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Ethereum Classic

Ethereum Classic is an open-source, public, blockchain-based distributed computing platform featuring smart contract functionality. It is a hard fork of the original with the same consensus rules. [5]

Ethereum Classic was created when the original was in 2016. Since then, Ethereum Classic has built a blockchain community of developers dedicated to its growth. The Ethereum Classic platform enables users to create and deploy , create and manage digital assets, and create . The blockchain is also well known in the community for frequent hacks on its system. [19][5]

History

Ethereum Classic is the legacy chain of — a blockchain network founded by and . However, its true supporters are members who maintained the immutability "code is law" stance i.e. non-supporters of the that took place after The DAO hack incident. [20][6]

Initially, the was established as a single network that facilitates transactions using the cryptocurrency ether or ETH. It quickly gained popularity for initial coin offerings (ICOs), as numerous teams used the platform to launch tokens. One of the most successful ICOs was The DAO.

The DAO

The DAO was the first-ever decentralized autonomous organization (DAO), allowing many would-be investors and entrepreneurs a chance to pitch and back ideas, with all parties reaping the rewards if they were successful. It was essentially a decentralized Kickstarter that used the blockchain and operated via a set of smart contracts. It raised over $150 million or 12.7 million Ether in April 2016, making it one of the largest crowdfunding campaigns in history. [7]

The DAO Hack

On June 17, 2016, the DAO was hacked. The hack was caused when the 'Split Function', (which was a way for investors to withdraw their support from a project and get their Ether back) was triggered repeatedly to drain the DAO of 11.5 million ETH worth $50 million at the time. The amount taken represented about a third of the DAO’s Ether.

The hackers found a loophole in the code that meant the network repeatedly refunded the same DAO tokens — without the transactions being registered on the public ledger. This happened because the coders of the DAO smart contract didn’t account for the possibility of a recursive call. The smart contract was also set up so that ETH would be refunded prior to the internal token balance being updated. [7]

Due to the scale of the hack, many investors proposed reversing the blockchain to rescue the affected investors, while others argued that doing so would set the precedent for future bailouts. A poll was conducted, with 97% of the community voting to restore the funds through a (which occurs when the original codes of a blockchain are changed in such a way that the newly generated data no longer matches the old data). [8]

Ethereum Classic (ETC)

As a result of the , the blockchain split into two separate networks. The newer, forked network inherited the name and uses ETH or ether as its . The older, unforked one was named Ethereum Classic and it uses ETC. [3][5]

Tokenomics

Ethereum Classic's token distribution follows the same pattern as , due to the fact that they both share a common history. Before the division caused by The DAO incident, ETH and ETC were the same assets (initially referred to as ETH). [9]

The original distribution event occurred through a public token sale managed by the Ethereum Foundation, which sold roughly 60 million ETH (80% of the initial 72 million ETH supply). The sale took place between Jul. 22, 2014, and Sep. 2, 2014. The remaining 12 million ETH (20% of the initial supply) were allocated to the Foundation and early contributors. Of the ether sent to the Foundation:

  • 3 million were allocated to a long-term endowment
  • 6 million were distributed among 85 developers who contributed prior to the crowdsale
  • 3 million were designed as a “developer purchase program” that gave Ethereum developers the rights to purchase ETC at crowdsale prices [9]

Ethereum Classic uses a Proof-of-Work (PoW) mining algorithm where miners are rewarded with new coins for validating the blockchain in competition with each other. [10]

The Fork Distribution

When and Ethereum Classic split following the DAO fork (on July 20, 2016), holders of ETH received equivalent amounts of ETH and ETC. Following a contentious , users of the original chain may be able to claim the native asset issued on the new chain, if different. Since the Ethereum Foundation trademarked the name "Ethereum" and the "ETH" ticker, the legacy chain opted to rebrand itself to "Ethereum Classic" and use the ticker "ETC" for its native asset. [9]

