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Parity Confirms Departure from Ethereum Following Move to DAO

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The company refused grants from Ethereum Foundation.

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On December 16, 2019, Parity Technologies announced that its Ethereum client, Parity Ethereum, would be maintained by a decentralized autonomous organization (DAO). Without the proper funding, however, critics pointed out that the project will likely collapse.

Stepping back even further, the move highlights the ever-growing divide between Parity and Ethereum ecosystem at large.

Transitioning to OpenEthereumDAO

Parity Technologies, erected by Ethereum co-founder Gavin Wood in 2015, announced via a press release that they would end their maintenance efforts of the Parity Ethereum codebase. 

Parity Ethereum is one of many Ethereum clients, otherwise known commonly as nodes, that users need to verify a blockchain’s data including its smart contracts. Other clients include Geth, Nethermind, Hyperledger’s besu, and Trinity to name a few. 

The organization reported on Monday that they are “increasingly unable to dedicate the level of resources required for even simple maintenance” of Parity Ethereum adding that: 

“We find it increasingly difficult to explain to our stakeholders why it makes sense to dedicate our expertise to maintaining legacy technology.”

Instead, the codebase will transition to a DAO in which developers who rely on Parity Ethereum can take over maintenance. 

The license for maintaining the project’s development will also be handed off to the DAO, and Parity Technologies will oversee the project from “a more explicit mentorship role,” according to the release. The new project is now being called OpenEthereumDAO.

As with many DAOs, the governance model will be incentivized by tokenization. Following Parity’s distribution of these tokens, holders will manage further development of Parity Ethereum via a staked-voting mechanism. Interested parties can apply to work on this code via several organizations including the Ethereum Foundation, Gnosis, POA Network, and ETC Labs. 

Members of the Ethereum community were quick to criticize the reorganization of the client’s maintenance. The primary concern has been that the lack of concentrated funding will effectively end further development. 

Nick Johnson, a lead developer behind the Ethereum Name Service (ENS) project, Tweeted “how will this DAO be funded? Without funding, this is just abandonment with extra steps.” In an interview with Crypto Briefing, Yaz Khoury, Director of Developer Relations for The Ethereum Classic Cooperative, said:

“Moving to a DAO is another way for Parity to say ‘we don’t want to work on this anymore but we don’t want to admit it publicly.’ An important point made about this DAO is who is gonna fund it if Parity is providing control to others.”

Handing over the license to the DAO is also problematic for Khoury. He said that it would have been “better to just relicense it and donate it to a foundation that’ll ensure it’ll have proper enterprise developers.” 

Incentivizing Open-Source Development

Prior to the shift to OpenEthereumDAO, the Parity Ethereum client was operated by a team of developers. To bridge Parity Technologies with the Ethereum community, Afri Schoedon was tasked with communicating developments in the role of Release Manager.

This meant that “he did the bulk of issue triaging, following the core dev calls and communicating anything that happened in the community,” according to CTO of Parity Fredrik Harrysson.

His name came up more than once as users grappled with the meaning of the new DAO model.

Following Parity’s announcement, another Twitter user asked, “can we drop these bells and whistles and just let the community pay [Schoedon] to maintain it as a [client] for as long as he wants?”

Jutta Steiner, the CEO and co-founder of Parity Tech, responded stating that Schoedon “wasn’t interested in taking this forward.”

The criticism reached a peak on December 18 when it became known that Schoedon had been terminated from his role at Parity.

In a vitriolic Twitter thread, Schoedon explained that he had indeed been pushing for an alternative to OpenEthereumDAO which included, among other conditions, €750,000 (~$834,000) in seed funding and hiring two Parity engineers specific to the client’s maintenance.

When approached for comment, a spokesperson from Parity confirmed that “Afri is no longer an employee of the company.” They also acknowledged that “Afri shepherded issues through our development process as Parity-Ethereum Release Manager and represented us in the Ethereum community.”

Schoedon has since publicly apologized for the outburst too, but the event revealed some of the more difficult aspects of pursuing open-source software development. These same difficulties are also present in the traditional technology space. In the case of non-crypto open-source development, many projects are often funded by larger technology companies in one way or another.  

For its part, Parity Technologies has been primarily funded by several VC firms including Blockchain Capital and Fenbushi Capital. 

It has, however, earned additional grants via the Ethereum Foundation and the Web 3 Foundation. The Web 3 Foundation, also cofounded by Gavin Woods, also led two initial coin offerings (ICO) to support development for its Polkadot product. Parity earned a grant from these offerings to help build the first production implementation of Polkadot. 

Polkadot is a highly-anticipated scaling and interoperability solution for which Parity sought $60 million in the latest ICO. More importantly, this product is agnostic in that it hopes to bridge all blockchains, not just Ethereum. 

The Ethereum Foundation granted $5 million to Parity Technologies on Jan. 7 to fund work on “Casper, sharding, light clients, developer tools, QA, audits and infrastructure improvements.” 

Half of the grant was released immediately, with the other half to be distributed in tranches after Parity reached several milestones. 

As of Dec. 11, the organization gathered $1.2 million of the remaining grant based on reaching some, but not all of the milestones. Peter Mauric, Head of Public Affairs at Parity, confirmed that the company would not be pursuing the remaining milestones and thus will forgo the remaining funds.

In the OpenEthereumDAO announcement, Parity also stated that they would “be highly focused on Polkadot for the foreseeable future and so will likely suspend our official paid mandate…as a Serenity development team with the Ethereum Foundation, continuing in an unofficial laissez-faire capacity only.”

Serenity is the name of the Ethereum’s scaling roadmap, also known as “Ethereum 2.0.”

Let the Meme Wars Begin

In many ways, these two December announcements confirm long-held sentiments that Parity has slowly been moving out of the Ethereum community. To waive $1.3 million and halt further Ethereum development indicates a serious change of focus.  

This is far less dramatic than it appears, however. 

Reading the follow up to Wertheimer’s comments, one encounters the same issues mentioned above on funding open-source development. Parity has a much greater incentive to spend their time and energy on Polkadot since releasing its native DOT token. That being said, there have been other indicators. 

At the beginning of December, for example, Parity urgently announced that users of their client had to perform another upgrade only a few hours before the Istanbul hard fork. In the first upgrade, they failed to include EIP1344, which would “implement better replay protection and increase security.”

The details for this absent-mindedness were unclear at the time, and there still hasn’t been an official statement. 

But with the move to OpenEthereumDAO, one wonders if this late announcement was merely a result of the Parity client falling down the company’s list of priorities. 

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