EOS Block Producer Offers Rewards For Token Holders’ Votes
Decentralization supporters within the EOS community were quite angered once more this week after one of EOS’ official Block Producers — Starteos — offered token holders financial rewards in exchange for votes.
What Is EOS?
As many already know, EOS is a blockchain-based project with a strong focus on smart contract and dApp creation. It is a relatively young coin, which was launch in 2017, although it only got its own MainNet working in June 2018. It was created by block.one, which is a startup led by Brendan Blumer and Dan Larimer.
EOS is also known for having the most successful ICO in the history of cryptocurrencies, which lasted for almost an entire year, and it raised around $4.1 billion. Its native coin is also called EOS, and it is currently the 6th largest coin by market cap.
The project uses a consensus model named DPoS, meaning that its investors get voting power, and can decide who can mine EOS blocks. In other words, the ecosystem consists of two entities — the ECAF (EOS Core Arbitration Forum), and Block Producers, who are creating blocks, just like Bitcoin miners.
EOS BPs earn different amounts of tokens, with some estimates saying that the biggest ones get around 1,000 coins per day. There are always 21 of them, and they are elected via the constant voting process. Now that we understand how the process works, let’s see what the problem is.
EOS Block Producer Tries To Buy Votes
The source of the issue is Starteos, a China-based startup that claims to have entered the blockchain industry as far back as in 2013. The company issued several large products since then, two of which — a digital wallet and a cold storage wallet — came out this year.
The company is currently EOS’ fourth-largest Block Producer, which means that it gets a big portion of the revenue. However, a little over a week ago, on November 27, they published a post on their Medium page that started the new wave of controversy. The post was titled “We Gonna Share BP Proceeds With You — This Is the Way We Warm You Up in This ‘Winter’!”, and in it, the company offered a stable and continuous EOS revenue in return for voting for the company.
All that the voters need to do is select Starteos as a proxy and pick a revenue model, which can be either stable income or random revenue. The community quickly stood against this offer, as it goes against democratic blockchain policies and decentralization itself.
The Community Reaction
As mentioned, the community was not happy with this development. Not only does it openly defy decentralization, but the BP did it without even trying to hide their intent. About a month ago, on November 8th, Starteos announced the launch of a dApp that would act like a slot machine. They stated that users can earn tokens by using this dApp and that the tokens will be coming from their EOS BP rewards. At the time, it was believed that there is no bad intention behind the project, although it came really close to offering block rewards for votes.
Soon enough, these suspicions were confirmed, as the company tried to make the same offer via Medium, this time more directly. The move quickly spread through different social networks such as Twitter, Reddit, and even YouTube. Before long, the community demanded Starteos to be removed from the ranks of BPs.
Some of the other BPs also left statements against vote buying, although they never openly mentioned Starteos. EOS New York, the eight largest EOS BP, stated that EOS lacks a document that will outline some basic system of governance. Despite the community, and at least one other BP turning against it, however — Starteos still holds a high position among the BPs.
Previous EOS Centralization Incidents
Unfortunately, this is not the first time that there were signs of centralization within EOS. Another example came only a few weeks before the latest ones, and it includes ECAF moderator reversing already confirmed transactions. The community was outraged on this occasion as well, and many started claiming that EOS is failing in its mission to remain decentralized.
Some comments on Reddit even accused EOS of raising $4 billion just to recreate the legal system that uses tokens, while it is neither immutable nor resistant to censorship.
Before that, in October 2018, Huobi and a few other major BPs were accused of mutual voting. The claims were that a Huobi spreadsheet leaked information that indicates that several nodes are intentionally voting together in order to remain in power. Interestingly enough, Starteos was mentioned as well.
Even before that, in June, another BP scandal occurred, when BPs went against ECAF decision and have frozen seven accounts believed to be connected to a phishing scam. While this was later considered to be the right call, the BPs taking matters into their own hands was still heavily criticized.
There was also an incident where suspicious ECAF orders were received, and BPs decided not to obey them as they were unsure if the orders truly came from the ECAF.
On November 1st, a blockchain testing firm called Whiteblock released results of testing EOS software. The report surprised everyone with claims that EOS is not a blockchain, but a distributed, homogeneous database management system. This was due to the fact that its transactions were supposedly not cryptographically validated.
The list goes on, and EOS has been going from one controversy to another, with more suspicion regarding the quality of the project and its decentralization rising each time when a new issue hits. While EOS is doing its best to go through this rough period and save whatever it can, many believe that a few more incidents such as these might damage project’s reputation beyond repair.
