Three researchers from Standford published a proposal to facilitate reversible Ethereum transactions.
The idea would build on the existing ERC20 and ERC721 token standards.
Both new token standards feature a combined smart contract and governance contract component.
The proposal received backlash from crypto community members who say reversible transactions are in contrast to the very ethos of blockchain technology.
Stanford researchers recently unveiled a plan to build two new Ethereum token standards to combat asset thefts ad hacks in decentralized finance. The tokens will feature reversible transaction functionality when specific conditions are met, per the proposal.
In cryptocurrency, a token standard refers to a set of rules hard-coded into a smart contract. These rules give the coin its identity, specific characteristics, and power smart contract compatibility across the digital asset ecosystem.
Ethereum has ERC20 designated for fungible coins like Ether (ETH) and ERC721 for non fungible tokens (NFTs) like Bored Apes. The proposal from Dan Boneh, Kaili Wang, and Qinchen Wang builds on these token standards and suggests developing ERC20R and ERC721R, with the R meaning reversible.
A thread published by Kaili Wang explained that crypto theft inspired the idea behind reversible tokens and transactions. The proposal also explained that a reversible is only possible when specific conditions are met, details from the proposal explained.
According to Wang, the prototyped reversible Ethereum ERC20R and ERC721R feature both a smart contract and governance component. This allows aggrieved parties to leverage a trial system similar to a decentralized autonomous organization (DAO) vote.
In theory, a user could request a freeze on specific funds if they have been stolen This locks down the assets and restricts the alleged hacker from moving stolen tokens. A decentralized court of judges then assesses the freeze request with the evidence provided and makes a decision.
Based on the decision, the argument proceeds to a trial where more evidence is submitted from both sides of the case. The funds are “reversed” or sent back to the “victim” if the judges agree to the reversal after weighing the evidence.
Wang noted that the proposal is not perfect and serves mainly to trigger discourse regarding the idea. Vitalik Buterin’s 2018 tweet about “Reversible Ether” was also quoted by Wang as a corner for the idea.
Reversible Ethereum Transactions Against Blockchain Ethos, Says Crypto Community
The reversible Ethereum proposal received heavy backlash from the community following its publication over the weekend. Several users on Twitter argued that the idea contradicts the core blockchain ethos. Other community members added that the proposal is difficult to implement across every theft case and transaction.
Despite the backlash, some users surmised that the proposal boasts merits and opined similar thoughts.
The ensuing conversation hints that crypto users hope a remedy for hacks and stolen funds emerges sooner rather than later. However, it remains unclear if reversible Ethereum standards are the preferred or possible solution to the crypto hack epidemic.
New Token Standards Not The Ultimate Solution – Chainport’s Maximiliano Stochyk Duarte
Maximiliano Stochyk Duarte, Head of Marketing at cross-chain solution Chainport echoed concerns regarding reversible Ethereum transactions as a solution to loopholes in DeFi security.
In my opinion, this wouldn’t be the ultimate solution to the problem. It sounds similar to how centralized banks or web2 services world work: basically, they are in power to take your money on any grounds. I would prefer regulation, so there are real consequences to hacks, etc… Blockchain should be immutable.
Duarte also told EthereumWorldNews that “employing quality audits and regulation where all crypto is treated as real money by governments” could be a key step towards combating DeFi hacks.
The Chainport expert believes that such strategies could trump the reversible Ethereum transaction model proposed by the Standford researchers. Duarte further opined that Ethereum serves as a leader in DeFi and the network’s immutability should remain intact.
Many ETH investors love Ethereum because of what it built within the DeFi ecosystem. Therefore, it doesn’t make sense to exert control over the network by reverting back the blockchain or reversing TXs.
Updated 12:43 PM UTC – Maximiliano Stochyk Duarte comments.