The Ethereum Classic community faces a pivotal decision about EIP-1559 adoption. Two proposals compete for attention: Olympia (ECIP-1111) proposes a treasury-based system with on-chain governance, while ECIP-1120 takes a protocol-native approach with algorithmic fee redistribution. Both agree that ETC needs EIP-1559 compatibility and that burning fees is wrong for a fixed-supply chain. The disagreement lies in what should happen to those fees.
This isn't the first time ETC has confronted a treasury proposal. In 2020, ECIP-1098 proposed diverting 20% of mining rewards to fund client development, and the community rejected it. The ETC Cooperative withdrew support, citing fundamental conflicts with ETC's decentralist vision. The proposal was formally withdrawn in October 2021. Now Olympia presents a similar concept dressed in new governance mechanics. The arguments against it remain largely unchanged, documented extensively at ethereumclassicclassic.org, which catalogued the philosophical, practical, and economic objections to protocol-level treasuries.
At its core, the difference comes down to a single question. Olympia asks "Who should decide how to spend accumulated fees?" ECIP-1120 asks "How do we stabilize mining revenue without anyone deciding?" Olympia requires complicated governance systems. ECIP-1120 requires nothing more than cold hard math.
In our opinion, ECIP-1120 far better aligns with Ethereum Classic's principles. Below we present an exhaustive case against the Olympia approach.
Arguments Against Olympia
Violation of Founding Documents
ETC's founding documents explicitly address the treasury question. The Ethereum Classic Declaration of Independence establishes that system forks are only justified "when fixing protocol level vulnerabilities, bugs, or providing functionality upgrades." A treasury doesn't fix a vulnerability. It introduces a socially-motivated change that redistributes value to designated beneficiaries. A Crypto-Decentralist Manifesto goes further, declaring that "neutrality is necessary" and that participants must be "on an equal footing with everyone else."
These aren't obscure historical artifacts. They're the philosophical foundation that distinguished ETC from Ethereum after The DAO bailout. When Ethereum's community chose social consensus over code immutability, ETC emerged as the chain that refused to intervene. Olympia's treasury model asks the community to trust governance mechanisms, coordinate on spending decisions, and manage discretionary funds. These requirements stand in tension with the principles ETC was created to uphold.
Protocol Neutrality Violation
Protocol neutrality means treating all participants identically. Any governance-based treasury inherently favors certain participants: large token holders who gain disproportionate voting power, people connected to the treasury proposal process, English speakers who can participate in governance discussions, those with enough funds to justify the effort of participating, and holders who keep assets in hot wallets rather than secure cold storage. Mining rewards are open to anyone with hashrate. Treasury disbursements flow to whoever navigates the governance process successfully. This introduces protocol-level subjective judgment into what should be an objective system, directly contradicting the Manifesto's requirement that everyone be "on an equal footing."
The Governance Bootstrap Problem
There's a fundamental bootstrapping problem that Olympia hasn't solved: where do the initial voting rights come from? In a fully open and permissionless system, it's effectively impossible to achieve a fair or Sybil-resistant distribution of voting rights without introducing some form of trusted identity. Anti-Sybil solutions like Gitcoin Passport, BrightID, and proof-of-attendance tokens exist, but they all anchor their security to external authorities and trusted third parties. This defeats the purpose of a permissionless blockchain by making governance dependent on outside systems that ETC doesn't control. None have been analyzed for suitability in ETC's context, and no specific integration has been proposed. The entire Olympia upgrade depends on solving a problem that may have no permissionless solution.
ECIP Dependency Chain Risk
ECIP-1111 (fee redirect) depends on ECIP-1112 (treasury contract), which depends on ECIP-1113 (governance). If the governance system proves non-viable, the entire stack collapses. Deploying ECIP-1111 before ECIP-1113 is proven could leave the network in a half-baked state that would be painful to undo.
Reversing consensus changes after deployment potentially violates "Code is Law" principles. The prudent approach requires validating the complete system, including real-world testnet deployment of governance mechanisms, before activating any component.
