After “mistakenly receiving” 2,100 Ethereums, will Spark Mining Pool refund or split the funds?

Decentralization has its pros and cons. The advantage is a high degree of freedom, while the so-called "defects" are that it is not "reasonable" and "inefficient". In the real world, if a wallet is accidentally lost, it is reasonable to negotiate with the finder to return it. Social customs even encourage people to return lost property. But on the chain, a high fee may flow to tens of thousands of miners. How can we concentrate our will to decide the distribution at this time?

As a result, centralized links like Spark Mining Pool have been pushed to the forefront. Whether the mining pool has the power to decide where the fee goes, and if not, who should decide and how to decide, the entire industry still lacks a unified rule for these.

Text | Huang Xuejiao, Sui Xin, Qin Xiaofeng

Produced by | Odaily Planet Daily (ID: o-daily)

A strange transaction that occurred on Ethereum sparked several days of discussion in the blockchain world.

On February 19, the same address on Ethereum performed 5 small transfers within 4 hours, with the highest transfer amount being 0.1 Ethereum. However, the transfer fee was far more than a thousand times the transaction amount, with the highest fee even reaching 2,100 Ethereum. The transaction was packaged by the Spark Mining Pool.

To whom this fee originally belonged and how it should be distributed remains unanswered, and has sparked much debate in the blockchain community.

Miners support directly sharing the fee, but domestic mining pools including F2Pool and CoinIn Mining Pool told Odaily Planet Daily that they support the principle of "it should be returned if someone claims it."

At present, the Spark Mining Pool has allocated a part of the fee, but in order to avoid legal risks, Spark hopes to leave the remaining fee to the sender to claim it, and then discuss the distribution plan.

In the new world of blockchain, many rules have not yet been established, and there are no unified industry norms or legal systems to deal with such incidents.

In this article, Odaily Planet Daily interviewed lawyers, miners, mining pools and other parties, trying to explore from multiple dimensions such as blockchain’s own rules, laws and humanitarianism - "If an erroneous operation issues an extremely high transaction fee, how should we deal with it?", hoping to provide some inspiration and thinking for readers who are concerned about this incident.

The jackpot becomes a hot potato

On February 19, multiple transactions with high transfer fees occurred on Ethereum, the highest of which was 2,100 Ethereums, which was packaged by the Spark Mining Pool.

Many people speculated that transactions with such high transaction fees were due to operational errors, and how the Spark Mining Pool, which mined the block, would distribute this "windfall" has become a focus of attention from all parties.

Spark Pool is the second largest mining pool on Ethereum. As of 16:40 on February 20, Spark Pool's computing power on the Ethereum network was 32.58 TH/s, accounting for about 20.8% of the total network computing power. The mining pool has a total of 10,300 Ethereum miners and nearly 140,000 connected mining machines.

On the afternoon of the 20th, Spark Mining Pool issued an announcement stating that the abnormal phenomenon triggered the internal emergency mechanism of the mining pool program. In order to avoid legal risks and unnecessary disputes, the transaction fee has been frozen and is waiting for the sender to contact the mining pool to discuss a solution. If the sender does not contact or give up communication for a long time, Spark will distribute the handling fee to the miners.

After seeing this announcement, Fan Heng, an Ethereum miner who mines at the Spark Mining Pool, was a little angry. He complained in the miner group: "Rubbish Spark, it's not your credit that you were able to mine it, but the computing power of all the miners, so do you have the right to decide whether this Ethereum stays or goes?"

In Fan Heng's view, 2,100 Ethereums is almost the daily income of all miners in Spark Pool. If it is distributed to miners, their income can be doubled. In addition to profit, the first rule of blockchain is that it cannot be tampered with. "There is not much integrity in the currency circle, and the rules are the most important." Spark Pool has violated the rules and the PPS+ it has formulated.

Spark Mining Pool is the first mining pool to implement PPS+ in China. PPS+ (Pay Per Share Plus) is a profit distribution model between mining pools and miners. It adds the distribution of transaction fees on the basis of PPS model. In this model, transaction fees need to be distributed to miners.

