High Stakes: Ethereum’s Fight Over Lost Funds Explained

The “world computer” is ensnared again in a heated debate.

Sparked by a controversial code proposal called EIP 867, ethereum’s development forums have become something of a battleground, crowded with bitter commentary, snide pull-requests and coordinated attempts to erase the idea from the platform’s repository.

For those unfamiliar, the conflict surrounds an effort to make it easier for ethereum users to reclaim lost ether (ETH), the network’s cryptocurrency (now valued at $870), outlining a process by which such requests could be submitted in a clear and executable format to those who maintain the technology.

No small problem, fund losses on ethereum have become frequent.

High-profile cases, such as the deletion of a code library from leading software company Parity Technologies saw 513,774.16 ETH or $421 million rendered inaccessible last year. And just months before, the same company lost 150,000 ether, or $123 million, due to a code error.

But it’s not just Parity. Last year, a faulty ethereum address generator saw Kraken exchange and wallet provider MyEtherWallet lose hundreds of thousands of customer funds. And many more, whether due to glitchy software or simple typos, have lost money on platform — one address even holds a total of $6.3 million in ether because it too closely mirrors a call code that automatically locks up funds.

But while some users think refunding the lost ether is acceptable, a side effect of enabling digital fund ownership and the accountability that entails, others are vehemently opposed, believing that such efforts threaten the integrity of the ethereum platform, while raising potential legal liabilities.

Indeed, one core developer even stepped down from his role as code editor citing legal consequences that might ensue down the line.

Still, the conflict is nothing new, harkening back to a controversial decision enacted on the platform in 2016 — in which ethereum refunded 3.6 million in hacked ether in a system-wide upgrade, or hard fork.