Underspecified and Undefined
Olympia leaves critical components undefined, creating unacceptable risk for a protocol-level change. The governance mechanism that the entire system depends on is not specified. ECIP-1113 references potential approaches but doesn't commit to any particular voting system, anti-Sybil mechanism, or decision-making process. This isn't flexibility; it's asking the community to approve a blank check. Deploying consensus changes while leaving governance undefined means ETC would be committed to a treasury system without knowing how that treasury will actually operate. The specific voting mechanism, quorum requirements, proposal processes, and safeguards would all be determined later by unspecified parties through unspecified means. This opens ETC to unknown protocol-level failures that cannot be evaluated because the system hasn't been designed yet.
Voting System Failures
Any governance system requires some form of voting, and all known approaches have serious flaws in permissionless contexts. Token-weighted voting gives disproportionate influence to large holders regardless of their long-term commitment. Identity-based voting requires trusted identity providers, undermining permissionlessness. Quadratic voting can be gamed through Sybil attacks. Conviction voting favors patient attackers.
Whatever voting mechanism Olympia eventually adopts will face these fundamental tensions. Quorum requirements are either too high to achieve (given ETC on exchanges, in cold storage, or lost) or too low to be legitimate. Voting is essentially costless, meaning participants have minimal skin in the game. Coordinated last-minute voting can pass proposals before opposition organizes.
What appears as "consensus" may reflect only information asymmetry and beneficiary-funded advocacy rather than genuine community sentiment.
The Centralization Gravity Well
The ethereumclassicclassic.org critique identifies a dangerous feedback loop that treasury systems create, dubbed the "centralization gravity well." Once a treasury designates beneficiaries, non-beneficiary participants become discouraged from contributing. Opposition to similar centralizing changes weakens over time. Protocol value declines as the community shrinks. Conditions emerge for further centralization. Treasury beneficiaries gain financial means to influence protocol decisions while non-beneficiaries lose motivation to participate. This self-reinforcing cycle makes reversal increasingly difficult.
Perverse Incentives
Treasury beneficiaries gain financial motivation to prevent competition from new developers. They may spend treasury funds on PR and lobbying rather than protocol improvement, no enforcement mechanism. The dynamic creates a "race to the bottom" where beneficiaries maximize profits while minimizing actual contributions. Even well-intentioned governance can't escape these dynamics when discretionary funds are at stake. Beneficiaries have every incentive to exclude competing client developers, create artificial barriers to entry for new beneficiaries, and lobby against any changes that might reduce their allocation. The structure rewards entrenchment over innovation.
Destruction of Natural Contribution
The ethereumclassicclassic.org analysis emphasizes ETC's natural "buy and contribute" model, where holders contribute because they have financial stake in the protocol's success. A neutral protocol encourages this organic participation. Contributors naturally incentivized to increase protocol value will naturally contribute without external coordination.
Treasury funding creates artificial incentives that undermine natural contributions, which the document identifies as "the lifeblood" of long-term blockchain success.
Miner Revenue Reduction
Redirecting base fees to a treasury directly reduces miner compensation. This weakens proof-of-work security incentives precisely when block rewards are declining under ECIP-1017's emission schedule. Making attacks cheaper while claiming to address security concerns is counterproductive.
What actually threatens ETC's long-term viability is mining becoming unprofitable. If mining revenue drops too low, hashrate declines, 51% attacks become cheaper, network security collapses, and nothing else matters.
ECIP-1120's backward-looking distribution ensures miners receive stable, predictable revenue. Olympia diverts fees away from the security budget.
Insufficient Treasury Revenue
The primary argument for Olympia centers on ecosystem funding, but the numbers tell a different story. Current ETC base fees would generate perhaps $10,000 to $50,000 per year at current activity levels, maybe $200,000 to $500,000 during high-activity periods. A single experienced protocol developer costs $150,000 to $300,000 annually. The treasury would accumulate slowly and fund modestly. Meanwhile, the ETC ecosystem already has funding mechanisms: the ETC Cooperative, private development, grants and sponsorships, community crowdfunding. The problem isn't lack of funds; it's coordination and allocation. Olympia's treasury doesn't solve coordination; it just moves it on-chain and adds governance overhead. All the complexity for minimal benefit.
Implementation Complexity
Olympia spans five separate ECIPs (1111-1115): the core EIP-1559 implementation with treasury redirection, the treasury smart contract, a DAO governance framework, a funding proposal process, and additional governance mechanics. Each layer introduces smart contract execution overhead, governance coordination requirements, multiple potential failure points, and political attack surfaces.
