As described in a Dec. 30 blog post by Iota Foundation, the problem was caused by issues at the IOTA Reference Implementation (IRI) – open-source Java software that defines the IOTA protocol that runs on nodes in the public IOTA networks, where clients can send IOTA tokens to each other. Specifically, the incident was caused by an edge case in transaction structuring that may have been constructed as an attack, the firm suggested.
Users of IOTA, the 24th biggest cryptocurrency by market cap, were unable to confirm transactions for 24 hours due to a mainnet incident on Dec. 29.
According to an official statement on the issue, the IOTA network experienced a mainnet incident that began at 2:50 AM UTC on Dec. 29, and was fully resolved by 2:50 AM UTC on Dec. 30.
The incident was caused by an unusual set of transactions that may have been constructed as an attack
The root cause lies in the fact that the IRI wasn’t able to handle an edge case where transactions are shared between multiple separate bundles, the post reads. Once the IRI marked a transaction as “already accounted for” in one bundle, it was ignored in the next bundle, which resulted in a corrupt ledger state from which the node was unable to recover, Iota Foundation explained. Additionally, the issue caused Iota’s dedicated network coordinator to cease the issuance of further milestones.
Iota Foundation hasn’t seen any known incidents with the same root cause to date, the blog post notes.
The firm emphasized that the incident wasn’t caused by software changes or any other components of the network but rather occured due to the “absence of transaction processing logic for an unusual set of transactions.”
New IRI version is released to fix the incident
In order to fix the problem, Iota Foundation released a new version of IRI, v1.8.3, at 01:58 UTC on Dec. 30. The new IRI version allowed the coordinator to resume the service, which subsequently led to healthy confirmation rate and stable milestone issuance rate. As Iota mainnet fully resumed operation at 02:55 UTC, major crypto exchange Huobi subsequently resumed deposits and withdrawals of IOTA after announcing a temporary suspension on Dec. 29.
Following the incident, the IOTA token has seen a notable sell-off and slipped over 4% over the past 24 hours to trade at $0.159 as of press time, according to Coin360. However, the altcoin is still slightly up from its intraweek low of $0.158.
Last week, major crypto payment processor BitPay confirmed that its service was down for over 3 hours as the company was working to fix transaction issues.
Investor in Overstock’s Blockchain Firm TZERO Backs Out
Singaporean private equity firm Makara Capital said it will not invest in Overstock’s blockchain subsidiary tZERO.
In an Overstock investor call on Aug. 26, Overstock’s interim CEO Jonathan Johnson said that Makara recently informed the firm that they “will be not investing in tZERO right now.”
Medici Ventures will continue to support tZERO
Johnson emphasized that Makara remains excited about tZERO’s product and will potentially reconsider its investment decision as tZERO progresses. In the meantime, Overstock’s blockchain-focused venture arm Medici Ventures will continue to support the project, Johnson stated.
The news come just four days after former Overstock CEO Patrick Byrne stepped down from his post due to a controversial relationship with a Russian woman who pleaded guilty to acting as a foreign agent.
Byrne developed a crypto-friendly strategy at the company, including the launch of tZERO itself and Overstock’s acceptance of Bitcoin payments.
Johnson replaced Byrne as CEO, while Kamelia Aryafar reportedly took Byrne’s place as a board member and executive vice president of Overstock Retail.
One year of investing plans
Makara’s retreat from investment in tZERO does not appear to be surprising as the company delayed the investment several times since the fundraising was initially announced in August 2018.
In August 2018, Overstock announced that Makara would invest $404 million in tZERO along with Chinese investment firm GSR Capital. In March, the two firms reduced their proposed investment to $100 million.
On May 9, tZERO finally secured a $5 million investment from Chinese investment firm GSR Capital, while both GSR and Makara were reported to be still considering additional investment.
Following the news, Overstock’s shares have continued to drop, dropping over 14% on the day to trade at $17 at press time.
