As we all know, Ethereum is a blockchain platform that runs smart contracts and due to this, the Ethereum platform is more prone to hacking and other cybercriminal activity. The Ethereum platform, although secure, has been prone to hacks that have caused harm to investors and loss to the blockchain as well. According to sources, this new standard is going to safeguard the platform from these problems.
The new standard, ERC-7265, was proposed by the community of Ethereum, with the aim of eliminating the DeFi hacks in the Ethereum ecosystem. The new standard concentrates on the possible loose ends in the ecosystem that could be prone to hacking.
Ethereum is the second largest cryptocurrency in the world, the first being Bitcoin. Although this platform provides secure transactions and fraud-free dealings, with the community being so huge and profitable, it’s always best to provide better and more secure protocols to help investors with smooth transactions.
The standard is focused on the smart contract interface called Circuit breaker, where if a threshold is crossed, it will trigger a temporary halt to the protocol-wide token outflows. The new standard just serves as a pass-through vehicle for the outflow of the tokens, it does not assume the structure of the underlying protocol.
To ensure the smooth functioning of the platform and increase reliability and security for the developers, the developers can mention if the circuit breaker contract should delay the settlement and, on a temporary basis, transfer the outflows from a custody account to another account or revert on the attempt of the hack.
As mentioned above, the Ethereum platform is the second-largest cryptocurrency project in the world. Hence, this network functions as a ledger that is distributed among its token holders, ensuring transparency, security, and unchangeability of the recorded transaction. Each of the nodes in the network maintains a copy of the entire blockchain, which makes it harder for bad actors to hack into the system.
The Ethereum blockchain was developed using two important proposal types;
- ERCs (Ethereum Requests for Comment)
- EIPs (Ethereum Improvement Proposals)
The ERCs, also known as Ethereum Requests for Comment, are standards that were proposed to concentrate on how specific features or functions are needed to be implemented on the Ethereum network. The main purpose of the ERCs is to ensure smooth functioning between new tokens and smart contracts with the Ethereum network.
The EIPs, short for Ethereum Improvement Proposals, are protocols implemented by the Ethereum network to improve or enhance the performance, security, reliability, and scalability of the network.
The ERC-7265 belongs to the ERC category responsible for the implementation of the functions and features that are missing from the network.
The hacks in the DeFi system have reached a staggering loss of $3.1 billion in 2022, which was much higher compared to the figures in 2021. Additionally, the Ethereum network saw a loss of $221 million in Quarter one of 2023.
The protocol update might impact the in-built protocols of the Ethereum network. EnbangWu, another community member of the Ethereum network, stated that this protocol will provide additional access to the Admin. This will allow them to perform functions such as updating AssetParams, overriding RateLimit, and initiating GracePeriod. This could be a concern for the Ethereum network as this stands against the decentralized nature of the blockchain.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