ECIP-1120 is implemented entirely in consensus code. Zero state variables, since distribution is calculated from existing block headers. Zero smart contracts means zero execution overhead. Zero governance means purely algorithmic distribution.
Smart Contract Attack Surface
Treasury smart contracts introduce re-entrancy risks, access control bugs, upgrade vulnerabilities, economic attacks on voting mechanisms, and social engineering vectors for governance capture. Even "immutable" contracts require careful initial deployment, extensive security audits, ongoing monitoring, and governance processes to respond to exploits. The DAO hack demonstrated that smart contract treasuries can fail catastrophically. ETC itself exists because of that failure. Implementing a new treasury contract invites similar risks. ECIP-1120's stateless design has nothing to hack because there's no contract to exploit and no state to corrupt.
Premature Deployment Risk
Deploying consensus changes (ECIP-1111/1112) before governance (ECIP-1113) is proven viable risks creating an irreversible mess. The governance spec references multiple anti-Sybil approaches but provides no specific recommendation for ETC. No testnet validation has been demonstrated. No bootstrap mechanism has been specified. Warnings against this premature activation have gone unanswered. The absence of concrete testing plans, bootstrap governance specifications, or Sybil-resistance integration details should disqualify the proposal from serious consideration until these gaps are addressed.
Chain Split Inevitability
The Crypto-Decentralist Manifesto warns that "any change to the system's rules that not all participants freely agree to creates a network split, diminishing network value for everyone." ETC itself was born from rejecting The DAO Hard Fork, proving that principled minorities will fork to preserve values.
A treasury-implementing chain will face entrenched opposition from ETC participants who remember why ETC exists, principled stakeholders across the ecosystem, and neutral chain advocates. The non-treasury fork has superior positioning: moral high ground protecting original principles, no governance overhead, no treasury spending volatility, and appeal to the neutrality niche.
A chain split destroys value for everyone through replay attack vulnerabilities, user confusion, divided hashrate, and fragmented liquidity.
Legal and Regulatory Risk
Olympia introduces a DAO LLC to administer treasury funds. This creates a legal entity with formal control over protocol-level revenue, fundamentally changing ETC's regulatory profile. One of ETC's unique selling points is the absence of any controlling legal entity, placing it alongside Bitcoin as a truly decentralized commodity rather than a potential security controlled by identifiable parties.
The distinction between commodity and security status has enormous practical consequences. Bitcoin and ETC have avoided certain categories of scrutiny precisely because no organization controls them or profits from their operation. Introducing an LLC that receives and allocates protocol fees creates exactly the kind of "common enterprise" and "expectation of profits from the efforts of others" that regulators look for. This risk extends to exchanges, who may delist or restrict trading to avoid regulatory exposure, and to users or other organizations in jurisdictions with strict laws.
Competitive Disadvantage
As more people recognize centralization risks in other chains, demand for truly neutral blockchains increases. ETC is uniquely positioned to fill this niche. Implementing a treasury surrenders this unique selling point, allowing more neutral competitors or a non-treasury ETC fork to capture market share. Developers choosing between projects naturally select those perceived as most fair and sustainable. ETC's neutrality currently attracts this talent pool. A treasury shifts competition dynamics, making ETC less attractive to principled developers who have other options.
The Democracy Paradox
ETC's founding rejected majority-rule centralization. The DAO fork happened against community sentiment, and ETC exists because a minority refused to accept the majority decision. Now using any form of voting to decide on centralization is philosophically incoherent with ETC's reason for existing. The Declaration warns against allowing "the tyranny of the majority" to compromise system values. A majority vote to implement treasury mechanisms doesn't justify abandoning core principles, particularly when this drives away principled minority participants who made ETC what it is.
Conclusion
ECIP-1120 offers a clear alternative that avoids every problem listed above. It provides EIP-1559 compatibility without governance complexity, fee utilization without discretionary allocation, and miner revenue stability without political capture risk.
The question isn't whether or not ETC development should be funded - of course it should. The question is whether protocol-level base fees should stabilize mining revenue or feed a governance-controlled treasury.
For a chain born from rejecting discretionary protocol intervention, the answer should be clear.
If you agree, make your voice heard. Share this article on social media. Comment on the ETC GitHub discussions. Signal your support for ECIP-1120 and your opposition to Olympia.
The future of Ethereum Classic depends on the community standing up for the principles that created it.
Onwards.