Alex Van de Sande, a promoter of the Ethereum Foundation, has proposed a pool of insurance. According to him, this new practice will mitigate the risk of splitting the network due to the desire to recover frozen funds, due to code errors in smart contracts.
“Creating a recovery contract with a dedicated insurance fund, would reduce the incentive of a person or group. For example, owners of more than $ 320 million of ETH were rendered unusable after Parity’s multi-signature wallet contract library self-destructed. It would have been necessary to continue a litigation fork to recover all or a part of the value lost because of the bug, “ wrote Van de Sande, the team leader of the Mist browser, in a blog.
The operation of the system
Ether will be locked into a recovery contract for a predetermined period of a few years. Developers will be able to secure their smart contracts this way. Any work deserving of salary, they will receive from this fact, an equitable number of ” tokens recover-ether” in exchange and will be free to preserve them or to sell them to the speculators.
Holders would have the possibility to recover their tokens for a percentage equivalent to the pool fund if the Ether secured by the contracts becomes frozen – hacking and other criminal attempts while the tokens retain their liquidity, will not be covered by the fund. The pool fund is 90%, the remaining 10% will fund the general insurance fund of all tokens.
If the blocking years pass without any recovery process being initiated, the recovery tokens will be automatically destroyed. The transmitter will be able to receive its locked Ether. As for profits, the sale of recovery tokens will ensure their existence.
The salvage contract would be governed by token holders. They could vote on certain decisions such as the contracts the fund should insure.
Some fortuitous points
However, there could be obstacles to the recovery of tokens. Governments that regulate cryptocurrencies can classify tokens as securities.
Van de Sande’s proposal, however, contains a controversial element. This is the launch of more than 513,000 passive ETH funds by issuing collection tokens to code-fault victims in Parity’s multi-signature contract library.
In addition to mitigating the risk of a contentious splitting of the network, Van de Sande argues that this action would transform victims – a group that includes many of the best Ethereum developers – into stakeholders in the new fund. This, in turn, will probably give the pool a greater chance of gaining popularity once it has been launched.
What do you think of Alex Van de Sande’s proposal for a new Smart Contracts Insurance Fund? Let us know in the comments section below.