“We think we’re the real ethereum.”
In a recent talk at CoinDesk’s developer-only conference Construct, developer Elaine Ou outlined how ethereum classic differs from ethereum, the blockchain that split from its original developers over an ideological disagreement last year.
While ridiculed as a ‘protest chain’ for its original commitment to ‘immutability’ (or the idea that one entity or group shouldn’t have the power to change the blockchain’s transaction history), one of the more interesting elements of Ou’s talk was her claim that ethereum classic has been forging ahead by differentiating itself from ethereum in other key technical ways.
Now, the group is moving forward with one pillar of differentiation: monetary policy.
In a statement released on Wednesday, various interest groups supporting ethereum classic announced their support for a proposed monetary policy, or set of rules governing how the protocol’s digital tokens (ETC) are dispersed.
Included are provisions that the total supply of the blockchain’s token will not exceed 230m ETC and a plan to scale down the rewards paid to parties that secure the blockchain.
Notable signatories include IOHK CEO and former ethereum CEO Charles Hoskinson and Barry Silbert, the founder and CEO of investment conglomerate Digital Currency Group (DCG).
The statement reads:
“Our common goal is to make Ethereum Classic a success. We believe that the community can unite and work together to achieve a sustainable global platform.”
As such, the news might mark a significant step in the project’s ideation.
To date, ethereum classic’s defining feature has been its focus on immutability. In fact, this is the ideological difference that led to the blockchain split between ethereum classic and ethereum, which reverted transactions after a major hack of The DAO project last year.
But the two protocols are still very much the same. The code issued on ethereum classic after the split has remained in step with the ethereum project, as the classic team has been copying over many of ethereum’s code changes.
With the news on monetary policy, ethereum classic is taking a nibble at legitimacy. Up until the split, many developers anticipated that in the case of a hard fork – merely a hypothetical up until The DAO event – a minority chain like ethereum classic would die out.
In this way, ethereum classic places itself as an aspiring project in the context of a long chain of cryptocurrencies that have failed to fulfill promises made by their founders, yet simultaneously impassioned their supporters.
Hard limits
To those observing the space, though, the announcement is hardly surprising.
“Ethereum’s current monetary policy – well, it doesn’t have a monetary policy,” Ou acknowledged in her overview presentation at Construct in January.
The community’s plan to ‘fix’ this problem has been outlined in an official proposal, known as ECIP 1017, the proposal that the protocol’s various stakeholders officially announced their support for on Wednesday.
“We wanted to modify the monetary policy so it looks more like bitcoin’s hard limit of about 200m ether. Every two-and-a-half years or so, the block reward will be reduced by about 20%,” Ou explained.
But, what’s the big deal about monetary policy?
To ethereum classic’s anonymous project coordinator, Arvicco, it’s an attribute that will facilitate further development and growth.
“The undefined monetary policy of ethereum, its unlimited token inflation, is an impediment to all positive developments,” he said. “Moving to a bitcoin-like fixed cap emission schedule was considered a priority by many ETC stakeholders.”
One of the best examples of ethereum classic’s upward progress, and continued controversy, is that investment company DCG proposed an investment fund that would support ethereum classic projects.
Yet, the monetary policy is so important, DCG founder and CEO Barry Silbert has said, that it doesn’t intend to launch the fund until the plan is finalized.
“When something is clearly known and defined, it makes it much easier for investors, miners, developers and other community members to plan around,” said IOHK project lead Carlo Vicari.
Ethereum classic arguably took its first step on this path when it carried out a hard fork to postpone the so-called difficulty bomb that’s built into the ethereum codebase (meant to encourage migration to another consensus mechanism).
But, isn’t changing the monetary policy a fundamental change to the protocol? Some would argue so, as it requires another hard fork.
Ethereum classic has become the poster child for what can happen when a protocol forks – and its actions now could go a long way to establishin precedent for other contentious chains.
It might show what could happen if ethereum classic itself executes a contentious fork. Although, so far, the cryptocurrency has carried out two others without spawning something like ‘ethereum classic classic‘.
One company’s influence
Monetary policy is perhaps the highest priority change according to the community, but there are others in the works as well.
IOHK, a company that’s been particularly active in the space, has been one of the biggest players so far.
Perhaps most notably given the major resource commitment, IOHK is funding seven full-time developers to work on a Scala implementation of the ethereum classic protocol, expected for beta release this summer.
The cryptocurrency now has two teams working on ethereum classic clients – implementations of the protocol users can run.
Beyond that, IOHK is treating the relatively new cryptocurrency like a research laboratory.
“We want to see if we can create a divergent roadmap and see where we can go with it, to see how successful a different model would be from what [ethereum creator Vitalik Buterin] has planned with the Ethereum Foundation,” Hoskinson said.
He pointed out plans to use a different consensus algorithm (a hybrid of ‘proof of work’ and ‘proof of stake’) and decentralized governance as options.
Hoskinson told CoinDesk:
“One of the biggest contentions in the debate between ethereum and ethereum classic is basically who gets to control the system. With ethereum, that’s the Ethereum Foundation. They control the money, they have the developers and they have the crowdsale mandate.”
Notably, Hoskinson was the former CEO of Ethereum (back before it was a non-profit even), but left over a difference in opinion about how ethereum should be structured.
But, though no one has control of ethereum classic, according to Hoskinson, he thinks there needs to be some better governance mechanism for coordinating future forks and distributing funds to developers.
One proposal that the company is working on is for a ‘treasury’ that funds developers, but isn’t managed by any one institution.
The proposal isn’t yet complete, but the idea is for a development ‘tax’ that’s built into the protocol. Essentially, while miners get a block reward for discovering new blocks, a percentage of each block reward will be sent to the so-called treasury to dole out to developers or projects the community chooses to vote for.
Hoskinson compared the structure to a traditional government that taxes participants for the common good. Although some participants might be wary of a tax, he argued that mining rewards are a kind of tax and that it’s possible that development could be funded in the same way.
Forward-looking questions
Despite these developments, ethereum classic is a small community. One criticism often leveled at the classic blockchain is that, unlike ethereum, not many decentralized apps (or dapps) are built on top of it yet.
In Hoskinson’s opinion, this is a good thing. Before smart contracts are deployed, he said, researchers and developers need to further vet their security and lay the groundwork at the protocol level.
Others, though, think that work on ethereum classic dapps could pick up sooner rather than later.
“I expect that after monetary policy is set and other foundational pieces come into place, the focus for some in the community will shift to dapp development,” Vicari said.
Ou mentioned that there are still many other major open questions around big technical upgrades, such as ‘sharding‘. Arguably, the Ethereum Foundation hasn’t delivered on its promises here, and Ou claims that ethereum classic might go a different route.
Still, even with all this recent discussion, ethereum classic was originally born out of a commitment to immutability, and that simple goal may continue to be what motivates the community.
Ou concluded:
“Right now, ETC’s main feature is that we favor immutability. I know that some people don’t care about that – maybe they don’t need a blockchain at all.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group.
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