Despite finally launching its official main network, EOS keeps generating negative news. In this most recent controversy, Block.one, the company behind EOS’s development, has announced it will participate in the voting procedure for block generators. The company has announced to use its token allocation to participate in the staking progress used for delegate voting.
EOS Delegate Proof of Stake
EOS uses a Delegated Proof of Stake (DPoS) consensus protocol. The protocol relies on 21 elected block producers to reach consensus with a super-majority (two thirds plus one node). EOS participants can stake their EOS tokens, in order to participate in the voting procedure to select these delegates. This means that voting is based on wealth, with 1 token counting as one vote for up to 30 different block producers. Votes are re-calculated every two minutes approximately, and voting can also be delegated. When un-staked, tokens are locked for three days.
Block.one Voting Power
Block.one’s move to participate in the voting process has been criticized by some, because of the large percentage of EOS tokens held by the company. As the creators of EOS, Block.one have allocated themselves 100 million of the 1 billion EOS initially created.
Whilst this “only” constitutes 10% of all available tokens, this number does not tell the full story. At the time of writing, 280 million EOS tokens are staked according to the official tracking page. Adding Block.one’s 100 million tokens would bring this number up to 380 million. Thus, the company would hold a voting power of approximately 26%. Some see this as an excessive share of influence in who gets to produce the blocks on the EOS blockchain.
Not the first criticism
This is not the first time EOS’s model has been questioned for excessive centralization. The small number of validator nodes has been controversial since the beginning. The delegate voting model coupled with the high benefits of becoming a delegate has been criticized as a risk by many, including Ethereum’s founder Vitalik Buterin in this post.
In addition, EOS’s main network launch has been marked by technical glitches, which saw the network go offline for a few hours. The issues we quickly resolved by patches provided by Block.one. However, as this first “freeze” came less than 2 days after network launch and three weeks after a major security issue had been discovered and fixed in the code, confidence in EOS has been dented.
Accounts being frozen for security reasons and other governance debates have also not helped the system’s reputation.
However, whilst all of EOS’s issues should be taken seriously, let’s not forget that we are entering new territory. Making third generation blockchains work is as much of a social experiment, as it is a technical endeavor. We still do not know if Delegated Proof of Stake is a viable alternative to Proof of Work. We also haven’t figured out yet how to govern blockchains effectively. It seems clear that, right now, EOS represents a slightly less decentralized blockchain model. But maybe for some applications, this is sufficient or even required. Time will tell.