One of the unique things about EOS is its Block Producer voting system. EOS, which just launched its mainnet, relies on a network of Block Producers to operate the network.
There are 21 Block Producers on the EOS network. There are huge incentives to be an EOS Block Producer, or BP. However, in order to be chosen as a BP, you need to receive a certain number of votes from the EOS network.
The Block Producer system is one of the most important innovations introduced by EOS. If you want to understand the value of EOS, then you also need to understand the EOS Block Producer voting system. Today, we’re explaining everything you need to know about the system and how it works.
What is an EOS Block Producer?
EOS Block Producers, or BPs, make up the decentralized network that governs the EOS blockchain.
In the bitcoin network, every node is part of the decentralized network governing the bitcoin blockchain. In EOS, that responsibility is handed to just 21 Block Producers. These BPs are responsible for producing blocks on the EOS blockchain.
Each BP will earn block rewards in the form of EOS tokens. These block rewards are part of EOS’s pre-designed token inflation. As of the EOS Dawn 4.0 release, only 1% of tokens produced through inflation will be paid to block producers out of the 5% total planned inflation every year (the remaining 4% goes towards a saving funds to be allocated by future work proposal systems).
Of the 1% of inflation that goes to BPs, 0.25% is the per block reward and 0.75% is the per vote reward.
What is the Incentive for an EOS Block Producer?
An EOS Block Producer’s incentive can be quite sizable. As EOS has skyrocketed in price lately, so too has the reward for Block Producers.
If EOS is worth $20, for example, then an average BP will generate $7 million in net revenue, according to assumptions mentioned in this Medium post.
EOS BPs will also have an incentive to re-invest rewards into the EOS network. For example, BPs will have an incentive to reinvest block rewards into infrastructure growth, community support and education, and financial support for decentralized apps (DApps) on the EOS network.
Who Can Be a Block Producer?
As of May 2018, there are 104 candidates for Block Producers.
There’s no specific criteria required to be a Block Producer. There are no rules encoded in the EOS network about who can and cannot be a BP. However, the EOS community organization, EOSGO, has outlined 8 specific criteria required to be a BP. We’ll talk about those criteria below.
EOSGO, by the way, is an independent organization for the EOS community. The organization aims to act as a bridge between Block.one and the EOS community and EOS token holders. Block.one is the original developer of the EOS network.
What Are the Criteria Required by Block Producers?
EOSGO has outlined 8 specific criteria required by Block Producer candidates. Those criteria include:
Public Presence: Block producers are required to display a public website URL and at least one social media account.
Steemit ID: BPs are required to post specific information on the Steem blockchain linked to their public Steem ID. Information posted on the Steem blockchain will include the official name of the BP candidate, the location of company headquarters, the expected location of servers, the types of servers used (cloud or bare metal, for example), a current list of employees and pictures of at least 2/3rds of staff, and relevant background qualifications for at least 2/3rds of staff.
Tech Specs: BPs are required to post tech specs, including an estimate of technical specifications and total expenditure for resources to the Steem blockchain. The quality and accuracy of these predictions will be judged by the EOS community.
Scaling Plan: BPs are required to have a scaling plan for their hardware posted to the Steem blockchain.
Community Benefit: BPs need to post a community benefit project onto the Steem blockchain, including how the BP will use block rewards to grow the EOS community.
Telegram & Testnet: The BP is required to list Telegram and testnet node names for community testnet participation.
Roadmap: The Block Producer is required to post a roadmap with values, a community project timeline, finances, transparency, and other topics.
Dividend Position: How will the Block Producer share inflation rewards with unaffiliated voters? How will the BP buy votes?
Who’s a Candidate to Become an EOS Block Producer?
There’s a total of 104 candidates in the running to become an EOS Block Producer. You can view the full list here.
Some of the top names on the list include HelloEOS, EOS – NL, TOKENIKA, EOSUNION, Huobi Global, EOS WTZ, and EOS Green.
Ideally, these BPs will be distributed geographically, politically, and organizationally. There’s also the possibility that a single entity will have more than one node. However, Block.one has announced that he expects the community to look poorly on any organization with more than two BP node candidates.
Approximately half of the BP candidates are located in northern Asia (51 out of 104 candidates), with 22 located in North America.
How Do EOS Block Producer Elections Work?
How can you vote for an EOS Block Producer? How do you register your vote for BP?
Elections began on June 2 when the EOS mainnet went live. The initial election period will end when 15% of the total 1 billion tokens have voted (or 150 million tokens have voted).
During the initial election period, 21 Appointed Block Producers (ABP) will be picked at random from the pool of candidates. Once the election period is over, the ABPs will be replaced by the elected Block Producers.
All EOS ERC20 tokens need to be registered in order to vote. You’ll also need to be activate on the EOS blockchain. All registered tokens will be immediately staked 50% towards network bandwidth and 50% towards CPU for the duration of the election period.
As an EOS member, your staked tokens count as individual votes towards each Block Producer.
To “cast” your vote, you’ll need to stoke your token towards CPU or bandwidth (not RAM). Members can also delegate (“proxy”) their voting power to others who can vote on their behalf. You may wish to proxy your vote to a trusted friend, an exchange, or a community member, for example.
All EOS members get to choose 30 Block Producer candidates in their vote. Your vote is weighted by the number of tokens being staked. Votes can be changed immediately, although staked tokens will be locked for 3 days after the staking period is complete.
You Can Vote Using the Command Line
EOS published a guide on how to vote for a Block Producer using your command line. You can read that guide here.
Ultimately, the EOS Block Producer elections are most likely going to be won by major mining pools. In early voting, BP candidates like Huobi Global, Bitfinex, and Antpool have all taken the lead. These three are largely expected to be among the 21 BPs on the EOS network.