1. ETC Year One and
Crypto Monetary Policy
Dr. Avtar Sehra
@avtarsehra
London Event
13 December 2016

2. 3rd Party Products
and Services
“Do not go gentle into that good night..”
- Dylan Thomas

3. Changing an Immutable Public Blockchain
The DAO, a smart contract based fund raised ~$150million from more than 11,000 investors, and was
hacked, with ~$70million** being “misappropriated”. The immutable Blockchain transactions were
reversed to return funds to investors through a “hard fork” on July 20th 14.30 UTC
*Weakness in smart contracts was due to a reentrancy issue
** Figures based on $20=1ETH market price at time of hack

4. ● Immutable Infrastructure should be a truth machine that can not be changed no matter
what the circumstances
● Neutral: Infrastructure should be neutral to transactions/ applications on it; endorsements
by a central team leads to conflict of interest that skew future evolution
● Open: Infrastructure should be openly accessible by anyone to ensure scalability and
minimize possibilities of risks linked to centralization
Principles of a Decentralised Infrastructure

5. All key aspects of the ecosystem require a certain level of decentralization
Decentralization
of all aspects of
ETC Ecosystem
Technology
• Core Dev/Support
• Operations
• R&D
Community
• Marketing
• Education
• Dapp Dev
Administration
• Governance
• Finance Management
• Risk Control
Decentralized
Infrastructure
Minimizing Points of Failure

6. ● Core ETC dev team being established
● Multiple clients ported
● Execute removal of difficulty bomb
● Strategy/fix for transaction replay issue
● Assess dev of ETC Mist-like client
● Deploy independent blockchain nodes
● Grow core developer community
2016 20182017
● Collaborate with Ethereum developers to
design, dev and test core protocol updates?
● Research/test PoW/PoS mechanisms
● Research/test maximally efficient monetary
policy for consensus mechanism
● Dev ETC focused Mist-like client
● Assess path to state Sharding
● Assess VM upgrades e.g. verified compiler
● Establishing communication channels for
global coordination and consistency
● Setup global meetups to begin deployment
of decentralised community network
● Establish framework for Dapp developers
● Defining core social contract
● Defining community-driven roadmap
● Define governance models for execution
● Design/deploy funding mechanisms
● Define monetary policy
● Execute PoW, PoS or Hybrid cons mech
● Execute appropriate monetary policy
● Test/implement state sharding
● Research/test VM improvements if
deemed fit for implementation
● Further outreach to miners
● Extend meetups and conferences
● Setup of overall Dev conference
● Deployment of structured Dapp dev
ecosystem and support framework e.g.
hackathons and 3rd party funding
Ecosystem Roadmap

7. Focus Points to Ensure Sustainability
1. Define Monetary Policy
2. Expand Core Dev Team
3. Establish Funding/Governance
4. Establish Dapp Dev Community
● Core ETC dev team being established
● Multiple clients ported
● Execute removal of difficulty bomb
● Strategy/fix for transaction replay issue
● Assess dev of ETC Mist-like client
● Deploy independent blockchain nodes
● Grow core developer community
2016 2018
TechnologyCommunityAdministration
2017
● Align with Core ETH dev team to design, dev
and test standard protocol updates?
● Research/test PoW/PoS mechanisms
● Research/test maximally efficient monetary
policy for consensus mechanism
● Dev ETC focused Mist-like client
● Assess path to state Sharding
● Assess VM upgrades e.g. verified compiler
● Establishing communication channels for
global coordination and consistency
● Setup global meetups to begin deployment
of decentralised community network
● Establish framework for Dapp developers
● Defining core social contract
● Defining community-driven roadmap
● Define governance models for execution
● Design/deploy funding mechanisms
● Define monetary policy
● Execute PoW, PoS or Hybrid cons mech
● Execute appropriate monetary policy
● Test/implement state sharding
● Research/test VM improvements if
deemed fit for implementation
● Further outreach to miners
● Extend meetups and conferences
● Setup of overall Dev conference
● Deployment of structured Dapp dev
ecosystem and support framework e.g.
hackathons and 3rd party funding

8. Perception of Sustainability
ETC Price has Stabilized over last
month as community has started to
focus on monetary policy planning

9. Monetary Policy:
Controlling the Supply of Money
Gold and silver mining in ancient Greece; where precious metal based monetary economy
replaced barter trading in seventh century BC.

