Introduction

With the events that came with the long-awaited first ruling on EOS lost key cases we have a perfect example for how arbitration makes a big difference and has a much wider effect beyond the ruling for a single case.

A problem with individuals losing their EOS private keys occurred that the code or system could not resolve, an impartial dispute resolver stepped in, objectively heard the pros and cons, evaluated the potential solutions and then arrived at a decision. This not only resolved this single dispute but a multitude of disputes by just one precedent arbitration decision. Opening the arena for new solutions to be proposed.

What are the events that led up to this?

The EOS Core Arbitration Forum (ECAF) issued a ruling on the 14th of December to resolve a lost key dispute.

To recap the history that led up to that ruling. The EOS.IO whitepaper indicated that the EOS.IO software was a new type of blockchain which would contain a variety of features that would make EOS.IO much more human-usable than previous blockchains. Features such as human-readable names, a better account permission structure and a possibility for lost key recovery. Whilst much of the promise of the whitepaper was fulfilled, when the chain launched it did not include any sort of lost key recovery services.

What transpired after launch was that there were quite a large number of people (some estimates put it at thousands) who had lost their keys. We can speculate as to why that is. Maybe this was a consequence of the long duration of the token sale event (which spanned a year)? Maybe people were less careful as they understood that they could recover their lost keys? Or maybe, this is just a defining feature of all blockchains that is just not recognised. (Apocryphally some statistics say that around 30% of the largest cryptocurrency - Bitcoin - is lost value due to people losing their keys. Hence the sensational stories of hard drives worth millions stuck in rubbish dumps the world over.) One way or the other, there were a lot of people who lost their EOS private keys.

The launch of the EOS Mainnet took place 6 months ago. During that 6 months, the lost key holders languished in patience hoping that somebody would do something. But nobody did anything for 6 months, nobody took responsibility, nobody claimed to be able to do something, nobody set up a tool ....

And seriously nobody, besides of maybe block.one could. But there are good and understandable reasons as to why block.one could and would not do anything. Doing anything with accounts on the EOS Mainnet may make them liable for decisions about which accounts got given EOS on the Mainnet in the first place. Which is a control that they clearly wanted to give up. Again for good reasons.

Of the other actors in the ecosystem maybe 15/21 BPs could do something. But one has to ask whether those BPs would want to be able to take deep decisions for every case? BPs in the top 21 turn over regularly depending on voter’s choices, would new BPs in the top 21 want to be liable for decisions that others took before them? One mistake possibly could mean the reputational end for each of them.

A referendum could, but it's not completely there yet. And it's also quite hard to come to a conclusion for a referendum and it clearly wouldn't do for single accounts.

ECAF’s place in all this

As there was nobody else to turn to, the people with lost keys filed claims with ECAF. ECAF had no option but to take these cases eventually as there clearly was an issue to resolve.

It took ECAF some time to make a ruling as a lot of buildup had to be done. During that time there was a lot of discussion in the EOS Community about lost keys and a lot of ideas were thrown around. Many good ones, but all requiring some sort of opt-in BEFORE the keys were lost. Which of course did nothing to comfort those who had already lost their keys!

ECAF worked silently to set up a working process with as tight as possible checks and giving a potential other owner chances to come up with their claim.

Eventually, ECAF ruled. It caused quite a stir. And ... suddenly people knew how to resolve the issue! Now BPs are proposing lost key automated solutions on the back of that and working hard to get a promising solution going ASAP. Something they had laughed about just days before, when ECAF spoke about the possibility of (partial-)automatisation of these cases.

Well, this is exactly what arbitration is about and what was "promised" this would be about - settling an issue for everybody so that people know how to do it right next time.

That's why and how arbitration makes a difference.

Dispute resolution steps in when the way forward is not clear and is more than simply resolving the dispute.

In fact, dispute resolution has a particularly special and desirable side effect. It not only resolves a single dispute but also resolves a multitude of disputes by just one precedent decision. A clear and balanced way is found through issues that have not been addressed and often effectively could not be addressed before giving others a path forward.