Stanford University Research Group Proposes Reversible Ethereum Transactions
The proposal begins by stating that the “immutability of blockchain transactions is both a blessing and a curse.” It then goes on to list a few recent crypto-related scams and exploits due to the fact that there is no “undo button”, such as credit card payment reversals.
A paper was written and experiments were conducted on ERC-20R and ERC-721R token standards, reversible versions of ERC-20 and ERC-721. These are the most widely used token standards for NFTs and other tokens.
The paper proposes a governance system to rule on reversing transactions that are challenged. A victim would post an on-chain freeze request to a governance contract with relevant evidence and some stake. The staked amount remains locked in the governance contract and excess stake is returned if the claimant wins the trial, otherwise, the staked amount can “compensate the defendant for their effort”. The request would be reviewed by a decentralized set of judges who will reach a decision in one or two days. Should the request be approved, the judges will initiate the freeze function on the contract to freeze funds. A trial would then be held where both parties present evidence to the judges so that they can reach a final decision on whether or not to reverse the transaction.
More complicated workflows were required for ERC-20 contracts and to combat malicious users from freezing assets of honest users. The researchers expect that there will be a large pool of available judges who the contract selects from at random. The judges will be compensated with fixed fees regardless of their decision. Judges that fail to vote in a timely manner or vote suspiciously will be removed from the pool of judges. To prevent bribery, the set of judges or only revealed after they’ve all voted.
Prototypes of the reversible ERC-20 standard were deployed and can be viewed on GitHub.
The proposal was announced by one of the researchers via twitter and sparked a divide between those for and against the project.
Billions in crypto stolen. If we can't stop the thefts, can we reduce the harmful effects?
— kaili.eth (@kaili_jenner) September 24, 2022
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