ETC Usage

ETC is a native token on Ethereum Classic and like , its primary use is to pay for the decentralized computation when using the network. It is also a native token with a monetary policy that creates a predictable, disinflationary emission schedule with a fixed supply cap. These qualities aim to give ETC store of value (SoV) properties. [9]

It is used to pay for executing transactions and functions commonly referred to as 'gas'. The asset also serves as a reward to miners for contributing resources to the network. [9]

Technology

Ethereum Classic (ETC) is an account-based blockchain consisting of external accounts, which are controlled by a user's private keys, and contract accounts, managed by contract code. External contracts can create and sign messages to send to both types of accounts, while contract accounts can only execute transactions automatically in response to a message they have received. These contract accounts are referred to as smart contracts and can be used to enable the programmability of (dApps). [9]

Ethereum Classic utilizes the Ethereum Virtual Machine (EVM), a Turing-complete virtual machine featuring the language “EVM bytecode”, which is typically written in a higher-level language such as Solidity or Vyper. Every operation on the EVM requires computational effort and memory, for which node operators and miners provide and are compensated with gas. A normal transaction on the network costs 21,000 gas but costs more if a user is trying to execute something more complex as that requires more computational power. Users can also speed up their transactions by raising the gas price since that will incentivize miners to include the transaction(s) in the next block to receive those fees. [9]

Governance

The Ethereum Classic Improvement Proposal (ECIP) process is a standardized model for proposing changes to the Ethereum Classic ecosystem, allowing anyone to submit code changes. Proposals must pass through several stages before being implemented, beginning in the “Draft Stage” and progressing to the “Accepted Stage” upon passing by rough consensus. Client developers may add the submitted changes to their clients at their discretion, and there are no on-chain voting mechanisms used to make changes. [9]

Hacks

The DAO fork replay attacks

On 20 July 2016, a replay attack occurred due to reliance on the same clients when the DAO fork was created and broadcast on both the ETC and ETH networks. To address this issue, the Ethereum Classic network was updated on 13 January 2017 to resolve transaction replay attacks, thus separating the two networks. [10]

RHG sells stolen ETC

On 10 August 2016, the Robin Hood Group transferred 2.9 million ETC to in an attempt to sell ETC for ETH on the advice of Bitly SA. 14% of the ETC was successfully converted to ETH and other currencies, while 86% was frozen by . On 30 August 2016, returned the ETC funds to the RHG by setting up a refund contract on the ETC network. [10]

Classic Ether Wallet website attack

On 29 June 2017, the Ethereum Classic Twitter [11] account released a statement indicating a possible compromise of the website for Classic Ether Wallet. The statement was later confirmed by Threatpost. The Ethereum Classic team and Cloudflare collaborated to place a warning on the suspected domain to alert users of the phishing attack. [10]

51% double spend attacks

On January 7, 2019, ETC developers were alerted to a possible attack on the network by Chinese blockchain security firm SlowMist, which was relayed to the wider community via Twitter. A tweet from the ETC Twitter handle, which has since been deleted, suggested that testing of new 1,400/Mh ethash machines by ASIC manufacturer Linzhi may have been connected to the attack. ETC developers stated that the attack was “most likely selfish mining” and that no double spends had been detected at the time of the alert. [12]

Another 51% attack occurred on August 29, 2020, which caused the reorganization of over 7,000 blocks and this corresponds to approximately two days of mining. [13][14]

Twitter Account Change

Since its inception in July 2016, the Ethereum Classic Twitter account had built up over 600,000 followers. Until September 15, 2022, it was primarily used to post about Ethereum Classic. On October 6, 2022, the 600k Twitter page was updated to support the Ergo Platform [17], a proof-of-work (PoW) blockchain capable of facilitating smart contracts, similar to Ethereum, with links to Cardano.

Bob Summerwill, the executive director of a public charity supporting Ethereum Classic, noted in a pinned thread that “6 years of community work has been erased.” [15][18] The new Ethereum Classic Twitter handle provided an explanation of the account change in a Twitter thread with the intro: "So what just happened with this account" [16]

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Ethereum Classic

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