Matter Labs co-founder proposes ‘Ethereum Supreme Court’ for on-chain disputes

Matter Labs co-founder and CEO Alex Gluchowski has proposed an Ethereum court system resembling a hierarchical court system similar to the real world.

In a Sept. 2 post on X (Twitter), Gluchowski floated the idea for an “Ethereum Supreme Court” — which would work similarly to the United States Supreme Court — serving as a final stop for parties to dispute smart contract issues rather than needing to take matters to a traditional lawyer or court.

“The most important function of such a system will be to protect protocols against political inference from the outside. It will serve as a great deterrence mechanism, and will elevate the role of Ethereum as a powerful network state,” said Gluchowski.

Smart contract implementation risks remain the biggest unsolved problem of Defi. L2s are equally affected.

Let me pitch an idea: L1 Fork as the Court of Final Appeal.

First, why existing solutions don’t work:

1) Time-locked upgrades are great for scheduled changes, but… pic.twitter.com/EcaogkZBH9

— Alex G. ∎ (@gluk64) September 2, 2023

According to Gluchowski’s concept, disputes and emergency upgrades would be handled by a hierarchical system of on-chain courts. The final stop, however, would be an Ethereum layer-1 soft fork as the “Court of Final Appeal.”

Gluchowski said that in this system, every protocol would have its own governance with normal and emergency upgrade mechanisms, and would also designate a special contract which can trigger an appeal.

When there is an emergency upgrade to a protocol, there would be an appeal period, during which any user can submit a challenge to the higher court. However, they’ll have to put up a pre-defined bail deposit.

Each court specifies the higher court to appeal to, with the Ethereum Supreme Court serving as the final destination for challengers, Gluchowski said.

Let’s chat. The main idea of the post: no human-driven court should be able to say the last word. The final appeal must always be an L1 fork.

— Alex G. ∎ (@gluk64) September 2, 2023

An example court heirachy would see protocols like Aave and Uniswap would contest matters in a court such as CourtUnchained or JusticeDAO. After those courts reach a decision, a party can appeal to the Ethereum Supreme Court.

However, there would need to be a strong social consensus for the on-chain court system to work, Gluchowski acknowledged.

He added that it would be expensive so that only “truly extraordinary” cases will be brought before it.

“[It will need to be] worthy of the attention of the entire Layer-0 (the social consensus) of Ethereum. Think of a bug in @Uniswap, a major L2, a Defi protocol with a systemic risk, etc.”

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Gluchowski noted there were several existing solutions to such disputes already but argued that they aren’t effective. 

For example, enabling time-locked features on smart contracts isn’t suitable in emergency situations and introducing a security council can mitigate the problem, but won’t solve it, while carrying its own risks.

“A security council could only freeze the contract temporarily, requiring a token governance approval for an emergency upgrade. But now a malicious majority of undercollaterized stakers could perform an evil take-over upgrade and steal all the assets,” he explained.

Gluchowski said that he and the team at zkSync — an Ethereum layer 2 scaling solution created by Matter Labs — will happily fund research into the proposal.

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