- Project name: Ethereum Classic
- Token name: ETC
- Crowdsale Date: July – August 2014
- Release date: July 2015 (as Ethereum)
The Ethereum DAO Hack and Creation of Ethereum Classic
When Ethereum was released, the biggest and most important feature was the ability to create Turing-complete smart contracts. A smart contract is a piece of code stored on the blockchain that is immutable and automatically enforces the terms that are programmed into it. Smart contracts are the backbone of decentralized applications (DApps).
The DAO, short for Decentralized Autonomous Organization, was a complex smart contract released on Ethereum with the ambitious goal of revolutionizing the ecosystem. It would operate as a decentralized venture capital fund that would approve and fund new DApps built on the Ethereum blockchain.
Ethereum users would have to buy DAO tokens for a certain price in ETH to indicate their participation in the DAO system. Whitelisted DApp proposals would be voted on by DAO holders, requiring a 20% approval from the community to unlock funding and begin building.
The DAO was widely regarded as a great idea that would foster a decentralized and transparent ecosystem of DApps, and people jumped on the opportunity. Within 28 days of the DAO’s formation it accrued 14% of all ETH tokens from 11,000+ investors, worth around $150 million at the time.
On June 17, 2016, an anonymous attacker exploited a loophole in the DAO smart contract. This attacker was able to steal 3.6 million ETH, or roughly $55 million from the DAO. However, the nature of the smart contract meant that these funds would be locked for 28 days. The Ethereum community was torn up about what to do next.
What is Ethereum Classic?
After the DAO hack, there were three options for the Ethereum blockchain: do nothing, implement a soft fork, or implement a hard fork.
Each choice had its pros and cons, although the Ethereum Foundation ending up deciding to do a hard fork to return funds lost in the hack to an account available to the original investors of the DAO, and most of the community agreed with this choice.
For background, a hard fork is where a new blockchain splits off from the existing chain at a specific block. The new version typically contains new protocol rules and is not backward compatible, meaning there is no way for the new blockchain to interact with the old one.
The decision was made to create a hard fork of the Ethereum blockchain at block number 1,920,000, a block that was validated just before the DAO attack. Considering most of the community agreed with the hard fork, the new version of the chain was remained to be named Ethereum.
Those opposed to the hard fork decided to remain on the old chain and coined the name Ethereum Classic. This camp was in the minority in the overall Ethereum community.
So, why didn’t everyone decide to accept the hard fork and switch to the new version of Ethereum? The debate has been a philosophical one centered around the principles of immutability.
Ethereum was initially launched as a platform with the goal of revolutionizing the financial industry through transparency and immutability. In fact, the slogan for Ethereum is to “build unstoppable applications”.
When the hard fork was proposed, many people saw it as a cop out that went against (one of) the very principles Ethereum was founded on. They thought that if the network could be forked every time an issue came up, then it’s not truly a decentralized and immutable network.
The people on this side of the debate were generally the ones who supported Ethereum Classic, while the Ethereum Foundation and a majority of the community switched to the new chain.
*Note that many of the features of Ethereum Classic are the same as Ethereum.
- Ethereum Virtual Machine (EVM): The EVM is a Turing-complete virtual machine that can execute scripts using a global network of public nodes.
- Smart contracts: Smart contracts can be deployed on the Ethereum Classic blockchain that act as immutable contractual agreements for payments and other events.
- Dapps: Ethereum Classic supports the development of decentralized applications that are powered by smart contracts and have no possibility of downtime, censorship, or fraud.
- “Code is law”: The Ethereum Classic network has built itself around the principle that code is law – meaning there is no way for a centralized group to alter the path of the network. As a result, Ethereum Classic features true transactional immutability.
- Fixed token supply: ETC tokens have a hard cap on their supply, no more than ~210 million will ever be issued.
Ethereum Classic is an open source project and its source code can be viewed here: https://github.com/ethereumproject
- July 30, 2015: Ethereum’s initial release date.
- June 17, 2016: The DAO is hacked for $55 million worth of ETH.
- October 25, 2016: Gas price hard fork implemented – first hard fork since the split of Ethereum Classic. Repriced operation to prevent DoS attacks.
