EOS Shows Decentralization Factor Is Not A Top Priority For The Controversial Blockchain Project
EOS Shows That Decentralization Is Not A Priority For The Project
EOS is one of the largest virtual currencies in the market and one of the most interesting projects because of its governability features. During the first part of the year, the team behind EOS did a very impressive work that allowed the cryptocurrency to reach the fifth place in the market and keep there for a long period of time. Nevertheless, there are some scandals that are eroding the good comments that the whole network gained the second quarter of 2018.
One of the latest issues that affected the integrity of the community is related to evidence that suggests that confirmed transactions were reversed. On the famous social network Reddit, a discussion started regarding the fact that the company took the decision to reverse confirmed transactions.
The decision that was taken by the company and by the arbitrator are alarming the community that defends decentralization, censorship resistance and immutability.
EOS is a network that is powered by smart contracts that hosts and deploys decentralized applications (dApps). The platform’s mainnet was launched back in June 2018 and has an open-source software. The platform was also developed by block.one which is led by Daniel Larimer. Moreover, the company held an Initial Coin Offering (ICO) that was able to raise $4.1 billion dollars in almost a year.
The consensus algorithm implemented by the network is known as Delegated Proof-of-Stake (dPoS). It works allowing investors to be rewarded with voting power and decide who will be mining the EOS blockchain in the future.
It is also important to mention that there are two major entities that work in the EOS blockchain, the EOS Core Arbitration Forum (ECAF) and Block Producers (BPs). BPs will earn an important number of tokens per day. The top three BPs could obtain over 1000 tokens each day.
In a Reddit post written by the author auti9003, he shows a picture of the ECAF moderator that was reversing transactions that were already confirmed by the network. The transaction happened without the owner's permission.
The arbitrator informs on the matter:
“Under the powers afforded to me as arbitrator under Article 6 of the Rules of Dispute Resolution, I, Ben Gates, rule that the EOS account in dispute should be returned to the claimant with immediate effect and that the freeze over the assets within said account is removed.”
Some networks such as Ethereum would need a hard fork in order for it to happen, but EOS has a different model that allows for these interventions from the ECAF.
And the comments started to spread in Reddit about this issue. Users complained that it has no sense to use a system that works in the same way as a bank account and the traditional legal system.
In the past, there were other issues related to the votes made by the network. These allegations showed that some Block Producers were performing ‘mutual voting.’ This case affected the cryptocurrency exchange Huobi that was voting with the funds held in its accounts for itself.
Block.one informed that they were aware of the situation and about some unverified claims related to block producer voting. However, Huobi is currently the top EOS block producer and Block.one did not provide further information about this situation.
It is also important to remember that in June there was another scandal affecting the whole network. At that time, the ECAF decided to freeze seven accounts associated with phishing scams. This has also created other issues with the accounts and the decentralized system that was already questioned.
For example, after this, the ECAF ordered to stop transactions to happen from 27 addresses. Nevertheless, the shocking fact is that they did not provide a clear explanation of why they were freezing the transactions of these accounts. The ECAF informed that they were going to provide an explanation on a later date.
A few weeks ago, more criticism started to affect the whole network. The blockchain testing company that is known as Whiteblock, informed that the EOS blockchain cannot be considered a blockchain. The first independent benchmark testing of the EOS software promoted by this company showed that EOS is a distributed homogeneous database management system. The main issue behind this characterization is the fact that transactions were not cryptographically validated.
Another thing that is important to mention is related to the number of transactions that the EOS network can process. Daniel Larimer tweeted that the network was processing 2351 transactions per second and network fees were close to 0 with no backlogs.
— Daniel Larimer (@bytemaster7) July 18, 2018
Nevertheless, the report shows that under ‘real world conditions’ the EOS network is able to process a similar amount of transactions as Ethereum. Ethereum is able to process around 15 TPS while EOS 50 TPS under real-world conditions, as the company explained.
After all, these situation EOS lost its 5th position in the cryptocurrency market. Stellar Lumens (XLM) was able to surpass EOS after several months standing in the fifth place.
EOS, instead is the 6th largest cryptocurrency and blockchain company by market capitalization with $4.12 billion dollars. Each EOS coin can be purchased for $4.55 dollars.
And indeed, Daniel Larimer said that they do not want to be decentralized. During an interview, he said that decentralization is not what they are searching for.
“Decentralization isn’t what we’re after,’ he said. “What we’re after is anti-censorship and robustness against being shut down.”
Nevertheless, he is convinced that they are more decentralized than Ethereum and Bitcoin because they work with three or four mining pools while EOS has 11 BPs working controling the majority of the EOS network.