10. Store of
Value
Functions of Money
Medium of
Exchange
Unit of
Account
Store of Value: Allows purchasing power to be
saved, and used in the future
Unit of Account: Stable and easily divisible
expression for the worth of any good or service
Medium of Exchange: Accepted by all as a means
to transact goods and services

11. Example of Bitcoin Monetary Policy in Action
Started: Jan 3rd 2009,
18:15:05
0 coins at the start,
and there is a cap of
21million coins
Through process of mining,
validating and “recording”
new transactions in the
blockchain, 50 coins were
released every 10 minutes
to miners (along with
transaction fees)
Reward of 50 coins is
reduced by 50% every ~4
years. We are now on
12.5coins per mining
reward
By October 2140 the last
Bitcoin will be mined, at
which point its is expected
all rewards are replaced by
transaction fees

12. Store of
Value
Factors to Manage Cryptocurrency Monetary Policy
Medium of
Exchange
Unit of
Account
Store of Value: The value of the native digital asset on the network
could be managed by controlling perception of future value of the
token through scarcity and supply control:
• How native digital tokens enter (and exit) the system
• Is there a capped or never ending supply (deflation/inflation)
Medium of Exchange: Number of retailers that are prepared to
accept cryptocurrencies as payment is not within the direct control
of the network, but it can be nurtured:
• Simple tools for interaction with network
• Perception of stable and secure means of transaction
Unit of Account: Parties agreeing and negotiating prices of goods
and services in cryptocurrencies is challenging as it depends on the
wider economic factors e.g. fiat system stability, legal and regulatory
factors, but it again can be nurtured:
• Value of native token is stable over time
• Simple divisible and manageable units

13. Comparing BTC and ETC Monetary Policy
Currency
Start
+UTC
Starting
Money
Supply
Supply
Cap
Average
Block
Time
Start
Block
Reward
Supply
Schedule
Current
Block
Reward
Money
Supply as
of 5 Dec
2016
Monetary
Base
Model
Bitcoin (BTC)
Jan 3rd 2009
18:15:05
0 BTC
21million
BTC
10 minutes 50 BTC
50%
Reduction
every
210,000
blocks
(~4years)
12.5BTC
15,959,725
BTC
Deflationary
Ethereum
Classic
(ETC)
Jul 30th 2015
15:26:13
60 million
ETC
Currently No
Cap
12 seconds
5ETC
(4.375 ETC
for max 2
Uncles
Perpetual
Release
5ETC
(4.375 ETC
for max 2
Uncles
86,560,205
ETC
Inflationary

14. 3rd Party Products
and Services

15. 1. Technology Progress to Date and Next Steps by Igor Atramonov
2. Overview of Proposed ETC Monetary Policy by Matthew Mazur
3. Panel Discussion on Monetary Policy in Cryptocurrencies
4. Video Message by Carlos Graterol on ETC Twitter Sentiment

16. 3rd Party Products
and Services

17. Ethereum Classic
Technology Progress
to Date and Next
Steps
December 2016
Igor Artamonov

18. How it started
At block 1,920,000 (at 20 July 2016) Ethereum Classic was born
In the early days people kept using the nodes without the hardfork
At the beginning there were only one person who was able to maintain
the Ethereum Core code - Gravity
Then, a few more developers joined ETC GitHub
To fork and fix Ethereum code
To start new projects

19. Ethereum Classic Progress
1. ETC Community has focused on taking care of all core aspects of
the network: Nodes and Wallets
2. Successfully made first protocol upgrade (Hard Fork at block
2,500,000)
a. VM Operations reprice to mitigate DDoS attack
3. Implementation ready for the next fork planned for 15th of January
a. Difficulty Bomb delay
b. VM Operations price improvements
c. Replay Protection

20. Core Projects
Geth - official client implementation of the protocol
Parity - 3rd party client implementation, supports both ETC & ETH
Mist - official wallet for ETC

21. Additional Projects
ETC Block Explorer (hosted on etherhub.io)
Dapp UI SDK - Javascript components for building ETC applications
EtherJar - Java tools for Dapp developers
EtherKube - tools to deploy/manage ETC nodes in a cloud (Kubernetes
& Docker based clouds)

22. Community
The Community is the main force behind
ETC decisions and development
All significant changes to the protocol
are made through ECIP (Ethereum
Classic Improvement Proposal)
process
35 members at the moment who have
rights to commit
Community makes code reviews for
each commit into core projects
Other people can send Pull Requests

23. Core Projects Team
Dedicated team to work full time on Core Projects
To maintain, improve and implement next versions of core projects
Forming currently by Igor Artamonov
Hiring Rust, Go and Javascript developers
Team funded by investors who are interested in Ethereum Classic’s future
ETC is also looking for additional and sustainable sources of funding

24. Core Projects Plan for Y17
Do protocol upgrade on January 15th
Difficulty Bomb, Replay Protection, VM Operations Reprice
Implement and test new Monetary Policy
Classic Wallet (New Project)
We aren’t happy with current Mist (ETH Wallet) code and we don’t think it’s worth the effort to
maintain existing code, so focus is to create a new wallet from the ground up
Research Hybrid Proof-of-Stake/Proof-of-Work consensus applicability to
Ethereum Classic
Maintain Geth and Parity

