In the spring of 2016, the first decentralized venture capital fund on Ethereum, the DAO, was hacked, which led to the most significant and controversial split in the Ethereum community by far.
Due to the vulnerability in the fund’s smart contract, the hacker almost managed to get away with $50M, a third of the money that the DAO had raised. However, the vulnerable smart contract also had a 28-day holding period, so the hacker couldn’t do anything with the money until that time had expired. This gave the community time to discuss a potential solution to the problem.
Most of the Ethereum holders and developers (that voted on the subject) supported the idea of implementing a hard fork and returning the funds back to their original owners. Nevertheless, some community members strongly opposed the idea of a hard fork since it would violate the immutability principle of the blockchain.
This resulted in a split on the Ethereum blockchain. Miners who supported the refund (the majority) began to mine the new chain, while miners who refused to adopt the hard fork continued to mine the unforked version of Ethereum. This unforked version became known as Ethereum Classic (ETC).
Since its launch in 2016, ETC has been supported by several independent development teams and some notable investors.
In fact, Grayscale Investments, the subsidiary of Digital Currency Group and one of the most influential venture capital firms in the space, is funding ETC’s development.
This support, however, has not helped the project to significantly improve its adoption. ETC has been losing the adoption race not only to Ethereum but also to projects such as EOS, TRON, and to other smaller blockchains.
The project also has faced many challenges on the technical front and the governance level, such as the 51% attack, and the ETC Cooperative (which stewards the development of Ethereum Classic) controversial board member resignation. Furthermore, the project has been struggling to differentiate itself from Ethereum and currently does not offer any significant improvements over its big brother.
Still, the project has an ambitious roadmap for 2020, decent funding, and developmental support, which could help it improve the adoption of the network in the future. To achieve this, the team will need to present a unique value proposition for the network. Otherwise, ETC risks becoming irrelevant and losing the support of its core community.Read full report
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