(Note: The PPS model is based on the proportion of miners' computing power in the mining pool, and estimates the assets that the mining pool can obtain every day, and distributes fixed income to miners every day.)

Spark Mining Pool said that part of the 2,100 Ethereums has been distributed to miners. As for how much this "part" is, Spark said "there is no statistical data, so I can't answer it." The undistributed part is the "frozen" handling fee mentioned in the announcement.

Regarding the “frozen” transaction fees, Spark Pool’s attitude is very clear: “Give priority to contacting the senders of these 2,100 Ethereums to jointly negotiate a distribution plan.”

This practice naturally caused dissatisfaction among some Ethereum miners in the mining pool, and a dispute between the two sides arose.

Will there be legal disputes?

Xinghuo said that it did not want to have conflicts with its clients, the miners, but if it directly divided up the windfall, there might be legal disputes.

Therefore, Xinghuo Mining Pool decided to make a public announcement and wait for the other party to contact them, but Xinghuo did not give a specific waiting time for the announcement.

So, what does the law stipulate regarding the “publicity period”?

Xiao Sa, director of the China Banking Law Research Association, told Odaily Planet Daily that "there is no legal time limit, it depends on the previous agreement or consensus." Given that there was no relevant consensus before, in other words, the "publicity waiting time" of the Spark Mining Pool can be set by itself.

Should Spark Pool return this high transfer fee? If Spark Pool does not return it, can the sender obtain legal support?

In this regard, Xiao Sa said, "This is a civil legal relationship. The principle is to respect the will of each subject and give priority to the agreement. If there is evidence to prove the rules on the chain, the rights and obligations of all parties can be fulfilled according to the rules."

According to the on-chain consensus, there is no agreement on the return of the fees paid by the sender to the miners, which means that the sender cannot get legal support in social laws.

Another key question is whether the mining pool has the right to decide whether to keep or remove this high mining fee?

In this regard, Xu Kai, a lawyer at Beijing Deheng Law Firm, told Odaily Planet Daily that, in the absence of a written agreement between the two parties, if the miner who packages the block is the Spark Mining Pool itself, then there is nothing wrong with it; if the miner is a specific miner, then the miner can request immediate payment of the miner's fee for the transaction that has already taken effect.

“If miners sign a contract with the mining pool when they move in, they must comply with the stipulations in the contract.” However, according to Jiang Rui, an Ethereum miner at the Spark Mining Pool, there was no contract signed between him and the platform, so if the mining pool really did not give him the handling fee, there was nothing he could do.

It is worth noting that, contrary to the “fear of legal disputes” this time, Spark Mining Pool chose to directly distribute the transaction fees to the miners in a similar incident more than a year ago.

On October 11, 2017, Spark Pool packaged a transaction with a handling fee of 190 Ethereum in block 4356580, and Spark Pool then distributed the fee to the miners.

The difference between the two cases is that the previous abnormal fee did not trigger the early warning mechanism of Spark Pool, so the mining pool did not withhold the fee. As for what this early warning mechanism is, Spark Pool said it was "inconvenient to disclose".

Five major mining pools jointly analyze

Regarding the issue of whether to retain or remove the 2100 Ethereum transaction fees, which is currently of greatest concern to the entire industry, Odaily Planet Daily also consulted the five major domestic mining pools. The opinions of all parties were basically divided into two camps: decentralization and humanitarianism.

• Decentralization faction favors distribution to miners

David, founder of Rawpool mining pool and vice president of blockchain financial company BitRock:

Mining pools are centralized, which is a bug in the decentralized POW mechanism.

Logically, the money belongs to the miners, and if there is no new agreement between the mining pool and the miners, it should of course be given to the miners.

In other words, if the mining pool and the computing power involved in the mining of the block reach a consensus on "not dividing" the money, they can "return the money to the original owner". But now it seems that the two parties have not reached such an agreement.

• Humanitarians support Spark Pool’s approach

An unnamed person from BTC.com mining pool:

I think any way to deal with this spark makes sense. Giving it to the miners is reasonable, and returning it to the victim is compassionate.

Huang Meng, CMO of Rawpool Mining Pool:

The loss of real money (for both the sender and the miner) makes everyone feel like a victim. If the money is not returned, it may lead to a war.