25. Overview

26. Other Teams
Few other teams and commercial organizations are gathering around
Ethereum Classic at the moment

27. Ethereum Classic
https://ethereumclassic.github.io/
2016
Igor Artamonov
igor@artamonov.ru /
splix@ethereumclassic.org
Twitter @splix

28. 3rd Party Products
and Services

29. ECIP-1017
Matt Mazur
(snaproll)

30. Current Network Hash Rate
≈ 700 GH/s

31. • Large scale, high risk, high profile applications will not use a chain with weak security
• Speculation demand drives the price until utility demand exceeds speculative demand
• Especially important to new systems
• ETC is a new system
• However, AMZN :)
• “Bootstrap” security of the network by rewarding early, high risk investment
• Incentivize speculation / increase speculative demand
• A MP which sets out to achieve “optimal total investment” will perform better than a MP which
sets out to achieve near term investment.
REASONING

32. GOALS & METRICS
• Simple, easy to understand, predictable
• Complexity introduces risk to users, reducing trust in the policy
• Allows time for development, adoption, and awareness of implementation
• Rate resembles bitcoin model
• Only generally accepted production model in crypto
• Depreciating rate of production over time
• Upper bound on total units
• 50% distribution date
• 3% inflation rate date

33. 5M20 MODEL
• 20% reduction of all awards every 5M blocks
• Equalize uncle rewards at block 5M
• More fairly distributes ETC to miners
• Reduces incentive to “farm uncles”
• Enables for more accurate forecasting of future upper bound
• Still provides an incentive to remain on the network

34. MP ANALYSIS

35. CURRENT MP
(All Eras)
5 ETC - 14.0625 ETC / block
in perpetuity
3% inflation Estimated in
2042
Almost 3x longer than bitcoin

36. ECIP-1017
Era 1
5 ETC - 14.0625 ETC / block
Blocks 1 - 5M
Era 2
20% reduction of rewards at block 5M
Uncle rewards equalized
20% reduction every 5M blocks thereafter
50% Distribution Date
Sept 2018
3% Inflation Date
July 2025

37. BITCOIN MP
(Era 1)
50 BTC / Block
Halving roughly every 4 years
50% Distribution Date
July 2019
3% Inflation Date
July 2025

38. METRICS COMPARISON
ECIP-1017
Bitcoin
Very Close Dates

39. ECIP-1017
Bitcoin
Dates off by 10 months
But “risk” period began in Sept 2014,
so add 11 months to ECIP-1017
=
Dates are off by one month
METRICS COMPARISON

40. ECIP-1017 isn't a perfect mirror reflection of bitcoin’s model,
but it provides the closest resemblance to it in key metrics while still retaining
simplicity and time for development, implementation and adoption.

41. Can’t occur due to
time constraint
Lowest vote count
Equal acceptance rate
and
sits in between
4M and 6M Block Eras
(ETCC Feedback provided by Roy Zhen aka pyds1977)

42. Too long, we need to start the Eras at block 4M, or sooner
Argument #1

43. Block 5M Block 6MBlock 4M
{
Sweet Spot
{
Potential
Development Risk
Potential Loss of
Investor Confidence
{

44. Too many coins, needs to be in the 120M-150M range
Argument #2

45. 72,002,454.77
120,000,000
= 60%
72,002,454.77
150,000,000
= 48%
Genesis block
86,796,809
150,000,000
= 58%
Genesis block
Current
≈ 18 months
Distribution of total coins occurs too soon
Risk of centralization of token ownership
Optimal investment unlikely

46. ETC doesn’t need to resemble Bitcoin’s long, drawn out MP.
That was only required because bitcoin was a new concept.
Argument #3

47. Any sufficiently disruptive crypto should not need to resort to changing from
a known, working model (bitcoin)
Any sufficiently disruptive crypto will likely require a bitcoin length time
period for the market to figure out the value proposition.
A crypto which chooses to part too far from bitcoin’s model, or at least from
relevant bitcoin distribution metrics, is using MP as a crutch, a marketing
gimmick, and/or as its main selling point.

48. Path to Implementation

49. Now 3M 4M3.5M3.25M
Discussion
Development
Testing
Implementation
3.75M
Adoption
Execute
or
Null
13.12.16 15.01.17 26.06.1706.04.1724.02.17 16.05.17
250k blocks ≈ 40 days
Client Implementation
Drop Dead Date
Client Implementation
Goal Date
Voting
Team Formation

50. While it is important to incentivize early, high risk investment,
the monetary policy should not remain a focal point of the network.
There are enough unknowns and complexities when it comes to ETC,
a monetary policy should not add to them.

51. 3rd Party Products
and Services
Monetary Policy in Cryptocurrencies
Jon Matonis | Alistair Milne | Edan Yago | Matt Herbert

52. Web: ethereumclassic.org
Twitter: @eth_classic
Slack: ethereumclassic.herokuapp.com