The IOTA network, referred to as the tangle, has been under siege recently by a sidetangle, which is a parasitic chain of transactions produced by a hacker. The sidetangle has been stitched to the maintangle, causing nodes to crash and slowing down the entire network. This has revealed a susceptibility for directed acyclic graph (DAG) based cryptocurrencies.
IOTA is the most popular and widely used DAG cryptocurrency, with a market cap of USD 2.7 billion and trading volume in excess of USD 50 million per day. Most cryptocurrencies use a blockchain, which requires adding transactions to a chain of all previous transactions. Each Bitcoin node must use the full transaction history of Bitcoin to confirm new transactions. With IOTA’s DAG, users only need to verify two previous transactions, which is deemed far more computationally efficient and allows for a fee-free system.
Apparently, the nature of IOTA’s transaction verification system can be exploited by hackers by creating a sidetangle, which is considered a parasite chain. A sidetangle is built by selecting tips that only reference themselves, making the transactions unlikely to confirm. The hacker can create millions of transactions like this, which forms the sidetangle, and these transactions never confirm.
The sidetangle would normally stay distinct from the maintangle and have no effect, but hackers have built software which stitches the sidetangle to the main tangle. This results in nodes including the sidetangle in their database. The sidetangle is filled with so many transactions that the nodes crash, according to Ralf Rottman who is on the IOTA Foundation Board of Directors. Ralf Rottman says, “People continually try to attack the tangle, and we learn from these attacks to make it more resilient over time. Remeber, IOTA is an early-stage project and these kinds of events are par for the course. As long as someone can get such a large percentage of hash power, they can do whatever they like. This is true for any DLT, and the exact reason we have the coordinator ensuring that tokens are safe during this early period.”
Head of engineering at the IOTA Foundation, Edward Greve, says, “The current sidechain and syncing issues are a new phenomenon for the Tangle, and we’re taking the opportunity to acquire data about how the Tangle is responding and performing. We will keep you posted and share new information as we are able to. Please understand, these new phenomena are not always obvious, and investigation takes time.”
No IOTA has been lost from the sidetangle attack but nodes crashing has slowed the network and reveals a general susceptibility for DAG cryptocurrencies that needs to be addressed. This is somewhat similar to a distributed denial of service (DDoS) attack. No solution for sidetangles has been formulated yet.
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