Roubini on BitMex: “95 percent of all bitcoin transactions are fake”
Anti-crypto personality Nouriel Roubini has lashed out at BitMex exchange following the recent announcement that the exchange had achieved US$1 Billion open interest on the Bitcoin perpetual swap contract, for the first time.
Roubini, who always has a lot of negative things to say about the cryptocurrency industry, took to Twitter to express his discontent about the recent record set by BitMex.
BitMex announced that the exchange had achieved US$1 Billion open interest on the Bitcoin perpetual swap contract, for the first time. Roubini commented saying “How can one believe ANY of these figures when 95 percent of all bitcoin transactions on a typical exchange are fake? Fake-coins, shit-coins, fake-transactions, fake-pricing. The only true thing in crypto space is manipulation, pump n dump, front-running, wash trading, etc…”
The two will be meeting in Taipei on July 3 at the Asia Blockchain Summit 2019, where they will have an open debate.View image on Twitter
ErisX goes all hands on deck to launch a Bitcoin Futures market
ErisX’s CSO, Matt Trudeau, detailed the company’s four important plans for the future, which includes launching a spot market, to secure a Bit License, DCO, and to launch a futures market.
ErisX currently has a DCM contract, which is a Derivative Contract Market that allows ErisX to run a CFTC-regulated futures exchange. However, ErisX aims to get a DCO [Derivatives Organization], which will effectively allow it to run a CFTC-regulated clearinghouse. A clearinghouse would mean that ErisX can take control of the custody of the assets and clear and settled trades.
The CSO explained the benefit of this, stating,
“There is some efficiency for firms like producers [like mining companies]; if they need to hedge their inventory or need liquidity on a spot market, they could do that conveniently on a single platform. “
Trudeau added that from the “post-trade standpoint” and “the collateral management standpoint,” ErisX would have cash, crypto, and the futures, all stored in their clearinghouse. This would boost efficiency since it would be available for all customers under a single platform. The CSO added,
“… so there is some efficiency in terms of managing collateral, if you don’t have assets on multiple platforms, it can all be in our clearinghouse.”
Apart from the aforementioned plans, Trudeau added that the crypto-industry needs to mature more and that ErisX plans to make a significant contribution to that. He added,
“The market is professionalizing and we think that in terms of what institutions are expecting from a trading/custody experience, we will bring some of the solutions to the market and that’s really the foundational pieces that they are looking in order to build their businesses on top of us.”
Apart from ErisX, LedgerX has also received a go-sign from the CFTC to settle Bitcoin Futures in Bitcoins. Other exchanges include Intercontinental Exchange’s Bakkt and Seed CX.
Bitcoin’s fantastic run contributes to a new milestone for BitMEX
The cryptocurrency market has been rife with news about Bitcoin, the world’s largest cryptocurrency, and its massive bullish movement. In a matter of just 3 months, Bitcoin has recovered from the bearish zone near the $4000 market, to currently trade near the $12,000 zone.
This price rise has prompted popular figures in the cryptocurrency industry to voice their opinions about the king coin and where it could go from its current market situation. Alex Kruger, a popular economist and analyst, is one of them and he tweeted,
“The hourly bar that marked tonight’s bitcoin $12,972 top had the highest hourly volume in Bitmex’s history. When such high volume prints come after an extended run, they often mark a local top. One could appreciate an intra-day blow-off top on the 5 minute as well.”
Kruger’s tweet comes in the wake of information that suggests that Bitcoin’s trading volume on the popular cryptocurrency exchange had skyrocketed over the course of the past few months. It was spotted in January of this year, when the trading volume found it difficult to breach the $1 billion mark. However, the present price hike has contributed to the volume spiking by a factor of 9 to amass a trading volume of more than $9 billion.
Kruger’s tweet also had comments from other Bitcoin enthusiasts, with @rufus666, saying,
“Gonna wait for Friday when these CME shorters gonna dump the corns they had to buy on spot after weekend rallies to hedge their positions.”
BitMEX had touched another milestone recently after the exchange clocked in a trading volume of a whopping $10 billion. This feat was also marked with requests from the community, asking BitMEX to include margin trading to its fold like the Changpeng Zhao-led Binance.
At press time, Bitcoin was trading at $12,595, on the back of a significant 11.19 percent growth over 24 hours. The cryptocurrency held a market cap of $223.96 billion, and a 24 hour trading volume of 32.23 billion.