Reversible Ethereum ERC20 And ERC721 Tokens Proposed By Standford Researchers

Summary:

  • 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. 

Billions in crypto stolen. If we can’t stop the thefts, can we reduce the harmful effects?

Over recent months, a couple other @Stanford researchers and I drew out and prototyped ERC-20R/721R to support reversible transactions on #Ethereum.

See post & 🧵:https://t.co/38Hs0F9goU

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.

Hey guys 🫡 clarifying a recurring misunderstanding from the comments:
This is not a proposal to replace non-reversible tokens with reversible ones, or to make Ethereum reversible. This is to discuss a new potential token type, as originally proposed 4 years ago. https://t.co/OhaDSp5Hi9

Reversible Ethereum Transactions Against Blockchain Ethos, Say 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. 

So how does this work when an attacker steals ERC-20R and cashes out to ETH via a DEX in the same transaction? Or ERC-20R will be incompatible with the current DeFi ecosystem? https://t.co/n5pN82ZBBe

Selecting & motivating a decentralized jury in a tamper-proof manner is an incredibly difficult process. If introducing extra tokens, it invites economic 51% attacks. If no extra tokens, it becomes plutocratic. If juror pool is small enough, often there are conflicts of interest

Transactions cannot be reversed while preserving a functioning decentralized system. Finality (well, immutability) is the primary product being sold.

The more reasonable solution is contracts with finer controls on how they operate and who can operate them under what conditions

Despite the backlash, some users surmised that the proposal boasts merits and opined similar thoughts. 

Very interesting. Along the same lines: https://t.co/8vCf4PJ59S

Interesting thread, conversation needs to happen about this kind of stuff. Glad you and your team are trying to find possible solutions.

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. 

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