Thread by @kaili_jenner

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 & 🧵:
mirror.xyz/kaili.eth/gB-r…

2/ 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. The steps:

3/ Step 1: Upon realizing theft, victim requests to freeze the stolen funds. To freeze means to disallow the funds to leave the account they currently are in.

4/ Step 2: The decentralized court of judges quickly vote to either accept or reject the freeze, based on preliminary evidence.

5/ Step 3: If accepted, freeze is executed. The process differs based on whether it's an ERC-20R or an ERC-721R; for 20R, see paper for algorithm to trace the funds.

6/ Step 4: Trial. Judges vote to revert or unfreeze the funds, given evidence submitted from either side

7/ Step 5 (last step): If reversal was agreed upon, the frozen funds are sent back to the victim. Justice is restored.
(See green in example transaction graph below)

8/ This is not a proposal for how reversible transactions ought to look like in final form -- this is a proposal to provoke discussion and even better solutions from the blockchain community.

Improvements, disagreements, alternatives - we hope to see them all.

9/ To learn some more, read the mirror post linked in the first post in this thread.
To learn a lot more, read our paper here:
arxiv.org/pdf/2208.00543…
It's been an exciting project to work on with @danboneh and @quinnwang9th at @Stanford !

10/ we will be presenting on this @UCBerkeley on oct 31-nov 1 at CESC. Come say hi :)

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://twitter.com/VitalikButerin/status/987262267036184577

Gonna mass-address other comments:
- If you think this is an incomplete solution, you're entirely correct. Our paper provides some pieces of the puzzle (focuses on the mechanics), but we mention many open questions surrounding decentralized gov. That space needs work.

- In this ERC-20R scenario, a transaction is only freezable for a short amount of time (say, 3 days) before it becomes irreversible. For most of their lifetime, ERC-20R funds are irreversible.

w.r.t fungibility: it's possible to implement this in such a way that the contract has two types of balances: permanent (settled) and reversible. If funds come from someone's reversible balance, then it will live in reversible balance for 3 days and then move to permanent.