Over 200 Ethscriptions Captured in Smart Contract Exploit

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A new protocol that allows people to create and share digital objects on Ethereum has suffered a major setback, according to its creator, who said the main Ethscriptions marketplace was hacked.

Launched last month by Tom Lehman, co-founder and former CEO of Genius.com, Ethscriptions is a new way to create Ethereum assets that leverage transaction call data to write non-financial data to the networks’ blockchain.

The Ethscriptions protocol itself and other apps that leverage the technology were unaffected, Lehman said. Still, a significant number of Ethscriptions listed on Ethscriptions.com have been stolen, Lehman said on Twitter Friday.

About 123 individual addresses lost a total of about 202 ethscriptions in this exploit, he said. Any young protocol will have bumpy landings, but that’s definitely not what I meant.

https://t.co/ZcR9HKlexS Marketplace Security Incident Update

In this Tweet, I’ll explain how the exploit happened and what we’re doing about it.

First, to be clear, this was not a vulnerability in the Ethscriptions protocol. It was a vulnerability in a pic.twitter.com/i5Q0W2PRMQ

Middlemarch (@dumbnamenumbers) July 12, 2023

In terms of value, it’s unclear exactly how much was lost as part of the exploit. But according to OpenSea NFT Market data, some listings have sold for as much as 5 Ethereum or around $9,600 over the past month.

Lehman told Decipher that when it comes to lost Ethscriptions, everything is terrible, but he specifically lamented the theft of Ethscription #56, describing it as brutal and pointing out the rarity often attributed to earlier artifacts.

The exploit also has a special sting, Lehman said, because it was meant to serve as an example that other marketplaces building support for Ethscriptions could build on.

The purpose of the marketplace was basically to help show others how to create marketplaces and help build an ecosystem, he said. Unfortunately, we fell on our noses in this area.

Lehman claimed responsibility for the failure, explaining that the exploit could be attributed to a smart contract he created with Indelible Labs co-founder Michael Hirsch. A code snippet allowed users to remove Ethscriptions they did not own from the market.

Part of the challenge with this new protocol is that you save a lot of money by limiting the use of smart contract storage, but then you have to be more strategic about how you use the contracts in cases like marketplaces, did he declare. You need to find a way to give information about smart contracts or make smart contracts not need this information.

The Ethscriptions.com marketplace will be relaunched once the necessary changes are made to the protocol itself, according to Lehman, who said he has been in contact with many people affected by the exploit. He praised them on Twitter as the first to adopt the Ethscriptions protocol.

Ethscriptions are distinct from traditional NFTs, stored in transaction-level data rather than being tokens issued on Ethereum by smart contracts, as in the case of the ERC-721 token standard. According to a Dune Analytics dashboard, approximately 474,000 Ethscriptions have been created to date.

The emergence of the protocols follows the rise in popularity of ordinals, used to create NFT-like assets on Bitcoin, which has led to a new wave of experimentation with the oldest crypto coin.

Lehman drew attention to the exploit on July 14. A few days later, a warning about the state of the affected market remains. A warning on Ethscriptions.com reads: There is a problem with the market contract! Remove your Ethscriptions and do not create new subscriptions!

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