Why It’s Impossible to “Reverse Ethereum” to Fix the Bybit Hack

As reported, the cryptocurrency market has just witnessed the most serious exchange hack in history, with more than 401,000 ETH (worth $1.46 billion) being siphoned off from Bybit on the evening of February 21.

Since the culprit is believed to be the North Korean hacker group Lazarus Group, the probability of recovering assets is currently low and causing Bybit to face huge losses, as well as the cryptocurrency market is at risk of suffering an amount of ETH that is about to be released.

Therefore, there have been many calls for Ethereum to “rollback” (reverse the blockchain) to before the time of the attack to fix the consequences.

This proposal was brought to the attention of Arthur Hayes, a famous KOL in the industry, and then received the support of many other figures, including Solana co-founder Raj Gokal.

Supporters of the proposal have pointed to the 2016 The DAO Hack, when 15% of the circulating ETH supply was taken over by a malicious actor, forcing Ethereum to hard fork to neutralize the attack. However, the incident caused a deep split in the Ethereum community at that time, with those who wanted to maintain the blockchain's decentralization and immutability disagreeing with the hard fork, which led to the emergence of the Ethereum Classic chain, which still recognized The DAO Hack as taking place.

Returning to the main story, the "rollback" proposal was immediately met with fierce opposition from the Ethereum support community, who believed that this was essentially a "smear" campaign aimed at attacking the decentralization and neutrality of the world's second largest blockchain from the Bitcoin and Solana camps.

Tim Beiko, a developer working for the Ethereum Foundation, published a lengthy post to clarify the matter, as well as giving his opinion on why Ethereum cannot currently “rollback”.

The concept of rollback first appeared with Bitcoin when the world's largest blockchain suffered a "value overflow" bug in 2010, causing the total supply to swell to 184 billion BTC instead of 21 million BTC. Bitcoin founder Satoshi Nakamoto had to release a patch to the transaction validation client software at that time, essentially invalidating transactions that occurred after the total supply was adjusted. This update caused the blockchain to be rolled back to the time the bug appeared.

Mr. Beiko noted that the reason Bitcoin could do this was because it was 2010, when BTC was still only worth $0.07 and did not receive much attention or active trading, so reversing the blockchain did not cause much damage to network participants.

In fact, Ethereum is the complete opposite when the world's largest smart contract network now has hundreds of thousands of active applications, serving millions of users transacting both on-chain and off-chain. Reverting the blockchain to before the Bybit hack not only requires the coordination of all the components participating in the ecosystem, but also requires many people here to give up the benefits they received in the hours after the hack, which not everyone will agree to in order to upgrade to achieve the majority support rate.

In addition, the difference between the Bybit hack and The DAO Hack lies in the nature of the incident. While The DAO Hack was indeed much more serious with 15% of the ETH supply affected, this ETH was locked in The DAO's smart contract for 1 month before it could be available, giving the Ethereum team and the community more time to come up with a solution and coordinate with the necessary parties to reach majority consensus.

On the contrary, the Bybit hacker took away more than 401,000 ETH and was free to use the funds immediately without any further constraints, and even started laundering some of the funds to BTC. Therefore, the incident was related from the beginning, and the longer we wait, the greater the benefits of reversing the blockchain will be.

Mr. Tim Beiko therefore came to the conclusion that Ethereum will not be able to reverse the chain to resolve the Bybit attack, clarifying the controversies that have appeared in the community in recent days. However, the Ethereum Foundation developer did not rule out the possibility that Ethereum could conduct an irregular state change to freeze the funds in the hacker's wallet, but this method is not very feasible because as soon as the upgrade is announced, the hacker can easily transfer the funds to another wallet to avoid being frozen.

In addition, the Ethereum community has previously rejected irregular state change proposals to recover accidentally frozen assets, such as the Parity multisig wallet bug that locked up more than 510,000 ETH in 2017, and the community rejected the proposal to release this amount.

Some also quickly dug up Vitalik Buterin's response in December 2022, when Solana had just experienced the FTX crash and was at risk of becoming a "dead chain". At that time, Vitalik believed that Solana still had the potential to return when it had a talented developer community and had purged the bad elements in the ecosystem.