Now Xinghuo is at the center of public opinion, and it may be in a bad situation. If Xinghuo is blamed in the end, it will be too pitiful. Now the problem is whether we can find the sender.

F2Pool founder Shenyu:

The principle of this distribution is that if someone claims it, it will be returned. There have been many cases in the past where a large amount of handling fees were paid due to misoperation on Bitcoin. If no one claims it, it depends on the distribution agreement of the mining pool. If it is PPLNS or PPS+, it will be divided.

Zhu Yu, co-founder of Poolin Mining Pool:

Mining pools have always done this, and we assume that our customers are honest and willing to not pick up lost items.

If we have to talk about it from a technical and logical point of view, we can choose not to retreat, but that would be too inhumane.

I used to work in the BTC.com mining pool, and they have made this kind of profit several times, with the highest amount being over 60 BTC. The owner will definitely come, and the longest one took two or three months to come.

Faced with different attitudes among mining pools and miners, Spark Mining Pool once emphasized to Odaily Planet Daily that from their perspective, even if traders come to them, they will not directly return the transaction fee, but will further explore compensation plans.

It is worth noting that among the five high transfer fees on the 19th, in addition to the highest 2100 Ethereum mined by the Spark Mining Pool, the other four transactions were packaged by the Nano Mining Pool and Ethermine Mining Pool. Among them, the Nano Mining Pool packaged three.

At present, the two mining pools have not publicly stated their attitude towards dealing with these high fees.

However, in terms of the mining pool profit distribution model, Nano Pool and Ethermine both use PPLNS.

The profit distribution under the PPLNS (Pay Per Last N Shares) model means that once a block is mined, all miners will be allocated the Ethereum share in the block according to the proportion of the number of shares they contributed.

Under this “mine and share” model, “Nano Pool and Ethermine should have distributed the high transaction fees to the miners,” said Xu Xin, founder of Spark Pool.

The difficult "paradox"

The question of how to distribute Ethereum's huge transaction fees once again touches on the debate over decentralization and humanitarianism in the blockchain world.

On February 21, Zhu Yu once again expressed his views on this matter in his circle of friends. He said that all the items related to the team he led were returned to the owners without exception.

In addition, he believes that with the improvement of the Bitcoin ecosystem and the evolution of wallet apps, incidents of erroneous transaction fees will become less frequent, but the Ethereum ecosystem is still relatively young and similar errors are inevitable.

In the design of Ethereum framework, there is no code that considers the rule of man and social contract. But we know that in the DAO incident, in order to maintain the social contract, Ethereum used a hard fork to force the rollback of the stolen tokens.

Decentralization has its pros and cons. The advantage is a high degree of freedom, while the so-called "defects" are that it is not "reasonable" and "inefficient". In the real world, if a wallet is accidentally lost, it is reasonable to negotiate with the finder to return it. Social customs even encourage people to return lost property. But on the chain, a high fee may flow to tens of thousands of miners. How can we concentrate our will to decide the distribution at this time?

As a result, centralized links like Spark Mining Pool have been pushed to the forefront. Whether the mining pool has the power to decide where the fee goes, and if not, who should decide and how to decide, the entire industry still lacks a unified rule for these.

Various unexpected situations may occur in the governance of a decentralized community. It is not easy to reach a consensus beyond the regulations at this time. Otherwise, Ethereum would not need a hard fork.

We can see that another public chain, EOS, has taken a different path in on-chain governance. Since its inception, EOS has established an arbitration institution, ECAF (EOS Core Arbitration Court), which has made many judgments on property disputes.

Industry insiders have mixed opinions on ECAF. Supporters believe that it can efficiently resolve disputes and recover stolen tokens, while opponents believe that it is too centralized and is a form of power in another sense. Therefore, ECAF may soon end its mission on the chain.

On January 11 this year, a voting activity was launched on the EOS Authority website on whether ECAF should be abolished. So far, 97% of the votes have been cast for "should be abolished". With less than 3 months left before the voting deadline, it is possible that ECAF will be abolished.

At present, there is no mature mechanism for resolving disputes on the chain. How to design the ideas and organizational forms of mediation still requires us to continue thinking.