Hello Steemit,
Wanted to pass along the press release just published by Poloniex in regards to the Ethereum Classic debacle!
I DID NOT WRITE THIS - CREDIT TO www.Poloniex.com
Responses to common ETC questions:
The community has expressed some concerns with regards to Ethereum Classic (ETC), so we wanted to take a moment to address them.
Are my deposits vulnerable to replay attacks?
As soon as the fork occurred, Poloniex took steps to secure all ETH and ETC balances by separating them into different addresses. A replay attack on a withdrawal from these addresses will now fail, because each address has a balance on only one of the two blockchains.
If you send a deposit to Poloniex, it can still be replayed if you have not taken steps to separate your ETH and ETC. However, our system funnels all ETH and ETC deposits through a smart contract that separates both currencies, directing each balance to a different wallet address. This protects both balances and allows us to credit your account with both deposits. If you did not intend to deposit one of the currencies, you may withdraw it separately without fear that the withdrawal will be replayed.
To protect your local wallets from replay attacks, ensure you use completely separate wallets for ETH and ETC. No addresses should ever be shared between these wallets.
I loaned my ETH before the fork, shouldn’t I receive the equal number of ETC when the loan is repaid?
Terms of the Loan
As many of you know, unless you had ETH in your balances at the time of the fork, you did not receive ETC. For those who loaned their ETH to others, keep in mind that the terms of the loan dictate that you receive the same number and type of coins you loaned within X days plus the agreed upon interest. The borrower does not owe you anything less than this, nor does the borrower owe you anything more, regardless of what may have occurred during the borrower's possession of your loaned coins. To assert otherwise on the matter is forcing a debt upon the borrower that undermines the loan terms that were agreed to by all parties.
Possession and Control
When you lend coins, you give up possession and control of them in exchange for an IOU with interest. These coins are actually delivered to the borrower, who can do with them what they wish - place an order, open a position, etc. Based on this principle, those who have actual balances, borrowed or otherwise, hold the rights to anything they may be able to earn with them during the possession period.
Shorting
When someone borrows ETH, they typically borrow it to sell it immediately to other traders, including spot traders who cannot possibly be aware that the coins came from someone who borrowed them. Spot traders exchanging BTC for ETH unambiguously own their purchases, and are the rightful recipients of the number of ETC matching their ETH holdings at the time of the hard fork.
Look at the math:
Poloniex customer accounts are kept at 1:1 reserves at all times. With this in mind, take a look at what happens when you play out a scenario where the Lender is credited ETC rather than the person who actually possesses the ETH.
- Alice shorts ETH by borrowing 200 ETH from Bob and selling it to Carol
- Carol, who used her own BTC to buy 200 ETH in the spot market, withdraws all 200 ETH to her Mist wallet
- ETH Hard Fork occurs
- Carol receives 200 ETC in her Mist wallet
- Because the 200 ETH Bob lent out is no longer on Poloniex, there is no ETC to give him
- The only option is to create an additional loan contract that neither party agreed to, wherein Alice owes Bob
200 ETC in addition to 200 ETH - Alice is forced to buy 200 ETC in a market she never entered to settle a debt she never agreed to
When you borrow, you receive an asset and a debt. But in this scenario, Alice is forced to “repay” a principle she never received, and the terms of the loan are changed without the consent of either party.
Why didn’t you make an earlier statement about who would be getting an ETC credit in their balance, or pre-announce that you were listing ETC?
We did not elaborate on who would receive the ETC credit because based on the principles delineated above, the answer was obvious to us: balances of ETC correspond to balances of ETH. In this arrangement, we give all ETC to our users — none of it remains ours. It seemed like overkill to spell this out for what was understood, at that time, as a keepsake without value, and it would have been unconscionable to duplicate all open loan contracts and saddle margin traders with debts of an asset there may never be a market for.
We usually do not pre-announce our intention to list a coin in order to avoid market manipulation. Despite repeated assurances from representatives of the Ethereum foundation that the community had little to no interest in Ether on the unforked chain (ETC), demand for a market grew rapidly, as did over-the-counter trading between private sellers and buyers. We felt that any announcement by us would lead to a price increase before the coins on our platform were available for trading, giving an unfair advantage to private traders. Neither Poloniex nor Poloniex staff participated in any ETC market prior to our listing, nor did we receive any compensation for listing.
In closing, we can always improve as a company and as a team. We take your feedback to heart and strive to hit the right chord with our customers and with the community with every decision we make. Along the way, we will hit a few bumps and will not always agree. This is crypto, after all. We stand firm behind our ETC crediting decisions, and we hope that this explanation brings greater clarity to the concerns that were raised.
Sincerely,
Tristan and the Poloniex team
I feel this clears a lot of the concerns I had.
What are you thoughts ?
Cheers,
Rich