Binance AMA Series: James Wo, Founder of Ethereum Classic Labs
On November 4, 2020, James Wo, the founder of Ethereum Classic Labs was a guest on Binance Overseas AMA Series. He talked about the value of interoperability for ETC and other blockchain projects, as well as the future expansion plan of the Ethereum Classic ecosystem.
Check out the full text of the interview below!
Q1: Could you please introduce MESS in brief and let’s know how it can resist a 51% attack?
A1. A 51% attack is made up of 3 factors:
1) The attackers must accumulate more hashrate than that of the whole network.
2) The attackers require enough capital to do a double spend. Otherwise, double spends of small amount are worthless.
3) Exchanges expose some risks in compliance such as a lack of KYC for large withdrawals and short confirmation time.
Only these 3 factors combined can make a 51% attack effective. As an infrastructure builder, ETC Labs contributes to the increase of attack costs and thus protects the network. So, we analyzed the problem, found Vitalik’s ‘ESS’ paper in 2014, and implemented it, even though it’s highly complex.
With MESS, the cost of 51% attacks will increase 30 times. For example, if the attacker wants to re-org 2k blocks, the cost with MESS implemented will be about $20 million. This makes 51% attacks nearly impossible to achieve profit so as to avoid it. That’s why MESS could be a 51% attack killer.
Furthermore, with MESS, the difficulty/hashrate has to rise exponentially according to the re-org number, which means small re-org costs little while large re-orgs would cost large amounts of money. So, if all exchanges set an appropriate confirmation number (e.g. within 2 hrs.), it would considerably increase security.
Q2. Does ETC have plans to increase its hash rate and how do you implement it?
A2. ECIP 1099 will be executed at block height 11,700,000, approximately on November 25th, 2020, reducing the DAG size to 2.47G. After that GPU miners still using 3G and 4G cards can continue mining ETC.
Besides raising attack costs with MESS, ECIP 1099 will bring the ETC network more hashrate, also helping to prevent 51% attacks. As far as I know, many 3G/4G cards are not in use now, and they have an incentive to turn back to ETC after November 25th because ETC is a mainstream cryptocurrency, and mining it is more profitable than other alternatives.
We have communicated with lots of miners domestic and abroad and we expect that the ETC hashrate will be back at around 10T by the end of 2020.
Q3. Could you please tell us more about Wrapped ETC (WETC) which you announced at the Web3 conference, and how it can benefit the Ethereum Classic ecosystem?
A3. Interoperability is critical for public blockchains. With WETC, we hope ETC will be directly involved in other ecosystems, increasing its underlying value. Compared to wBTC’s centralized implementation which gives Bitgo custody, WETC is realized by a decentralized solution built by ETC Labs jointly with ChainSafe, and the solution is fully audited. WETC has passed all testnets, and is going online in 1 week.
After launch, WETC will be listed on several DEXs like UniSwap and Bancor. So, WETC will be paired for trade with BTC/ETH/USDT. In addition, we are connecting some lending projects like Maker, Compound and liquidity mining projects like SakeSwap, SushiSwap and SashimiSwap to make WETC mainstream in the DeFi ecosystem. After all, ETC has a fixed monetary policy with capped supply and generated by a PoW algorithm, thus being offered in more areas will boost its value largely.
Q4. Back to the conference, you also mentioned another topic, ETC — Polkadot bridge. What’s the difference between WETC and this kind of bridge?
A4. The ETC-Polkadot bridge means more than a simple asset bridge. The smart contracts on each side can call instructions/messages on the other chain, facilitating ETC’s integration into the Polkadot ecosystem and its parachains.
In other words, ETC could be regarded as Polkadot’s Layer 2 and vice versa. Moreover, we highly value the Polkadot ecosystem and think it’s in a rising trend. We expect by the time of parachain IPOs, there will be far more projects within the Polkadot ecosystem while ETC’s participation will bring considerable income for its investors.
Q5. ETC Labs has reached lots of collaborations this year. Do you have any future plans? Besides Ethereum and Polkadot, which ecosystem do you think is promising as well?
A5. We believe there are still many opportunities in the DeFi area, so we have set numerous plans in DEXs, Lending, and Liquidity Mining. Additionally, we will look into some emerging areas in the Ethereum ecosystem such as derivatives, insurance, and aggregators to maximize the use of ETC tokens.
Besides Ethereum and Polkadot, we also believe that the Binance Smart Chain is promising. It takes advantage of Binance’s native resources and volumes as well as its fast and user-friendly design. This is the main reason why we are very glad to cooperate with Binance Smart Chain in interoperability and we are keen on issuing a WETC on the BSC.
In fact, we are currently cooperating with BSC projects like KAVA. Overall, we’re very interested in connecting with the BSC ecosystem. Generally speaking, we value all the opportunities to cooperate with the real decentralized public blockchain ecosystem.
2020 is the year of #Defi so can you tell us some of your planning on Defi in #EtherumClassic? @Ashraf291292
A: Let me answer this question first.
I think Defi is definitely the most important fact in 2020.
