The EOS network, already characterized by critics as one of the cryptocurrency ecosystem’s most centralized projects, could be about to concentrate even more power in the hands of an even smaller number of actors.
Block.one to Begin Voting for EOS Block Producers
EOS creator Block.one on Thursday announced that it will begin staking its tokens to vote for the network’s 21 block producers, who — according to the protocol’s Delegated Proof-of-Stake (DPoS) consensus algorithm — verify EOS transactions and enforce the network’s constitution.
The company, which raised more than $4 billion during the yearlong EOS initial coin offering (ICO), also received 10 percent of the 1 billion tokens created in the network’s Genesis block. It now intends to use those tokens to support block producers that “share the core values” of the EOS community.
“As a recipient of 10% of the initial EOS token allocation, Block.one recognizes its responsibility to participate as an active minority voting member,” the organization wrote in a statement. “As such, our approach has been carefully considered, and Block.one will soon begin allocating votes to block producers that share the core values necessary to maximize the integrity and potential of the EOS public blockchain network.”
Block.one had withheld from voting during the network’s activation period, in part to encourage an organic, community-led launch. However, it had never stated that it would continue to withhold its votes once consensus had formed around a single mainnet.
That, of course, is its right as an EOS holder, and disgruntled users nevertheless implicitly agreed to it by participating in the crowdsale and adopting a mainnet that allowed Block.one to claim its 100 million tokens from the Genesis block.
However, some critics have raised concerns about the level of centralization that this will create in the nascent EOS network.
EOS Creator’s Stake Raises Questions About Centralization
According to data from block producer candidate EOS Authority, there are currently about 275 million tokens (27.5 percent of the total supply) staked for voting. Other things equal, Block.one will control more than a quarter of the votes if it elects to stake all of its tokens. That’s significant in itself, but the picture becomes more alarming when observing the current vote distribution among block producer candidates.
At present, the top block producer candidate has 59.3 million votes. A single EOS token can be used to vote for up to 30 block producers (there is discussion of raising it to 50), meaning that — barring a massive increase in user staking — Block.one theoretically has the ability to use its tokens to single-handedly select which block producers will verify transactions for the network.
But that’s not all. Block producers can also freeze accounts and in some cases recover stolen funds, authorities they maintain under the network’s on-chain governance model and constitution.
Granted, Block.one has no financial incentive to act maliciously against the network, and there is no reason to think that it would launch an attack against its own creation. However, critics point out that this level of centralization could create a single point of failure.
What, for instance, would happen if a government ordered the company to stake its tokens for block producers that agree to censor particular categories of transactions of freeze specific accounts? Perhaps it would spur more users to stake their tokens and rally around other candidates, but then again it might not. Once again, this is an extreme case and there is currently no reason to believe a government will take such an unprecedented action. However, there’s no denying that it weaves systemic risk into the EOS network.
Block.one has formally proposed scrapping the current constitution and adopting a new one that allots block producers and arbiters less governance authority. However, the network is currently operating under the original document, and it is not clear when the new one — if adopted at all — will take effect.
Featured Image from Shutterstock