The broader promise of Web3, filled with decentralized autonomous organizations (DAOs) and their trust-minimized tokenized ecosystems relies on trust — or the lack thereof. So what happens when the government breaks that trust? It’s not merely a bad actor to blame. It’s those same incentive structures that were designed to spur development. Decentralized physical infrastructure networks. It’s ironic that the recent Docker malware campaign is specifically targeting Teneo, a decentralized physical infrastructure network (DePIN). This is not merely a technical misstep; it exposes deeply concerning governance issues that have the potential to endanger the wider Web3 ecosystem.
Incentives Gone Wild: A Fatal Flaw?
Underneath the surface, Teneo is an incredibly cool idea. It incentivizes users to run Community Nodes that scrape social media data, turning all that useless noise into dollar signs. These rewards are paid out in Teneo Points, which can subsequently be redeemed for $TENEO tokens. We’ve gotten more specific in designing the system to incentivize and collect the right data, as well as reward true participation.
The malware campaign, which utilized a Docker image named "kazutod/tene:ten," bypassed the actual data scraping process entirely. As a result, it overwhelmed the network with phony “heartbeat” signals. This ruse served to create the façade of productive work while still enabling it to “cash the checks.” Consider it welfare digital welfare fraud on steroids.
This isn’t just a failure of security, it’s a failure of design. By valuing the quantity of heartbeats over the quality of data, the Teneo reward system introduced a dangerous incentive. It simply became more profitable to figure out how to game the system versus actually doing something valuable. Because when profit is the sole purpose, ethics usually get left by the wayside.
Looking back, this scenario feels an awful lot like what happened on Wall Street with the advent of algorithmic trading. This focus on speed and volume led to flash crashes and other forms of market manipulation. This is an important reminder that the most sophisticated systems can still be gamed if the incentives are misaligned. No, it is the unintended consequences of a poorly designed system that has an enormous loophole in it.
Whose Job Is It, Really?
It’s concerning that a Docker image with the potential for such malicious behavior was allowed to exist on Docker Hub for two months. Even at just 325 downloads, that was a serious danger. Although Docker Hub acted quickly to remove the image, the account behind the image was still live. This very much calls into question the vetting processes that Docker Hub uses. To begin with, it raises doubts about the extent of responsibility the platform takes for the content it serves.
We must ask ourselves: Whose job is it to protect us from these threats? Is it really up to the individual Web3 projects, such as Teneo, to have to go out and defend themselves? Or do maintainers that host or distribute code like Docker Hub have a moral and ethical responsibility to prevent abuse and promote integrity in their ecosystems?
The answer, of course, is both. Developers of these Web3 projects should ensure that superlative security practices like comprehensive code audits, anomaly detection technology, and educated community monitoring are utilized. The onus can’t be placed entirely on developers’ shoulders. Platforms like Docker Hub must do more. Enhancing our malware detection capabilities is an immediate and critical piece of the solution. Second, they should require enhanced identity verification measures and more rigorously monitor for bad actors.
This incident is not an isolated case. One such example is the RustoBot botnet, that takes advantage of vulnerabilities to IoT and networked devices, showing the increased threat landscape. These devices, many of which are not well protected at all, become low-hanging fruit for bad actors.
Governance Now: The Time Is Now
The potential disaster from Teneo underscores an urgent need for improved governance frameworks in Web3. Decentralizing technology isn’t enough—we need to decentralize responsibility too.
Here are a few actionable steps that Teneo, and other Web3 projects, can take to strengthen their governance and security:
- Implement stricter validation mechanisms for heartbeat signals: Move beyond simple frequency checks and incorporate data quality assessments.
- Conduct regular security audits by independent experts: Bring in external auditors to identify vulnerabilities and provide unbiased recommendations.
- Increase transparency and community involvement in governance decisions: Empower the community to participate in decision-making and hold the project accountable.
- Explore alternative consensus mechanisms: Consider more robust consensus algorithms that are less susceptible to manipulation.
Ultimately, the future of Web3 rests on our underlying capacity to create trustworthy, resilient systems. We have to leave the glitz aside and get to the gritty task at hand of developing some strong governance frameworks. The Teneo incident is a wake-up call. Let's not ignore it.
Attackers are always changing and advancing their tactics to get around detection. The move away from direct XMRig deployment seen in this campaign demonstrates this shift. This highlights the importance of ongoing advocacy and adjustment. It is a perpetual cat and mouse game, and we need to be the ones ready to play.
