For orthodox Ethereum users, this might sound outright blasphemous, although those who got tricked may consider it a proper security measure. Stanford scholars Kaili Wang, Qinchen Wang, and Dan Boneh have proposed new Ethereum token standards allowing reversing transactions in certain circumstances. In a paper published on September 24, they call for an "undo button" that could be applied in a situation of a theft – assuming there's enough evidence to back up such claim – or a hacking attack.
For that purpose, the researchers designed opt-in token standards, which they named ERC-20R and ERC-721R. Their aim is not to replace the current standard or render Ethereum editable. The idea is to provide a short time following the transaction (authors suggest around three days) to make it possible to contest theft and restore money to its legitimate owner. Apart from that, transactions would not be reversible. To support their point, the authors bring up events such as BAYC phishing, PolyNetwork attack, Harmony Bridge compromise, and Ronin theft. "$14 billion of crypto stolen in 2021 alone" – they remind.
The token's mechanism is visualized in the graphics below.
In case of a hacking attack, a victim may post a request to freeze the stolen money, but they need to support it with adequate evidence. The request is then analyzed and voted on by a decentralized group of judges. Depending on the result, the transaction is reversed or not. That's the short version of the story. For the long one – check out the original article.
"Our hope is that this starts a discussion on token reversibility, and that some of you may find even better reversible solutions that help reduce the losses in the ecosystem" – the paper concludes.
In a Sunday tweet, Kaili Wang once again stressed that the concept is in the stage of development: "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".
The "undo" button for crypto transactions is not the newest idea on the block. In 2020, Kiorobo, the Tel Aviv-based startup, launched a protection layer for Ethereum, after previously creating a similar solution for Bitcoin. It allows the user to "undo" the pending transaction in a short time frame, before the receiver enters a special code sent to them by the party dispatching the assets.