What Happens If Reversible Ethereum Transactions Appear?

Stanford University academics developed a prototype for reversible transactions on Ethereum, claiming it might be a way to lessen the effect of cryptocurrency theft.

The report, which was published on September 9 and detailed on September 24, argues for a blockchain “back button” or “undo button” in the event of a hack or theft. It cites recent BAYC phishing assaults, Poly Network attacks, Harmony Bridge penetration, and Ronin theft as grounds for requiring a reversible transaction.

Kaili Wang, a Stanford researcher, said that at this stage it is not a finished concept but more of a proposal to provoke discussion and even better solutions from the blockchain community, noting:

“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 decentralized quorum of judges.”

However, Wang noted that the prototype was not intended to replace ERC-20 tokens or make Ethereum reversible, but rather to provide a small time frame post-transaction for thefts to be challenged and maybe recovered.

If someone’s money is stolen, they can file a freeze request to a governance contract under the proposed token rules. This will be followed by a decentralized court of judges voting within a day or two at most to approve or reject the proposal.

Both parties to the transaction would also be allowed to offer evidence to the courts, giving them enough information to make a fair judgment.

For NFTs, the procedure would be quite simple because the courts would just need to determine who now owns the NFT and freeze that account. According to the idea, it guarantees that enough money in the thief’s account is frozen to cover the stolen amount and that the funds are only blocked if there is a direct flow of transactions from the crime.

Wang’s tweet sparked several responses, with a diverse range of people asking further questions, endorsing the notion, rejecting it, or suggesting their own suggestions. Anthony Sassano, a prominent Ether bull and podcaster, seems to disagree with the proposal:

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