Ethereum Classic

  • Cryptoasset Report
  • August 27, 2019

Ethereum Classic is a smart contract platform, emerging through an Ethereum fork following the 2016 DAO hack.

Overview

In most technical respects, Ethereum Classic is identical to Ethereum, including core functionality as a Turing-complete smart contract platform, metatoken functionality including the ERC-20 standard, and smart contracts written in Solidity. DApps developed for Ethereum can be ported over to Ethereum Classic, though there are few examples of this to date. However, Ethereum Classic has a distinct monetary policy from Ethereum, presently a 4 ETC per 15 second block time reduced by 20% every 2.4 years, and a long-term supply cap of 230 million ETC. In contrast, Ethereum does not have a long-term supply cap, instead maintaining a more flexible monetary policy including staking rewards in future versions. Both networks use the same hash algorithm, Ethash, with similar corresponding hardware. Unlike Ethereum, Ethereum Classic does not intend to migrate to a Proof of Stake system.

Project Details

Ethereum Classic arose in mid-2016 following the DAO hack, in which over $150 million in ETH was stolen from its smart contract through a software vulnerability. Since this represented over 10% of the total ETH supply, the community underwent a contentious debate over how to best remedy the situation and promote long-term viability for the network. Ultimately, a majority of the community voted to hard-fork the network to return stolen funds to their original address. The forked blockchain became Ethereum, and the non-forked blockchain became Ethereum Classic. All holders of ETH at the time of the DAO received an equivalent amount of ETC following the fork. At the time, proponents of the later project emphasized the importance of immutability in token holdings, so thought that reverting the DAO tokens was improper. This philosophy follows the ‘code is law’ approach to smart contracts, and Ethereum Classic’s broadly conservative approach to development and monetary policy.

Ethereum Classic has received notable support from Digital Currency Group, a venture capital firm with considerable holdings across the industry, including Coindesk. In particular, Grayscale operates the Ethereum Classic Trust, a publically traded fund tied to an underlying reserve of ETC. The Ethereum Foundation is not involved with Ethereum Classic, which is supported by developer groups including ETC Cooperative and IOHK.