So ETC is definitely planning to work a lot on DeFi as said before. You know, WETC will be ready next week. Once that is ready, it will automatically be listed on different DEX including UNISWAP and others. And for the next step, we already announced cooperation with the MakerDAO foundation. As on the lending site, you can use ETC deposits and borrow some money on lending sites, we have MakerDAO cooperation, we are working with others including Aave and Compound as well. Also, we are on the liquidity mining side as well, we’re working with Sushi Swap, Sashimi Sake, and few others to make sure the value of ETC token goes up in the future.
Once we are ready on the lending side and liquidity mining you can convert your ETC into WETC, and use WETC in different projects in the ecosystem then we will add the value of Ethereum Classic tokens. For the other DeFi sectors we think 3 of them are important and have great potential in the future. The first is insurance, the second is derivatives, the third is aggregators. So, I think these three sectors are very important and promising in the future, so ETC will definitely monetize the development in these three sectors and try to work with the top tier projects as well.
2. In which areas does ETC Labs provide grants? How do you determine the needs of the EthereumClassic ecosystem and choose projects that can meet these needs? @zafermetin
A: In the past, I think ETC labs has had to be coherent and invested 5 million dollars to different projects, including different sectors. But overall speaking, we really care about infrastructures and different kinds of tools to support the ecosystem.
For example, we invested and gave grants to ChainSafe and Bloq — these two are very reliable components that help us to build the protocols with our ETC core development team. We worked with BloqCloud to provide an ETC version of inferra for the decentralized sector, we gave a grant to Swarm, which is also a very promising project compared to Filecoin and others.
For the next step, I believe ETC Labs will also take a deeper look into a different DeFi early stage (or middle-stage) projects, we will start to give grants and investing into different DeFi projects which are willing to build on top of ETC ecosystem.
3. What is ETC’s plan to increase its scalability? @Wayang07
A: That’s a very good question.
I think scalability is super important for all protocols… so I guess, a lot of protocols will face the same problem. I believe right now the most realistic and reasonable solution for this is their tool.
We have all kinds of projects working on that part, specifically. I think Roll-Up is probably the most promising one in layer two. So definitely ETC core, our core team is doing deep research on that to see whether we can come out with the solution next year.
4. After the Covid-19, many projects were affected. What strategies did ETC have to control the negative impact of Covid-19? @TranAnh01
A: I think the virus, you know, probably affected all industries or projects in these industries but luckily, our development team, BD, and marketing teams are all pretty decentralized.
We used to have our office in San Francisco, but most of our developers and employees are still working remotely. So, on that part actually didn’t affect a lot because of the virus. And since we are communicating everything online, we avoid a lot of outside influence. Our work efficiently improved.
I am not sure about other projects, but the influence for us is not a lot. And for our team, we are trying to expand our team, right now we have more than 10 full-time developers in the ETC Core team. And also, we have a bunch of great employees in the ETC labs team which focus on giving grants to different projects, investing in different projects, and also building partnerships. So, overall speaking, I think nobody can predict when the virus should end, but overall, we are not influenced by the virus.
5. A project that wants to travel long distances needs a specific and long-term plan. ETC. please share with us your strategy and vision for 2022? @trustmeam
A: Yeah, that’s a great question, we definitely have a good vision for the Ethereum Classic project.
I think we want to build a Proof of Work (PoW) version of the worldwide computing system, so, you know, Ethereum is going to Proof of Stake (PoS), they are fully committed to (Ethereum) 2.0. I fully believe that there will be a lot of projects which will stick to PoW, and actually, it is more suitable to build on top of the PoW version of a blockchain.
I think that will leave a lot of room for ETC to grow and will attract a lot of projects to actually build on top of the ETC network. And, ETC also has some kind of similarities with Bitcoin. The market cap for ETC is a total of 210 million, so you are not worried about an infinite issuance of Ethereum Classic (coins) ETC which is fully decentralized so nobody (unanimously) can change anything. I think in the future ETC will have a solid foundation and infrastructures that can support a good ecosystem as well as have their good kind of reputation, and trust from investors and token holders, that we are not going to be a project which changes its algorithm quickly and easily.
It will be a very solid and long-term and a good project.
6. What is the difference between ETC and ETH? @FaiSalAham
A: From the protocol level, ETC is fully comparable with Ethereum so at this stage I don’t think on the infrastructure side there will be a lot of difference between ETC and ETH, which means the application or use cases can easily build on top of both Ethereum and ETC without making a lot of changes.
From the ecosystem side, I think definitely Ethereum has a lot of great projects, so we try to work with them. We issue WETC which can participate in the Ethereum ecosystem, so simultaneously I think ETC is also working on our own use cases on top of it. So that is two ways we both participate in the Ethereum system and we also do this for ETC as well.
Either way, we can make sure ETC is valuable because either you can cover into WETC and pass pay in their ecosystem or you can directly use ETC on the ecosystem. So I guess, we will definitely see a lot of great projects and a better ecosystem for ETC in the future.
On the non-tech side of things, I think both Ethereum and Ethereum Classic have a lot of users and token holders. For example, ETC has at least a million token holders, you can see there are over a million ETC addresses, so overall speaking, both protocols have lots of users, token holders, and investors.
