Overview

Bringing peace of mind to a chain near you

Overview of Novo Space

Novo Space is an experiment in bringing peace of mind back to crypto. At a high level, it's a subspace within Ethereum which uses the ERC-20R standard to support reversing transactions according to well-defined rules in well-defined situations.

See the Quick Start page if you are looking to launch the app and dive in.

The Problem With Perfect Censorship Resistance

The current state of ethereum is one aiming for perfect censorship resistance. While this is great for credible neutrality, it comes at the cost of the inability to revert even faulty transactions.

This cost has been a large one financially with crypto hacks totaling billions of dollars. The Wormhole hack costed $325 million, the beanstalk hack costed $182 million, the BadgerDAO hack costed $120 million; there is no shortage of such examples. With the ability to revert certain transactions, we could revert these hacks and reclaim the lost funds!

See this post on censorship resistance in crypto for more

Punnet square categorizing transactions with respect to faultiness and revertedness

The above punnet square helps to capture the tradeoffs involved. Perfect censorship resistance optimizes for having 0 false positive reversals, but it is at the expense of also having many false negative lack of reversals.

We should aim for preventative measures to limit the importance of true positive reversals. But, if we don't think we are capable of using preventative measures to reduce the chance of another wormhole hack equivalent to acceptably low levels, it may be worth investigating a system for facilitating some true positive reversals at the expense of potentially letting some false positive reversals sneak through. It's possible that such a system better satisfies certain needs than one which aims for perfect censorship resistance.

Another note: the current main approach to reversing faulty transactions is to facilitate a blockchain hardfork as was done in response to the DAO hack. The issue with this approach is that it calls on mob war strategy which has many unpleasant side effects. It leads to a situation where code is law most of the time, except in undefined situations where code will not be law in undefined ways. By systematizing the situations in which transactions are to be reversed, people can actually know what they are getting themselves into.

Novo Space: A Potential Solution

Novo Space is an experiment at a solution to this problem. It's a subspace of ethereum where transactions are reversible in certain well defined situations according to certain well defined rules.

Novo Space is a subspace within Ethereum. Related song.

Transactions are said to be a part of Novo Space if they are interacting with Novo tokens. Novo tokens are those which extend the ERC-20R standard and set their governance contract to that of the Novo Space Governance contract. Examples include N-USDC and N-DAI.

What are the rules which govern reversals?

Note: you can substitute any arbitrary governance into the Novo Space Governance Body. For the purposes of the Novo Space experiment, the Novo Space Governance Body is a simple presidency model where one person has is responsible for arbitration.

The process for reversing a transaction is as follows:

1. Once anybody in the Novo Community identifies a fraudulent transaction, they create a reversal request. This reversal request includes the identity of the person creating the request, a description of the situation, and the suspected transaction.

2. The Novo Space Governance Body (NSGB) monitors incoming reversal requests and reviews them as they appear. For each new reversal request, NSGB establishes whether or not there is probable cause against the suspected transaction. If so, the suspected assets are frozen for further review. If not, the reversal request is closed.

3. For those reversal requests which have probable cause, the NSGB deliberates over whether or not the suspected transaction was fraudulent. If they conclude that it is, the suspected transaction is reversed. Otherwise, the assets are released and the reversal request is closed.

It's important to note that the reversibility window for transactions is 3 days. After 3 days, a transaction can not be reversed even if it is found fraudulent. This puts a limit on the power of the NSGB.

What is it like to interact inside of Novo Space?

It can be helpful to categorize transactions into three types:

1. Those which move tokens from outside of Novo Space in to Novo Space

2. Those which move tokens within Novo Space without leaving Novo Space

3. Those which move tokens from within Novo Space outside of Novo Space

The first category of transactions settle instantly. Novo offers the Novo Bridge for turning your ERC-20 tokens into Novo tokens. Examples include turning USDC into N-USDC and DAI into N-DAI. Once you enter Novo Space, you get access to all of the apps and protocols in the Novo Space ecosystem.

For the second category of transactions, we introduce two terms: settlement time and reversibility window. Settlement time refers to the time you have to wait after a transfer before you have the ability to transfer those tokens again. Reversibility window refers to the window of time following a transfer inside of which the transfer is reversible.

The second category of transactions settle instantly in the sense that immediately after transfer a Novo token, it can be transferred again. That being said, the reversibility window of Novo token transfers is 3 days. This means that Novo token transfers can be reversed if deemed fraudulent within 3 days of the fraudulent transfer taking place.

Put together, these properties mean that living inside of Novo Space feels just as free as living in the dark forest, but with the added bonus of faulty transaction protection. You can pretty much forget that you are in Novo Space while retaining the peace of mind that comes with being in a safe space.

The third category of transactions only settle once this reversibility window has ended. This prevents criminals from exiting Novo Space immediately after performing some fraudulent transaction. They need to wait for the reversibility window to end before they can get their tokens out. This offers time for the Novo Community to identify the fraudulent transaction and freeze the stolen assets.