The proposal for the development of reversible transactions could mitigate the impact of attacks on DeFi and crypto protocols.
A group of researchers from Stanford University in the United States has conducted a proposal for the development of “reversible transactions” in Ethereum. The proposal notes that this could be a solution to token thefts and attacks on DeFi protocols.
Blockchain technology researcher Kaili Wang of Stanford University posted a tweet on her Twitter account on September 25th explaining the idea behind so-called “reversible transactions.” Wang notes that it is a “concept under development” rather than a firm proposal and aims to encourage dialogue and for the crypto community to contribute ideas.
For Wang, The main cyber attacks are undeniably thefts. Therefore, if there was a way to rto prevent these thefts, the ecosystem would be much safer. The Stanford University proposal would allow transactions to be reversed, but only if there was solid evidence of theft, since the reversal would have to be approved by a quorum decentralized judges.
The proposal outlines the creation of “Optional Token Standards which are siblings of ERC-20 and ERC-721, called ERC-20R and ERC-721R.”
The proposal explains that It is not about replacing ERC-20 tokens nor make the entire Ethereum ecosystem reversible. As the title notes, this is an optional standard that “allows a short window of time after the transaction for thefts to be challenged and restored.”
In this sense, when a robbery occurs, A request is made to freeze the assets of a government contractThe decentralized court must then vote quickly (within a day or two at most) to approve or deny the request.
At this point, both parties must provide evidence to the court so that they have all the information possible to reach a fair decision.
The problem with fungible tokens on Ethereum
Wang explains that, in the NFT case, the process would be really simple, since they would only have to review who is the current owner of the token and freeze the account.
However, freezing fungible tokens is much more complicated, as a malicious user can distribute the funds among dozens of accounts, pass them through a token mixer or exchange them for another kind of digital assets.
To counter this, they have designed an algorithm that provides a “default freezing process to track and block stolen funds.” This way, enough funds will be frozen in the malicious actor’s account to cover the stolen amount, and the funds will only be frozen if “there is a direct flow of transactions since the theft.”
Some developers in the Ethereum community, such as Anthony Sassano, They do not agree with this proposal, since they believe that the User protection and rollback control of transactions should be placed on higher security layers, such as exchanges and decentralized finance companies, but never on the base layer of the blockchain or the tokens themselves.
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