Researchers from Stanford University have created a prototype for “reversible transactions” on Ethereum, claiming it may solve or lessen the damage of cryptocurrency theft.
Stanford blockchain researcher Kaili Wang unveiled a rundown of the reversible token idea on Sunday in a tweet, admitting it is not yet a finalised concept, but more of a “proposal to provoke discussion and even better solutions from the blockchain community.”
She added: “The major hacks we've seen are undeniably thefts with strong evidence.
“If there was a way to reverse those thefts under such circumstances, our ecosystem would be much safer.
“Our proposal allows reversals only if approved by a decentralised quorum of judges.”
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
— kaili.eth (@kaili_jenner) September 24, 2022
How would this work?
Wang made clear the prototype is not to replace Ethereum tokens with reversible ones, but suggests that it is an opt-in standard that “simply allows a short time window post-transaction for thefts to be contested and possibly restored.”
This was first proposed approximately four years ago.
Someone who has had assets stolen can submit a freeze request, which would be assessed by a decentralised court of judges that would swiftly vote “within a day or two at most.”
Both sides would be allowed to give evidence to the judges to ensure they have the information to reach the correct decision.
Enough of the thief’s funds would be frozen to cover the stolen amount, only when “there’s a direct flow of transactions from the theft.”
The researchers said this algorithm provides a default freezing process for tracing and locking stolen funds.
For non-fungible tokens (NFTs), the process would be expected to be fairly easy, with the judges being able to freeze the account of whoever “currently owns the NFT.”
Although the proposal accepted that freezing normal tokens could be a lot more complex, with the thief having the chance to split funds across dozens of accounts and run them through an anonymous crypto mixer or exchange them for other digital assets, Coin Telegraph noted.
Ethereum bull and podcaster Anthony Sassano was not happy with the idea.
He believes that reversal control and consumer protections should, if at all, be placed on the “higher layers,” such as exchanges and companies, instead of the base layer (blockchain or tokens).