- January 14, 2017: Die Hard fork implemented – delated the difficulty bomb intended to force the network to move from proof of work to proof of stake.
- December 11, 2017: Monetary policy changed – ETC went from unlimited supply to a fixed cap system with a hard cap around 210 million ETC.
- May 2018: Hard fork to diffuse the difficult bomb was successful.
- June 2018: Emerald Wallet v1.0.0 released
- July 2018: Geth v5.5.0 released, Emerald-Js v0.1.6 released
- August 2018: Emerald-Js-UI v0.0.3 released, Emerald Icon Library released for sketch app
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Considering there is no single governing body for Ethereum Classic, there is no roadmap for the network. The largest organization of developers is called ETCDEV and they update a general roadmap that can be found here.
The team defines their short-term goals as building scalability through sidechains, IoT and Machine-to-Machine protocols, and helping third party developers build apps on top of ETC. Their long-term goals are focused on better security and encryption, interoperability with other blockchains, and decentralized web.
Specifically, the ETCDEV team’s 2018 goals include removing the difficulty bomb, releasing a Dapp SDK, sidechains, new opcodes from ETH, IPFS integration, SputnikVM optimizations, JIT, compilation, and a new improved statedb layer.
Their plans for 2019 are to improve scalability and sharding towards 1000+ transactions per second, light client for IoT and mobile, interoperability with other blockchains, and improving cryptography on EVM.
Currently, the only goals listed for 2020 are hybrid consensus research and mesh networks.
ETC is the native token of the Ethereum Classic blockchain – it is used as gas that incentivizes the network miners through fees from transactions and smart contracts.
Up until block 1,920,000, ETH and ETC were the same currency, meaning all transactions before that block are shared between each network. The hard fork diverted ETH tokens into a new blockchain and the ETC ticker was created for the separate blockchain.
As of September 6, 2018, the circulating supply of ETC is 104,354,157. The average block time is 14.1 seconds and the current block reward is 3.88 ETC, meaning 3.88 ETC enter the circulating supply roughly every 14.1 seconds.
Unlike Ethereum, ETC switched to a fixed token supply system in late 2017, with a hard cap around 210 million ETC to ever be created.
Although there is not an official team behind Ethereum Classic, the largest organization working on projects is ETCDEV. They are an independent team of software engineers and professionals who have committed to work full time on core Ethereum Classic projects.
ETCDEV maintains Classic Geth, the main client for the ETC blockchain and has contributed to other large projects such as Emerald Platform, Emerald Wallet, and SputnikVM.
The biographies of key team members are listed below:
Igor Artamonov, Founder & CTO – Igor has been a professional software developer since 2001, working as a Java developer at Luxoft, HFLabs and iSoftek. He also was the founder of TipTop.io and Infinitape before founding ETCDEV.
Constantine Kryvomaz, Rust & GO Developer – Constantine has worked as a QA engineerg at WorldAPP, server-side software engineer for Wargaming.net, and as a Python software engineer. He works on server-side development for ETCDEV mainly using Rust & Go.
Darcy Reno, Program Manager – Darcy has extensive management experience in the technology industry, working as a development director for EA, head of technology at MPC, CTO of Bardel Entertainment, CEO of SpaceList, CEO of Kloud Ktrl Technology.
Donald McIntyre, Business Development – David’s previous work experience includes VP at UBS Securities, Senior VP at Morgan Stanley, and founding companies such as Dineronet, McIntyre S.A., Naation, Global Financial Access, Inc., and Etherplan.
Advisors for ETCDEV include Cody Burns from Accenture, Elaine Ou from Bloomberg, Avtar Sehra from Nivaura, and Roy Zou from Bitkio.
- Ethereum Classic is one of the more decentralized blockchains, with multiple development teams working on the protocol (ETCDEV, IOHK, and Ethereum Commonwealth), software for running a node, block explorers, wallets, etc.
- Ethereum Classic benefits from inheriting the Ethereum codebase – the Ethereum Virtual Machine enables developers to create and test smart contracts that power decentralized applications.
- Immutability – Ethereum Classic has shown that it values the “code is law” rule, meaning there is true immutability on the network and no transactions will ever be reversed.
