Ethereum Developers Propose ‘Circuit Breaker’ To Deter Hackers

Jul 15, 2023

Ethereum developers have proposed a circuit breaker mechanism that would halt token outflows exceeding a predetermined limit as a security measure.

EIP-7265 would allow developers to specify the value of withdrawals that triggers the circuit breaker, and whether that takes the form of delayed settlement after a cooldown or completely revert attempted outflows. The feature could prevent hackers from immediately draining the assets of exploited DeFi protocols and protect users against losses.

The proposal has garnered support on Github. However, Enbang Wu, a smart contract auditor, suggested adding a timelock function to protect users against administrators abusing ERC-7625. A timelock would give users a grace period to withdraw their assets in the event an administrator suddenly changes the circuit breaker’s limit.

“The proposed standard is agnostic to what the admin is… it could, for a given app, be decentralized, [or] only operate on a timeline,” replied Daniel Goldman, a software developer. “I don't think the standard itself needs to be opinionated on this.”

The proposed ElP comes as core developers are working to ship Ethereum’s next upgrade, Dencun, which is tipped to bolster the scalability of Layer 2 rollups by orders of magnitude.

On July 1, FLCL, an Ethereum developer at Nethermind, tweeted that the seventh closed devnet for EIP-4844, the core proposal included in Dencun, was live and stable. EIP-4844 improves data efficiency on Layer 2 by replacing bandwidth-intensive “calldata” with lightweight blobs.

“Great to see [Devnet 7] stable for over 9,000 blocks,” said Anthony Sassano, host of The Daily Gwei podcast. “This is [EIP-]4844 running live on a devnet.”

Combined transactions on Layer 2 are currently outpacing mainnet by 250%, according to L2beat.

On July 1, Toni Wahrstatter, an Ethereum researcher, tweeted data showing more than 95% of blocks are processed through MEV-Boost, software allowing validators to earn extra rewards from Maximal Extractable Value (MEV).

MEV describes arbitrage techniques validators use to extract slippage from on-chain transactions, including transaction reordering and sandwich attacks. Eigenphi, an MEV data aggregator, estimates MEV bots made off with $1M in profits over the past week.

The data also shows the dominance of Flashbots, the MEV research team that developed MEV-Boost, dropped to 22% after peaking at around 70% last November. Ultra Sound is now the top relayer with 30%.

Flashbots drew criticism last year after confirming it complies with U.S. Treasury Department sanctions blacklisting wallets associated with the Ethereum-based coin mixing protocol, Tornado Cash. Flashbots responded by open-sourcing aspects of its code, allowing developers to design MEV-Boost relayers that disregard the sanctions.

According to Mev Watch, only 27% of blocks now comply with U.S. sanctions, down from a high of 79% last November.

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