Stanford University researchers have proposed a prototype for “dynamic transactions” on Ethereum, stating that it could be a solution to reduce the impact of crypto theft.
On September 25 TwitterStanford University blockchain researcher Kylie Wang shared the idea of an Ethereum-based reversible token, stating that it is not a finalized concept at this stage, but “an idea to spark discussion and create better solutions from within the blockchain community.” Referring to:
“The major data breaches we’ve seen are thefts with undeniable hard evidence. If there was a way to reverse thefts in such situations, our ecosystem would be much safer. Our proposal would only allow for an override if approved by a decentralized panel of judges.
The proposal was put together by blockchain researchers at Stanford, including Wang, Dan Boehne, and Qinchen Wang, and lists the names of “opt-in standards for ERC-20 and ERC-721 siblings” ERC-20R and ERC-721R.
Billions have been stolen in crypto. If we can’t stop theft, can we reduce the damage?
In recent months, another couple @ Stanford Researchers and I developed a prototype to support reversible transactions on ERC-20R/721R. #Ethereum.
See post: https://t.co/38Hs0F9goU
— kaili.eth (@kaili_jenner) September 24, 2022
However, Wang Explained. Explaining that the prototype is not intended to replace ERC-20 tokens or make Ethereum reversible, he explained that it is an opt-in standard that “simply allows for a short-term window post-transaction to counter and restore theft.”
Under the proposed token standards, if someone’s money is stolen, they can file a claim against their assets with a management contract. This would then require a decentralized jury to vote “within a day or two at most” to approve or reject the request.
Both sides of the transaction have enough information to theoretically be able to present evidence so that judges can reach a fair decision.
For NFTs, the process will be relatively simple as the judges need to see “who is the current owner of the NFT and who has stopped the account”.
However, the proposal acknowledges that freezing the fungi signals is more complicated, as the thief could split the money among dozens of accounts, mix it anonymously or exchange it in other digital assets.
To prevent this, the researchers developed an algorithm that provides a “default cooling process to track and lock stolen funds.”
It ensures that sufficient funds in a thief’s account will result in a freeze to cover the stolen funds, and that the funds will only be frozen “if there is direct transaction flow from the theft.”
We provide other comments in bulk.
– If you think this is an incomplete solution, you are absolutely right. Our paper provides some pieces of the puzzle (focusing on the mechanics), but we also address many open questions regarding decentralized government. That place needs work.
— kaili.eth (@kaili_jenner) September 25, 2022
Wang’s Twitter post generated a lot of discussion, with a mixed crowd asking more questions, supporting, refuting, or offering their own ideas.
Related: The UK government introduced the bill, which aims to encourage authorities to ‘seizure, deter and recover’.
Prominent Ether (ETH) bull and podcaster Anthony Sassano was not a fan of the proposal, telling his 224,300 followers on Twitter: “I’m all for bringing new ideas to Ether, but I’m not here. For TradFi 2.0. Thanks, but no thanks.”
I’m all for people coming up with new ideas and putting them out into the ether, but I’m not here for TradFi 2.0.
Thanks but thanks https://t.co/pdSIB5Ib05
– sassaal.eth (@sassal0x) September 25, 2022
Discussing the idea further with people in the comments, Sassano explained that he thinks reverse regulation and consumer protections like exchanges and companies should be placed on companies rather than the base layer (blockchain or token).
“Doing it at the ERC20/721 level would essentially be doing it at the ‘base layer’, which I don’t think is right. End-user protections can be put at higher levels like the front-end.”