- Ethereum Classic is not bound to a governing entity like the Ethereum Foundation, and there is not one person with significant influence over the protocol. This is good from a decentralization standpoint. For Ethereum, the foundation plays a huge part in the future of the network, and people like Vitalik Buterin are viewed as critical to its success.
- Ethereum Classic has a relatively small community as compared to Ethereum and some other smart contract platforms. As a result, the development activity for Ethereum Classic is far less active than Ethereum.
- Judging from the relative hash power compared to Ethereum, Ethereum Classic has a relatively low number of nodes and miners when compared to Ethereum. As a result, the network is more susceptible to 51% attacks and other attack vectors.
- There are very few dApps running on Ethereum Classic. Dapp Direct is the only dApp tracker on Ethereum Classic that we have come across, and according to the tracker, there are only 7 dApps on the ETC blockchain. The dApp with the most daily users was Bitcoin Classic Token, which had only 23 users in the past 24 hours.
- This is the website containing the list of tokens on the ETC chain, and there are 17 tokens in the list. We are not sure how updated the list is, but nonetheless it is a very small number for a smart contract platform. According to Token Market, there are 3 listed assets on ETC.
- The Ethereum Classic network is slow and faces the same scalability issue that Ethereum is facing. In the roadmap, the team will be exploring sharding and sidechain as a scaling option. However, no concrete work has been done yet as far as we know.
- Immutability – as mentioned above, “code is law” is the prevailing rule on the Ethereum Classic network. The immutability feature is both good and bad; transactions will never be reversed on Ethereum Classic but bad actors like the DAO hacker will get to keep their stolen funds.
Overall Rating: C
Since the split of Ethereum and Ethereum Classic, the vast majority of developers stayed with Ethereum. There is a strong network effect for developer community, so we believe it is extremely difficult for Ethereum Classic to become the leading smart contract platform, especially when its code base is so similar to that of Ethereum.
Ethereum Classic faces the same scaling issues as Ethereum. It is much more difficult to implement scaling solutions while the blockchain is running on a mainnet with live smart contracts outstanding. Charles Hoskinson, CEO of IOHK, one of companies developing ETC, mentioned that ETC probably won’t adopt Plasma or Casper to scale the chain, so they would need to come up with different scaling solutions and we believe this effort is still at a very early stage as no clear proposal has been put forward yet.
The recent Coinbase listing is a big catalyst for ETC but Coinbase will soon be listing a lot more coins, diminishing ETC’s advantage. Going forward, we believe new Coinbase listings will have less impact on prices.
As a smart contract platform, Ethereum Classic is a legacy chain with older tech and little usage in terms of number of dApps and smart contract transactions.
As a store of value, Ethereum Classic pales in comparison to Bitcoin or Litecoin in terms of brand recognition.
As a medium of exchange, there are many other competitors and merchant adoption of ETC is behind Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Monero. It also has more attack vectors because of the Turing completeness nature of the EVM, making it less safe as a standalone currency that is used for transactions.
We think that it is difficult for Ethereum Classic to find a niche to differentiate itself – it is a general smart contract platform with legacy tech and little usage. We don’t believe it will be the winning chain in the long run.
- Website: https://ethereumclassic.org/
- Community whitepaper: https://coss.io/documents/white-papers/ethereum-classic.pdf
- Technical documentation: https://ethereum-classic-guide.readthedocs.io/en/latest/
- Declaration of Independence: https://ethereumclassic.github.io/assets/ETC_Declaration_of_Independence.pdf
- Blog: https://ethereumclassic.org/blog/
- General GitHub: https://github.com/ethereumproject/
- Developer GitHub: https://github.com/ETCDEVTeam/
- Twitter: https://twitter.com/Eth_Classic
- Forum: https://forum.ethereumclassic.org/
- Reddit: https://www.reddit.com/r/EthereumClassic/
- Discord: https://discordapp.com/invite/bMGuZsA
- Block explorer: https://gastracker.io/
- Telegram: https://telegram.me/ethclassic
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.
This article is contributed by Victor Lai with the help of our Senior Analyst Kieran O'Day.
Our rating system is based on 5 tiers: S/A/B/C/D, with S being the highest and D being the lowest rating.