CWC Newsletter #33 (June 29, 2020)
By Taylor Ryker, Analyst
A Value Proposition of the EOS Mainnet, Part 2
Before I begin, please check out these informative news outlets for the past weekly updates and announcements in the EOS and EOSIO space: EOS Nation's Hot Sauce, EOSWriter's Twitter Week in Review, Crypto Peter's Moran Post, and EOS Go's What Happened This Week on EOSIO.
This post is the second part of "A Value Proposition of the EOS Mainnet and EOSIO Ecosystem," and if you would like to read part one, click here. In part 2, I would like to discuss how the EOS mainnet is developing to become more valuable through two issues: (1) Decentralization and (2) Transparency.
Decentralization and transparency of the EOS mainnet has been met with much debate, criticisms, and concerns. Critics have made claims that EOS is centralized and lacks transparency. Mainstream blockchain news outlets have reported since last Fall 2019 that EOS was centralized by Asian Block Producers or that large token holders were dictating the direction of the EOS mainnet.
Other critics have pointed out that prominent Asian Block Producers may constitute a "Chinese oligarchy" and have not been as transparent as their western Block Producer counterparts. And many in the EOS community are concerned that Block.one has not been as transparent about their goals or actions, such as Block.one's investments.
Below, I have enumerated critical concerns of EOS surrounding centralization and lack of transparency with counter-points that reveal the value of the EOS mainnet in terms of decentralization and transparency.
Centralization Claims of EOS Mainnet:
(1) Geographical centralization (Block Producers reside in Asia and especially in China)
(2) Voting-Reward Proxies and/or Vote Trading by top-21 Block Producers
(3) Large Exchanges are top-21 Block Producers
(4) Class-action lawsuit against Block.one and claims of centralization
Decentralization of EOS Mainnet:
(1) The top-21 Block Producers have begun to become more geographically decentralized, representing different groups (exchanges, start-ups, and technology labs), and reward their users for voting them in. The top-21 Block Producers are not all from Asia or China with Block Producers like EOS Nation, EOS Rapid, and Attic Lab providing much technological and/or community leadership in the space.
(2) Last year, YouTube star Colin Talks Crypto was able to use his Voting Proxy to pass "regproducer," a standard for Block Producer compliance. This showed to the EOS community that the voting and direction of the EOS mainnet was not centralized in the hands of the top-21 Block Producers. Colin Talks Crypto, a supporter of the EOS mainnet, was able to use the millions of votes proxied to his account to vote in Block Producers who were willing to activate regproducer.
(3) This past Spring 2020, the 21 Block Producers, with the support of EOS token holders, voted in to lower the annual inflation, burn EOS tokens, and upgraded the EOS network to EOS 2.0 with the EOS Virtual Machine. The Block Producers are decentralized enough to maintain the network's security while collaborating with each other to enhance the network. If the Block Producers were colluding with each other, they would, in theory, be incentivized to increase inflation because the Block Producers are paid in the annual inflation of the EOS token.
(4) Last Fall 2019, the EOS mainnet witnessed much congestion due to an EIDOS mining scheme. The EIDOS congestion revealed that EOS mainnet is more decentralized because the Block Producers did not censor, blacklist or freeze these transactions. Free market of the CPU rental market (REX) highlighted the strength that transactions on the EOS mainnet have value. A silver lining of the EIDOS event was that it spurred the release of code to EOS 2.0 and EOS VM to remedy the congestion.
Non-Transparency of EOS Mainnet:
(1) Block.one has had a difficult time maintaining transparent communication with the EOS community
(2) Some top-21 Block Producers have not been as open and transparent with the EOS community
Transparency of EOS Mainnet:
(1) Legal issues and regulations have muted much of Block.one's explicit language to the EOS community. Chaney Moore has a great piece on the changing nature of Block.one's communication of Voice after their SEC settlement last Fall 2019.
(2) With the SEC settlement with Block.one, they may be advised to not make bold claims that may not come into fruition in the short-term; they are taking their time in creating high quality products (code upgrades/releases, Voice social media platform, inter-blockchain communication, blockchain database, etc.).
(3) Block Producers have created and released tools to maintain transparency of the efficacy of Block Producers and integrity of token voters: 1) EOS Rate, 2) EOS Authority's tools, and 3) EOS Aloha's Block Producer monitor tools.
(4) Block.one began to vote for Block Producers in order to create and maintain relationships with Block Producers. Block.one began to vote on May 29, 2020 and have voted for the past 5 weeks with 10 million votes recycled each week to vote in a new batch of Block Producers (between 9-10). It is speculated that Block.one's voting is to create a baseline of integrity and expectations for Block Producers for future Block.one voting.
(5) About two months ago, Block.one created the Public Blockchain Engagement (PBE) to promote transparency and communication with the EOS and EOSIO communities. With the former members of EOS New York at the helm of the PBE, EOS community members feel more comfortable that lines of communication will be better.
(6) Everything that is proposed, voted on, and transacted are on-chain on the EOS mainnet. This means that the transparency of the network is visible to anyone with an EOS block explorer, bloks.io. Even transactions on middleware technologies like the LiquidApps' DAPP Network are all on-chain, which can scale faster with cheaper transactions.
Conclusion: EOS Mainnet and Ethereum
Although the recent developments surrounding the EOS mainnet may not have fully remedied the issues of centralization and transparency, I believe that the current gains highlight the resiliency of the EOS mainnet and the potential for it to become a valuable blockchain. If you are a developer on the EOS mainnet, you can be assured that you won't be censored or blacklisted due to arbitrary reasons as long as you can afford the network's resources.
On the other hand, Ethereum just recently witnessed a gas increase voted-in by large mining pools even though there was some discontent from community members. The increase in the gas limit points to the centralization of Ethereum mining pools. With a group of central authorities in the likes of Vitalik Buterin, Consensys, and the Ethereum Foundation leading Ethereum, I feel more comfortable with the EOS mainnet because it is decentralized in the sense that Block.one and the Block Producers do not control the mainnet's destiny--it's up to the token holders. Hopefully with the increased transparency of the EOS mainnet, token holders can benefit.
Disclaimer: KJ Kingsley is not a financial advisor and holds the digital tokens or cryptocurrencies represented in the content above. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this post constitutes a solicitation, recommendation, endorsement, or offer by myself to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of any of the author’s employers.