The difference here is obviously the price because a lot of people believe in Ethereum 2.0 so you can see the price went up a lot this year and with all the DeFi use cases, we can see that’s also a reason why Ethereum price goes up.
ETC labs and ETC Core will try our best to improve the infrastructure and ecosystem and ensure ETC is more valuable and useful in the future. In that way, we can increase the value of the ETC token.
7. Do you have a plan to BURN, Buyback or Locked $ETC Tokens to increase its value???@ CMO (Master Tuyul)
A: We can see a lot of the value of the tokens increase because of different types of token mechanisms, including BURN, Buyback, and also locking tokens. I think for ETC because the circulation supply is so big, the valuation is actually real unless you have some tokens which have a billion-dollar valuation where you only have ten million circulation supplies, then the valuation will be somehow fake, and this is definitely overvalued.
So for ETC, first of all, you see a lot of circulation supply and most of the tokens have liquidity you can easily trade on the decentralized exchange. So the value of the ETC token is real, this is the first point. The second point as I said before, we are definitely not going to change any mining algorithm or whatever I fully believe we followed the logic of bitcoin.
Once you issue the project then the token economy should be fixed, you should never change that. Otherwise, there is no point for you to use the public blockchain cause it’s not immutable, it’s mutable. So we fully believe that’s most fair to all the token holders and investors, and in the long-term, they will add confidence and value for the tokens. However, we can definitely try to build different kinds of applications to make sure people lock their tokens.
For example, right now Grayscale or ETCG locked somewhere between 11 to 12 million ETC tokens, and that’s 10% of the total supply, which is a great amount and you can definitely earn a premium on top of that which is also great and we are trying to announce the cooperation with MakerDao foundation.
So I fully believe the TVL and different kinds of DeFi projects for either ETC or WETC will be pretty big in the future. ETC only has a market cap of about 600 million. If you can successfully have a smaller number like 90 million TVL, that’s fifteen percent of the total circulation supply. That will potentially increase the price of ETC right. So I think it is not a very tough task, once we make sure WETC works then lots of DeFi use cases add Ethereum Classic to their ecosystem.
So that’s something we are going to do in the future. I fully believe this is the most efficient and useful for us to increase the value of the token.
8. Will ETC’s partnership with Polkadot help ETC improve its security and will attract more users? Will this partnership be a huge challenge that ETC creates to compete against Ethereum? @AlantisFLY
A: Yes, actually ETC Labs already work closely with Web3 Foundation about building a bridge between Ethereum Classic and Polkadot.
It is likely to be finished before the end of this year. So once that is done, both ecosystems can work closely with each other. They will be able to call instructions between their smart contract (which means: we can enter into the ecosystem of different parachains in the Polkadot ecosystem), and ETC could build as a layer two level of blockchains to the Polkadot protocol. Polkadot can also be viewed as the layer two levels of blockchain for Ethereum Classic. So that will add a lot of value for different applications and products on top of these two big ecosystems.
For the second part, I don’t view this as a competition with Ethereum, you know, interoperability should be done between all different protocols so it’s too early to say whether we are competing with the other ones. What we have done is try to build WETC to enter the Etereum ecosystem. And we build bridges to enter into the DOT ecosystem as well. What we have done is that we try to work with more players in the industry and make sure ETC is useful in the future.
9. How are developmental changes made on the ETC network? Do you plan to transition to PoS for scaling your network like ETH is Progressing to RTH 2.0 ( Casper ) ? @lala356
A: I am pretty sure we are not going to transfer to PoS, we will stick to POW.
We still see bitcoin dominating the market, and we fully believe POW will still play an important role in the future in the crypto world. We are fully committed to that. However, we do talk to a lot of miners who still mine in Ethereum right now because Ethereum is going to transfer the POS in around two years.
All the hash rate and the miners will come to ETC after Ethereum transfers to POS. And this actually is a good time for ETC to grow and become a secure founder mining site cause we will have a lot of big miners and an increase in hash rate come to ETC and mine.
It will benefit the ecosystem in the long run.
10. I am an investor of $ETC and I have noticed that it has had exponential growth in the last days, what are the profits of holding in the long term? I would like to see it listed on more exchanges! Thank you! @AURARAO
First of all, thank you for being a long-term holder of Ethereum classic, I think ETC definitely has a long-term value because there is no POW version of the blockchain with a smart contract.
So you can see bitcoin is good, but that’s more like digital gold but if you want to build applications on top of POW blockchain, then ETC is the only one here. So there is certainly a lot of room for ETC to grow in that space. And for the exchange listing part, I think we are almost get listed on all the exchanges, but we still have our two future plans:
1. Try to get listed on Bitstamp, so that will help us to cover the European market. That’s very important, and increase motivation for European people to hold Ethereum Classic.
2. We are actually talking to LedgerX, ErisX CME, and other licensed future and options trading platforms in the U.S. and trying to get ETC listed on those platforms. So once that is done, there will be a lot of institutional capital and moving to the space to buy and trade ETC.
That will also increase the value of ETC token a lot.