Terribly simplistic analysis. I would dipute many assumptions here.
Mark Ranford
11

Thanks for your coments Mark.

My analysis is bound to be a simplification of the real world, but helpful nonetheless in some very real senses too.

In the real world there are many players who are both eth and DAO holders, and a few very influential players who are core developers and DAO holders, and possibly even a reasonable number of miners who are DAO holders. These players will have mixed motives to contend with over the short term.

The players you point out to are what I would call “Long Term Holistic Thinkers”. These are players looking at the overall Ether ecosystem and not just their short term balances.

However, I would point out to you that these players are strongly divided too between a hard fork, soft fork and no fork.

There is the argument you make, stating that without DAO token holders getting their money back via hard fork it will damage people’s desire to invest in DAPPS in the future.

Then on the flipside there is the argument that states that forking away money from some accounts/DAPPS to others demonstrates that the technology and community are able and willing to do this again whenever they feel the circumstances warrant it, by simple majority.

If a majority can fork away the assets of a minority, and claim that there is no law but majority rule, which is what many have been claiming on reddit and the forums, then I would much rather keep my money at a bank or other centralized institution where there is a contract that makes explicit promises and must legally keep its promises.

We already have a “majority can do anything it wants to any minority” system called democracy. In it, funds are seized from a minority to act in the “best interests of the community”. This will become a very real possibility in the ethereum community if the hard fork goes ahead. Expect in time, for example, that the core developers state that if you want them to keep working for the project they should be issued additional ether by hard fork, or if some DAPP is very successful that the community demands 10%-50% of its profit for improving infrastructure and marketing ethereum or even marketing or subsidizing less successful DAPPS. Forking to do this potentially wipes out all of the benefits of a decentralized system. It is only because the community is blinded by the size of this heist that they have lost sight of the principle and chosen to lean towards pragmatism over principle.

I for one already view ethereum right now as not ready yet to release meaningful DAPPS on. There are clearly many more issues than just the one the DAO was exploited by. There needs to be a maturing not only of the security elements of the software, but of the core developers’ attitudes towards testing and releasing code, at every level of the platform.

Back to the game theory analysis, all those reaching a conclusion similar to mine about the holistic, long term problems created by a fork will want to leave, or at least reduce their stake in ethereum. Every one of them will put downward pressure on the price. The miners are the ones who profit from a high price. They must sell ether to upgrade their machines and pay for electricity. They will die with a very low price. Giving back 11.3 million ether, even if only 10% of it exits (a sale of $10 million+) will crash the ether price. I think the price is likely to crash somewhat either way, but much less if there is less ether on the market to be sold.

Anyhow, we shall see in a few weeks. Either this analysis is right or it will be proven wrong.

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