leading to over 7,000 blocks being reorganized, equivalent to about two days of mining. OKEx exchange lost over $9 million in this attack.
According to statistics, these three attacks disrupted over 10,000 blocks in total, with reported double-spending losses exceeding $9 million. After the second attack, the ETC price dropped by less than 1%; after the third attack, the price dropped by about 4%.
Community and Ecosystem Response
In response to the continuous attacks, the Ethereum Classic community and relevant parties quickly adopted several countermeasures:
- Increased Confirmation Times: ETC developers advised exchanges and other service providers to significantly increase the confirmation time for ETC transactions, for example, to at least 7,000 or over 10,000 block confirmations, to effectively defend against deep reorganization attacks. Exchanges like Coinbase subsequently increased ETC deposit confirmation times.
- Initiated Investigations and Accountability: ETC Labs partnered with law firm Kobre & Kim and blockchain analytics firm CipherTrace to launch in-depth investigations aimed at tracking down attackers and pursuing legal action.
- Technical Upgrades to Enhance Security: To fundamentally address the risk of 51% attacks, the ETC community implemented an improved Ethash mining algorithm called "ETChash" or the "Thanos upgrade" in November 2020. This upgrade aimed to change mining parameters, reducing the economic feasibility for attackers to acquire sufficient hashrate, thereby enhancing the network's resistance to attacks.
- Industry Discussions and Recommendations: Ethereum co-founder Vitalik Buterin once suggested that ETC developers should consider transitioning to a Proof-of-Stake (PoS) mechanism, believing it would be more effective in defending against 51% attacks. ETC Labs CEO Terry Culver also acknowledged the common vulnerability of Proof-of-Work blockchains and stated that solutions such as "reorganization caps" were being researched at the time.
The Nature of 51% Attacks and Challenges for PoW Networks
A 51% attack occurs when an attacker controls more than half of a blockchain network's hashrate (or stake), enabling them to manipulate transaction order, prevent legitimate transactions from being confirmed, and even conduct double-spending attacks (i.e., spending the same funds twice). For Proof-of-Work (PoW) networks, hashrate is the cornerstone of their security. When network hashrate is relatively low, the cost for an attacker to rent or purchase enough hashrate to launch a 51% attack also decreases, making some PoW chains with smaller market capitalization or dispersed hashrate face higher risks.
Ethereum Classic, as a PoW chain after the Ethereum hard fork, has a much smaller hashrate scale than the Ethereum mainnet, making it more susceptible to 51% attacks. The series of attacks in 2020 profoundly revealed the vulnerability of PoW networks when hashrate is insufficient and prompted the ETC community to strengthen its network security through technical upgrades to cope with potential future threats.
