Blockchain development company Input Output Hong Kong’s proposal to implement a treasury within the protocol layer of the Ethereum Classic blockchain is being met with opposition by ETC core developers. Utilizing smart contracts, core devs contend, should be exercised in place of further complicating the protocol itself.

Among altcoin traders, IOHK’s lengthy proposal was met with ridicule. Twitter user Cryptospacesuit said it looked like “a DAO 2.0.” Particularly unpalatable to would-be investors was the passage advocating an annual money supply increase of 20% to accommodate the treasury.

ETC core developer Elaine Ou addressed the issue of inflation on the Ethereum Classic Slack channel. “The treasury proposes increasing the block reward from 5 ETC to 6 ETC, and maintaining that reward forever,” she said. “This is an inflationary monetary policy that is contrary to the community’s goals (the consensus was that there needs to be a hard cap to the money supply).”

Fundonomy fundraising platform developer Avtar Sehra writes, “There really is no need to increase complexity of the underlying network protocol, as that just increases points of failure.” While representatives at IOHK say they will nix the 20% monetary increase from the revised draft of the document, Sehra maintains that inflationary monetary effects are likely unavoidable. “If you have a small amount of perpetual release for treasury, that would put us back in inflationary territory.”

The changes to the protocol outlined in IOHK’s proposal would impose numerous burdens on developers. “From a technical perspective, I have no idea how we would even begin to implement this in either the geth or parity clients,” states Elaine Ou. “They’ll need to support new transaction types, new block types, and new EVM instructions. We’re basically erasing those clients and starting from scratch.”

ETC core developer Igor Artamonov (Splix on Github) shares similar concerns, favoring smart contracts running on the ETC blockchain over protocol alterations. To that end, Artamonov has already designed such a smart contract, issuing Bitcoin-inspired BitEther (BEC) currency to miners, with unclaimed tokens benefiting development projects.

Artamonov contends that IOHK’s research collected during their appraisal of the Dash blockchain’s treasury system should not be applied to ETC. “Dash cannot be used as an example, as it’s a young project,” he says, “and it will take years before that model can be proven. I actually expect it will cause damage to Dash, as its current market valuation will attract parties more interested in short-term earnings.”

Flaws in the treasury model could allow hackers like the DAO Attacker to drain funds, or cause bugs preventing functioning interactions between blockchain layers. Core developer Ou cites such risks, mentioned by IOHK’s representatives in the proposal and in the Slack channel, in stating her position. “[I] strongly prefer having it as a smart contract,” she explains. “Ethereum (classic’s) attack surface is big enough as it is. I am against adding more complexity to the core clients.”

IOHK chief executive officer Charles Hoskinson resisted the core developers’ suggestions. “Implementing a treasury as a smart contract solves nothing,” he says. However, his critique of smart contracts did not address existing proof-of-concepts, particularly Artamonov’s BitEther project. Third parties like IOHK may need to learn to tolerate what tradeoffs may come from using smart contracts for treasury and governance applications, as the proposal’s motion to tamper with the protocol layer of Ethereum Classic does not appear to be an option worthy of discussion.