Multi-Billion Dollar ICO EOS has Mainnet Transparency & Launch Integrity Questioned
As we just reported, EOS is live. But before this milestone was met and seems to be moving along smoothly now (in the first few hours so let's not get ahead of ourselves) there was quite a bit of controversy being stirred up from the crypto community regarding the entire process and whole procedure on how the voting system works and block producer candidates are selected and chosen.
EOS was developed on the Ethereum blockchain with the aim of eventually competing with it by improving on a number of features, the main one being scalability. This assurance raised it no less than $4 billion dollars over its year-long ICO, and it was supposed to finally be launched on its own blockchain at the beginning of June. However, this was not the case.
Just last month a Chinese security entity, 360, found a “vulnerability” in the EOS code that could theoretically have been used to create tokens out of thin air. That same firm found an additional flaw at the end of May, one which could be used to take control of the entire ecosystem.Then there was also Guido and his $120,000 bug bounty campaign after exposing 12 potential weakpoints.
Thank you. A couple more waiting to be rewarded. I think the final tally was $120K but I lost count. Took me about a week.
— Guido Vranken (@GuidoVranken) June 4, 2018
Their Chief Technology Officer, Dan Larimer, said that the flaw was the result of poor coding rather than the system is badly designed, and regarding the second, EOS undertook to fix it before launch. This second problem was already threatening to push back the launch date.
Responding to the public criticisms, Block.one issued an open invitation in Medium for people to hunt for undiscovered bugs in return for monetary rewards. While this can be interpreted as a responsible move in and of itself, it was not reassuring coming as it did a few days before the release.
Millions of dollars worth of EOS and Ethereum tokens were reportedly stolen, although no accurate summation of the losses is available. However, none of these issues affected the launch date as much as the voting issue.
The EOS blockchain will be validated by a maximum of 21 nodes at any one time. These nodes are called ‘block producers’. They will be elected via community vote and regularly have to stand for re-election. This is aimed to annul the problems caused by the proof-of-work consensus system, even though it has no shortage of its own problems before even being initialized. Proof-of-work, as used by the Bitcoin blockchain, is a problematic system in many ways, but it is foolproof in terms maintaining the decentralized nature of the network.
EOS aims for a faster and more efficient network that can be scaled up, but, achieving this goal may mean that it is compromising on too much of what makes a blockchain a blockchain. the blockchain is planning to launch with ‘Appointed Block Producers’ who will be “immediately replaced by the Elected Block Producers (BPs) that have been voted in by the community upon activation,” according to the official EOS timeline.
This was the fascinating thread to read, in which Vitalik even chimed in with his straight forward smiling comments:
Fascinating thread about EOS.
Apparently, they are trying to select an initial quorum of 21 servers. And they are using a centralized server for their vote.
This is fatal. It means that their actual initial quorum is that one server. 1/5 https://t.co/vvK9jvLm5u
— Emin Gün Sirer (@el33th4xor) June 10, 2018
Why don't they just run the vote on an ethereum contract? ……..
— vitalik.eth (@VitalikButerin) June 10, 2018
.@EOS_io requires 15% of $EOS token holders to vote to elect #BlockProducers So far less than 1% have voted. It's still pretty complicated to vote but I thought their community would have supported the network launch a lot more than this?!
— Alex Saunders (@AlexSaundersAU) June 11, 2018
Is it worrying that the decentralization of EOS, such as it is, is being eroded even before the network begins operating? But this is only one problem; another is that at current prices a block producer stands to profit by an average of $2.5 million a year, according to Hackernoon. This gives them an added incentive to do anything necessary to keep themselves ahead of the pack. The contrary perspective is that they have no incentive to behave in this way because this would make the community lose faith in the network, which is the foundation of its value.
What do you guys think? We will be sure to have many more updates as they come flying in from the EOS camp as well as the respected crypto twitters!