“You know what? That is a feature. Undo is a feature. The question is though; how far do you go with that?” That’s what Balaji Srinivasan, founder of the bitcoin based 21, asked in a recent interview.
The interviewer says that “most people with the DAO are like, “I’m happy with how that went.” The reason is probably because the benefits far outweighed the costs, but when we look back and as time goes on, these costs might be forgotten, so let’s state them.
Ethereum’s price plunged when the DAO hack was announced. The whole cryptospace froze in its tracks, with the event consuming everyone’s attention. The whole world was watching, with the wider public’s interest sufficient to gain the NY Time’s front-page.
Then, chaos. The ethereum communities turned into a metaphorical war zone. If this was happening in physical space, you can imagine protesters on the street, looting, burning, demos and counter-demos, clashes, etc.
Then there was the ballot box. Coin-holders stated their preference, miners stated their preference, those against their decision disputed its representativeness or legitimacy, nitpicking any little thing, while continuing to loudly argue against the fork.
Then, the split as ETC was in a surprise move listed on Poloniex. In a real life comparison, this would have been a stock market crash at the same time as a stock market boom. Then, the currency attracted a bit more attention by detractors, having some insignificant bugs exploited which led to no losses, but weakened moral.
Ethereum reached a bottom of $5 in December 2016, around four months after the fork. Then, sentiment shifted, with the currency going on to increase 10x, reaching an all-time high of around $50 where it has stabilized and continues to currently trade.
Just from the above description, we can see that there is a significant cost for the community to agree to press the undo button. It’s unlikely, for example, that a fork would occur if $10 million is stolen or if the matter is greyish, but if $1 billion is stolen at this point, then it may be difficult to say the costs would not justify the benefits.
That is until sharding, estimated sometime in early to mid-2020s. Eth is very much experimental until then with plans to undertake a number of upgrades which may and probably will go wrong since all this is bleeding edge frontier. However, it is just code, so it probably will all quickly be fixed, with the community moving on.
During this embryonic stage, the currency needs flexibility so that it can move fast and complete its roadmap. If, therefore, something happens which justifies the significant costs of pressing the undue button, then the community might decide they should do so.
We can’t really say now what should happen after sharding, but this should give the currency some five or seven years, where all its aspects are refined, solidified, best practices set-up, etc.
The code, by that point, after sharding goes live and operates finely for some 2-3 years, should be hard as stone and probably will be set in stone since no more modifications would be required as far as we can see.
At that stage, any grand theft shouldn’t really be possible. Smart contracts that handle huge value should have their own undue button as well as fail-safe mechanisms. Moreover, we don’t even know if by then it would be possible to reach any wide agreement. The protocol might become so intermingled or be so under the surface that it can’t easily be changed without breaking a lot of things.
Still, would the community agree to undue a theft of $100 billion? Probably, if it is possible, but they might not. Competitors of whoever got the funds stolen might successfully persuade against it. If they didn’t use best practices then perhaps the community might decide to punish them as an example, etc.
Any such undue event would come at a significant costs and there is always the potential that the overwhelming majority would decide against it. Therefore, the raising of such proposal to the community would have to be done for extremely good reasons. Sufficiently good that most would be willing to take a short-term hit for long term benefits, a very difficult thing.
That sets the bar extremely high with only very exceptional circumstances worthy of consideration. Some might say that even in that case it shouldn’t happen. However, if it can happen and the benefits far outweigh the costs, then it probably will happen since we’re self-interested humans.
We can’t idolize simple code and hold it to a deity level. If a smart contract, for example, goes wrong and machines start breaking into houses, causing widespread havoc, and the only way to stop it is through a hard-fork, then, of course there should be such hard-fork.
Some might say that would cause a moral hazard, but whoever was involved with that project would probably be shunned or even imprisoned for reckless negligence. Some might say it makes the protocol political, but the solution is easy. Hold a tokens vote, miners vote too. Whoever disagrees is free to split and compete in the free market.
