EOS community fights back against ‘whales’ controlling its blockchain Eos Use Cases

ICO Review: EOS vs Universa

TNW uses cookies to personalize content and ads tomake our site easier for you to use.We do also share that information with third parties foradvertising & analytics.

EOS community fights back against ‘whales’ controlling its blockchain

community is growing anxious that its blockchain is really being controlled by a select few. A petition has been drafted to introduce voting limits to protect small-time token holders against the influence of whales. 

EOS runs on Delegated Proof-of-Stake (DPoS) to determine who validates blocks on its blockchain: instead of miners though, it uses so-called block producers (BPs).

The idea is that those who have invested more money should have a stronger voice when it comes to making important decisions Eos Use Cases , as they have more to lose – but there is currently no limit to the amount of votes that can be controlled by any one party.

“Currently, Bitfinex is voting between 10 million and 40 million EOS for up to 30 other BPs,” the

“These votes go a LONG [sic] way to ensuring the recipients are among the Top 21.”

“In most cases, Bitfinex’s votes make up between 50 [and 90 percent] of […] BP’S TOTAL VOTES [sic],” it continued. “For the record, ” it continued. “For the record Eos Use Cases

What makes EOS particularly unique is its election system, which asks users to use their tokens as means of selecting who should be maintaining the blockchain. Users will lock their tokens up (stake them), and nominate candidates who they think should be trusted with the responsibility of maintaining the blockchain.

The 21 candidates that receive the most votes are the chosen ones: they produce blocks and keep things running smoothly. They are paid in EOS, along with the rest of the candidates, who are given tokens to remain on stand-by, should they be needed.

The petition asks that EOS introduce a limit to the amount of votes any one entity can control. This is due to recent concerns over the influence of cryptocurrency brokerage firm Bitfinex, issuers of the controversial

Almost a dozen Bitfinex wallets with more than three million EOS staked, each, were used to vote in the

. Collectively, they were worth 40 million votes. There has only been around 370 million votes cast overall.

Three are known to be official Bitfinex wallets. The rest were controlled by Bitfinex whales delegated to vote on its behalf. As this was happening,

that Bitfinex was using EOS stored on it’s exchange by users was being leveraged to increase its voting power. This was later denied by Bitfinex.

receives is equal to the amount of EOS the voter has staked. In Bitfinex’s case, it currently has around 11 million tokens staked – if they vote for 30 candidates, all 30 will receive 11 million votes. But that number is fluid; the process of staking coins is fast, and any funds locked up are able to be freed after 72 hours.

Where it gets interesting is that because of the massive amount of weight Bitfinex pull – small startups are making considerable cash. Take Genesis Mining for instance, which recently stated that cloud mining was

and has been ‘restructuring’ contracts. Due to Bitfinex’s vote, Genesis Mining is making nearly 300 EOS ($1,500) 

It isn’t even producing blocks, it’s on stand by, having just enough votes to make decent passive income.

of the top 100 candidates. Without Bitfinex’s help, they might have been in even

” mechanism. Simply, votes count less if you don’t participate in elections regularly. Users have since unstaked tokens, and due a general disinterest in the process, the voting power of those left in the network is down over 4 percent – just a few months after launch.

In order to address calls for massive overhauls to its constitution, EOS is activating a “referendum contact” that would make implementing things like voting limits possible.

EOS Dublin is one BP candidate who is eager for the new system, as it would make petitions like these obsolete.

“The main point here is that on EOS we have the ability to make changes when things can be improved,” an EOS Dublin spokesperson told Hard Fork. “Bitfinex have so far been an honest player in the community and have given some of their larger token holder customers a way to cast votes through proxies.”

“The good news is that we are weeks away from having a referendum contract so anyone in the community can put forward a proposal like this and if it attracts enough support it will be passed. If not, it won’t.”

Beyond potential conspiracies, this is certainly indicative of the influence whales have over blockchain tech. There’s no doubt that most of the cryptocurrency in the world is owned by a small group – last year, just

Certainly, the EOS community, by design, has influence, but if voters continue to leave and limits aren’t set, it will surely fade – all to the benefit of the whales.

Hard Fork reached out to EOS UK, another BP candidate, who has since updated us with their view. When asked if the current system has allowed whales like Bitfinex to create a voting monopoly, spokesperson Roger Davies commented that while he believes that all Bitfinex votes have been legitimate, there are still concerns:

“[…] I am almost certain that manipulation of the voting of block producers is taking place. I have no direct proof of this, of course, but we have become increasingly frustrated by […] this unnatural voter distribution. [It] suggests collusion of whale token holders, ‘whalification’.”

On whether or not a voting limit would solve the problem, it would be “practically impossible” to enforce. Eos Use Cases , with Bitfinex being both an exchange and a block producer, it would be “practically impossible” to enforce.

“No, I do not support this proposal […] because it favours bad actors that are capable of simply creating multiple wallets and distributing masses amounts of tokens across different wallets.”

Davies has another solution in mind: Telos, which he describes as “the most suitable proposal for improvement of the voting mechanism.” With Telos, if token holders only vote for one block producer, they will only vote with one percent of the tokens in their wallet. In order to utilize all their voting power, they will have to vote for the maximum, which is now 30.

“This, in conjunction with the capped genesis snapshot where each wallet is limited to 40,000 tokens, seems to provide the fairest mechanism to ensure equally distributed voting power.”

North Korea will reportedly host its own cryptocurrency and blockchain conference