Leaked Huobi Document Allegedly Spells Chinese EOS Block Producer Community Collusion
A document recently appeared online that appears to show collusion between EOS block producers (BPs). Specifically, BPs in China are engaging in “collusion, mutual voting, and pay-offs” amongst themselves, suggesting the EOS community isn’t as decentralized as users think.
The document was uploaded online by EOSONE and then shared by Maple Leaf Capital (@MapleLeafCap), which tweeted the following last week:
Recently, an internal excel document from Huobi (one of the BPs) is circulating in the Chinese community. This file documents the collusion, mutual voting, and pay-offs that occur amongst the Chinese BP community. I’ m working on getting the file.
— Maple Leaf Capital (@MapleLeafCap) September 26, 2018
Maple Leaf Capital then linked directly to the file. You can view it, although it’s written in Chinese.
The document was acquired by EOSONE in some unknown way. It purportedly comes from Huobi employee Shi Feifei. The document is titled, “Huobi Pool Node Account Data 20180911.” In the document, we can see that Huobi controls five nodes. We can also see voting activity.
There are two main allegations in the article. Maple Leaf Capital, as an EOS token holder, claims he views such actions “with utter disgust”. The two main allegations include:
- Huobi and many other EOS Block Producers mutually vote for each other to cement their BP position
- Huobi openly votes for a few BP candidates in exchange for EOS tokens in return
The document appears to show Huobi voting for 20 other Block Producer candidates. Of those 20 Block Producer candidates, 16 gave votes to Huobi in exchange.
In regards to the second allegation, Huobi votes for eosiosg11111, cochainworld, and eospaceioeos in exchange for 170%, 150%, and 50% of the returns respectively, as evidenced by this tweet from Maple Leaf Capital.
In allegation 2, Huobi votes for eosiosg11111, cochainworld, and eospaceioeos in exchange for 170, 150, and 50% of the returns respectively, as shown below in the tweet. pic.twitter.com/cO2HEkTqnD
— Maple Leaf Capital (@MapleLeafCap) September 26, 2018
Multiple Block Producers appear to have paid Huobi an average of $6,000 per day (1,116 EOS) between September 5 and September 11.
In other words, China-based EOS Block Producers have colluded to help each other maintain their powerful status as EOS Block Producers. EOS, which has already faced plenty of criticism since launching its mainnet earlier this year, is now facing renewed criticism that it isn’t a truly decentralized network.
“As an EOS token holder myself, I view such action with utter disgust, and there is a reason why our Mapleleafcap proxy only votes for a very selective group of Chinese BPs,”
added Maple Leaf Capital on Twitter.
It’s also important to note that China already dominates the EOS network: 12 of the top 21s BPs “are effectively controlled by China,” according to Maple Leaf Capital.
“This in my opinion could increasingly compromise the integrity of the network.”
How Can EOS Solve This Problem?
EOS relies on a decentralized network of Block Producers to maintain the network. What happens when those Block Producers aren’t truly independent? What happens when Block Producers collude to stay in power? How can EOS solve this problem moving forward?
“I personally believe such matters need to be solved via increased community awareness, better infrastructure to allow for higher voter participant, and potential punishing mechanism (which may be difficult). It’s growing pains, but it needs to be dealt with.”
Other analysts echoed Maple Leaf Capital’s concern with EOS’s centralization:
These allegations, if true, are very concerning about decentralization on the #EOS network. This type of thing is exactly what @HelloTelos was founded to prevent. I will follow this with great interest.
— Douglas Horn (@Douglas_Horn) September 26, 2018
To make matters worse, Huobi is also pushing its Huobi Pool Token (HPT). Some suggest that the HPT token is a way for Huobi to share their EOS block rewards with HPT holders in exchange for EOS lock-up. Maple Leaf Capital describes that process – and the problem with it – in a series of tweets here.
Let me walk you through what HPT (Huobi Pool Token) is. The token is currently trading @ ~0.06 RMB / 0.0087 USD per token on https://t.co/M0ZC7yUvtr (which by the way isn’t open to US users)
— Maple Leaf Capital (@MapleLeafCap) September 29, 2018
Huobi Denies Receiving Payments
In a statement released earlier today, Huobi has denied the EOSONE report that it received payments. Huobi refutes the claim that they’re involved in voter collusion with other Block Producers.
However, as pointed out by cnLedger, Huobi has not denied the authenticity of the leaked spreadsheet.
Huobi denies having financial business with the nodes ($EOS BPs) in the leaked spreadsheet. However they have not yet denied the authenticity of the leaked file. "Relevant information is still under further investigation"https://t.co/4oQYY6xM4I https://t.co/qL0wXNbfSI
— cnLedger (@cnLedger) September 30, 2018
The Singapore-based cryptocurrency exchange insists that relevant information from the document “is still under further investigation.”
Ultimately, EOS has had a difficult few months since launching its mainnet earlier this year. Some people see this as natural growing pains for any decentralized network. Others, however, see it as a significant problem that affects the fundamental value of EOS as a platform. Stay tuned to see where the EOS Block Producer collusion claims go next.