Despite the appearance from social media of a majority against restoring Parity’s ethereum coins, a non-fakable ethereum token holders vote shows they’re currently largely in favor.
The numbers are tiny to reach a full conclusion, only 37 have voted so far, but the vote has been on-going since yesterday and 67% of those that have voted are in favor while 33% are against.
The result appears surprising, even with the caveat, but then we’ve long suspected social media comments often amount to who can shout loudest rather than a genuine representation of overall opinion.
Making this vote quite important in our view because we do think it would be highly persuasive whichever way it goes.
Since this is on-going and can very much change within the one week voting time period, we’ll try and be unbiased in laying out the arguments for and against.
Firstly, you’ll remember in November last year a security vulnerability in Ethereum’s second most popular client, Parity, was exploited, leading to 500,000 eth being frozen or “burned.”
Most of that Eth belonged to the Polkadot ICO, with Polkadot being a Parity affiliated protocol of sorts that tries to make blockchains “talk” to each other. There were also a number of other non-Parity affiliated ICOs and projects that were affected.
The final relevant fact is that the exploit was accidental, or so the person, Devops, claimed at the time, who back then said:
“I’m eth newbie… just learning… sending kill() destroy() to random contracts you can see my history.”
We don’t have any reason to doubt him, and we don’t think any of the above is in question so far. What is in question is whether this 500,000 eth should remain frozen or burned or whether they should be restored.
The arguments against restoring them have two main legs as far as we can see with both somewhat related to each other.
Firstly, they argue Parity was negligent in not auditing the second contract despite them having to take down the first contract as it had some problems. They further argue auditors would have noticed the exploit.
They say such negligence should have consequences, with coders so learning through punishment that they have to be extremely careful when designing contracts or indeed protocols.
From that derives the moral hazard argument. If some frozen, burned, or even hacked eth are restored, and some are not, this creates a subjective ad hoc environment that can be manipulatable by interested parties or indeed by adversaries.
That moral hazard argument can then be taken to the extreme to say the government could order the censoring of a certain address or activity, or fake social media or established media campaigns can push for it, or that FED like processes would be established to favor one group over another, and basically the whole thing becomes gamable.
To distill that, those that argue against restoring the eth are arguing in favor of immutability. That is, ownership should never be changed except for as stated by the already running network rules. They make no exception to this position as far as we are aware, minus where a protocol bug say prints out a trillion eth as it did in bitcoin in the early days.
The arguments in favor of restoring the eth have a number of arguments too, but we’ll present them in a sort of reverse pyramid to continue from the above.
Those in favor of restoring the eth argue that while immutability is a quality of the ethereum network, it necessarily can not be an absolute quality, as even those against the restoration concede in agreeing the network rules can be changed if a bug prints out a trillion.
Ethereum, and decentralized blockchains, therefore, have general immutability, they say, but there are or there can be exceptions, like the Slockit DAO fork.
They are somewhat hazy regarding when such exceptions should apply, but it can perhaps generally be summarized as when big enough amounts or events are involved, when the coins are restorable without affecting any other coin or process – thus no blockchain rollback – when there’s a sufficiently good enough reason, and of course when there’s a general majority in favor of restoring them.
They say moral hazard does not apply here because each network participant has to consent. Thus if the majority is really against it, then the chain with the restored coins would be a minority chain, like ethereum classic.
Regarding any potential negligence they say the bar for coding quality is indeed high, but if even the experts who run ethereum’s second biggest client can not get it quite right, what hope is for mere mortals?
The punishment here would be, they argue, what Parity is currently going through. One can just imagine, for example, the devastation at the Parity team during those November events or indeed what can be seen as humiliation for this proposal to even be put forward.
That ensures, they argue, the coding standards would remain very high and perhaps even increase because of course no one can be sure the eth would be restored.
If there was any negligence in this case, they would say, that shows just how hard it is to code on irreversible money. That’s because, they would say, the ecosystem does not quite yet have the refined experience, with ethereum and smart contracts still barely two years old.
Mistakes are to be expected, they would argue. And if even such mistakes that are accidentally found by a noob going around pressing buttons, lead to the loss of hundreds of millions, then ethereum becomes a fairly dangerous platform to code for.
That means the ecosystem would slow down because experimentation is severely punished, while established companies would think more than twice before dedicating resources as they could go up in flame without recourse.
In that situation the ecosystem would then need another more agile and a more forgiving blockchain which is a bit more friendly to developers and can therefore allow for wider experimentation and for faster movement as well as innovation.
Both arguments are fairly persuasive and although we have tried to lay them out in an unbiased way, some bias might have leaked as we are independently in favor of restoring the eth.
We are in favor mainly because the ecosystem needs to mature a lot more before the blockchain can be frozen. There has, of course, been quite a lot of advancement on that front since 2016, but as the Parity events show, that’s clearly not been enough.
We are also very aware of what happened after the DAO. If you can recall, at the time the ecosystem dreamed of Decentralized Autonomous Organizations, of us becoming CEOs and boards of directors, running smart contract based companies in a collective of sorts.
It is a stupendously innovative idea with considerable implications in our view, and we would like that to be brought back, but it was shelved in 2016 because coders deemed it far too risky.
That suggests an absolute line on immutability comes at the cost of innovation. Considering these things are not even ten year olds yet, even for the oldest, bitcoin, while eth has barely learned to walk, slowing down innovation at this point would probably be a choice limited to one chain.
Because as we have argued before if the eth are not restored, then Parity should fork on its own as the ecosystem does need an agile blockchain which does move fast, does break things, and does not shelf innovative ideas like the DAO based on some principle that even its proponents say has exceptions.