Reversible transaction, way of the future or just a fools errand?
Researchers at Stanford University have made a prototype for Ethereum where it is possible to reverse a transaction. Is this a good way to combat fraud and theft of crypto? Or is it just something that takes away the control of the users?
How would it work?
The researchers have made a proposal for two new Ethereum token standards: ERC20R and ERC721R. Where the R, I assume, stands for Reversal or something along those lines. A token standard is a set of rules that a smart contract must comply with in order for it to be able to interact with different dApps.
According to Kaili Wang, one of the researchers. The new token standard would work by combining a token contract and a governance contract. The Governance part of the smart contract is controlled by a “decentralized judiciary system”. Here a quorum of judges votes to freeze and reverse malicious transactions.
A person who is a victim of a theft or a hack could then make a free request to the governance contract by providing compelling evidence. If the majority of judges vote in favor of the request the funds can then be frozen.
While making such a freeze request, the victim must fund the judiciary process to reward the decentralized judges. Priority fees, which can be added to a case to speed up the time for its review, can also be added by the victim, per the proposal.
After a freeze has been initiated a trial can be held where both parties can submit evidence. Then the judges will vote. And depending on the outcome of the vote the funds either stay and are unfrozen, or they are returned.
The reception among the community
The community has been very vocal about this. But if it is the sentiment of the actual majority or just a vocal minority is as always hard to judge. What however is clear is that almost all of the people have been critical of the proposal for one or another reason.
https://twitter.com/kaili_jenner/status/1573935469238403072
But as Kaili also tweeted. Their proposal is not a bee-all or end-all. It is simply the first step towards a solution to a widespread problem. And I totally agree with her and there.
My thoughts on the proposal
Sure is it a perfect solution, no. But they are the first to percent something that could work, and that possibly could address this problem. The problem of hacks and scams in the crypto space. And if we want to bring crypto to the masses that is one thing that needs to be addressed. Preferably with a solution that would not interfere with the other aspects of crypto.
I have looked through their proposal, but I have to say it is on a level that is a few steps above where I am comfortable. But what I did find a bit alarming is the part I have quoted from Kaili above. Where she explains how the judges will be financed.
And the part I see there is a big problem, they are incentivized to take as long as possible. This is because they are paid by the person who submitted the claim. And even if this payment is a fixed amount there is the question of priority fees. Where people in a sense pay to jump the line.
One way to address this would be to have the judges be paid on completion. This would incentivize them slightly to come to a decision. That and a fixed pay per case. And by all means, that is probably not the best solution. But I would argue that it at least is slightly better than the proposed one.
I actually reached out to Kaili to ask her about this and this is what she said:
They judges are not paid on a time basis, so they actually are incentivized to take a shorter amount of time. The priority fees can be used to determine the order in which they do the claims. -Kaili
It appears I was most likley over reacting. But whenever their is payment involved there can be other issues. So I still think this is an area that needs to be looked into further. To make sure it is working as intended.
It´s a work in progress as the good Dr. said
Regarding the proposal as a whole, I think it is good that they have started the ball rolling. But as with many things they are rarely perfect from the start. But instead are a work in progress. And I think that holds true here as well. So I see no reason for panic, unlike a lot of others.
What are your thoughts on this? Would you like to be able to reverse transactions? Or do you think it will mess with the very foundation of what makes a cryptocurrency? Please sound off in the comment section down below. If you would like to support me and the content I make, please consider following me, reading my other posts, or why not do both instead.
See you on the interwebs!
Picture provided by: https://pixabay.com/
Resources
only time will tell if it is successful or not!