29 Jun 2018 Anthony Lehrman
Crypto Analysts Warn of EOS Further Centralization
Last week, Block.One, the company that stands behind the EOS protocol, announced its decision to become an active voter with the 10% of all 1 billion tokens in circulation that it holds. Over $4 billion was raised in the yearlong EOS initial coin offering.
The voting will be in favor of the platform’s 21 block makers that enforce the network’s constitution and verify transactions, as indicated in the coin’s Delegated Proof-of-Stake (DPoS) consensus algorithm.
In an official statement, Block.One stated that the company’s desire to be an active minority voting member. The company is set to allocate their votes to block producers who actively promote the fundamental values that help increase the integrity and develop the EOS public blockchain network in the best possible way.
To provoke a natural, network-driven launch during EOSIO’s activation period, Block.One has been staying away from voting so far.
Although EOS users participated in the adoption of a Mainnet enabling Block.One to get the 100 million tokens from the Genesis block, analysts and users have expressed concerns about the centralization of the EOS network.
The concern comes from the fact that nearly 275 million tokens (27.5% of the supply) are staked for voting. This means that if Block.one decides to stake most of its tokens, it will control over a quarter of the votes.
Concerns raise even more, as currently, 59.3 million votes belong to the largest block maker and in a vote one EOS token can be used for up to 30 block producers. This means that in theory, the company can use its tokens to select the block producers that will have the power to verify network transactions.
Block producers are able to block access and recover stolen funds, according to the power allocated to them in the network’s administration model and constitution.
Crypto analysts and critics are mainly concerned about the further centralization because this might be a point of failure, rather than an opportunity for Block.One to act illegally against its network.
Despite the criticism, EOS is making steady progress in its price and market cap. Trading at around $8, and with a market cap of approximately $7.2 billion, EOS is a serious candidate for the top-three of cryptocurrencies.