Is EOS Really Decentralized?
Quite contrary to the way Daniel Larimer writes and speaks, some in the EOS community are having their doubts about the decentralization model of EOS. After just one week of the EOS mainnet going live, the community is questioning its decentralized nature.
Software bugs and now recently the EOS platform’s 21 block producers who verify transactions and validate blocks, froze seven EOS accounts that allegedly belong to crypto hacking thieves. The accounts had allegedly stolen funds by scamming users through phishing scams or other attacks.
Earlier, the launch of the mainnet of EOS was delayed due to a critical bug. It so happens it was found by China-based cybersecurity firm Qihoo 360. Emin Gün Sirer, a professor at the prestigious Cornell University, criticised EOS developers for not seeking assistance from consensus protocol experts. These kinds of a stories about EOS are an on-going trend, making many question the true openness of the platform and if how it operates is really decentralized.
In an era where being “decentralization” is a selling point and does not always reflect how a community operates, with a private company Block.One that developed EOS, there’s speculation, discussion and rumor that EOS is not a real altcoin, but a scam. This is especially troublesome since EOS managed over the duration of a year to raise $4 Billion in the biggest ICO to date, that greatly inflates all money raised via ICOs in 2018.
The EOS Mainnet launch has been so broken and such a nightmare, it’s raising questions about the legitimacy of the project.
Mock Decentralization and Mainnet Launch Red Flags
When fraud and ICOs go together, investors have a right to be skeptical and should do their due diligence. EOS the biggest initial coin offering to date, with potentially the biggest misuse of the term “decentralization”. Experts including smart contracts pioneer Nick Szabo condemned EOS for its code and centralization issues. According to some outlets, less than 1% of EOS addresses hold 86% of the tokens, hardly what you would call a decentralized community and investor model.
EOS Trust and Credibility Under Fire
This is very worrisome for the credibility of cryptocurrency platforms, altcoins and the entire blockchain startup community moving forwards. It’s never a good sign when a corporation is behind a platform, Block.One and EOS or Ripple and XRP. Let’s remember two salient points: Block.One is located in the Cayman Islands. It basically did its entire ICO without a live product. Major red flags guys! Now the product is buggy and does not appear terribly decentralized.
Daniel Larimer can preach on Medium, or fall back to his former projects, but EOS’s history and actions speaks for itself, here is a platform with major trust issues from the real crypto community and investors. EOS isn’t Ethereum, it may not even be what it claims to be.
EOS has Serious Problems of Consensus
“Consensus by conference call” — that’s how one critic characterized the on-chain governance model employed by the nascent EOS network in the wake of several high profile incidents involving block producers. As Whalepool on Twitter so artfully points out:
The almighty “Block Producers” of EOSio freeze 7 EOS accounts and will recover any lost funds due to phishing or scamming.
That sounds pretty authoritarian to most everyone, and the breaches of the aspects of what decentralization would entail, are piling up for the woefully buggy EOS Mainnet launch. Some believe it’s violating its own terms:
While controversial in its own right — many compared it unfavorably to Ethereum’s decision to hard fork over the DAO hack in 2016 — the action was also apparently executed in violation of the EOS constitution, which delegates such on-chain governance decisions to an arbitration body.
From Article IX:
“All disputes arising out of or in connection with this Constitution shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”
This of course, is not how a real decentralized community would operate. If the EOS constitution is violated, this points to massive fraud. There is no stopping for Block Producers though it violates the EOS constitution, which delegates such on-chain governance decisions to an arbitration body. Mr. Larimer’s attitude isn’t winning over trust either:
The Authority of Hype and Constitutional Breaches of Decision Making
Let’s give him credit though, Dan Larimer, is supposedly one of the key visionaries of EOS code writing, indeed he likes to mention that he’s also worked for Steem and Bitshares. Anyways, he’s the representative of EOS challengers and he’s not popular, but he has a point to make. At some point in time none other than Satoshi (so the story goes) talked to Larimer in very clear terms “If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry.”
Here it’s not just software bugs, it’s governance confusion and a failure of human leadership. Critics that know a lot more than I do argue that, if block producers are willing to take such punitive actions — even without the concrete constitutional authority to do so — this early in the network’s history, there is no reason to assume they will operate differently in the future, particularly if governments pressure them to censor certain transactions or users. We just you EOS by your deeds, not your words and how much you were able to raise in an ICO. You have to live up to the hype and prove to the world that you aren’t a fraud, and that you won’t drag words like decentralization through the mud of deception and fraudulent activities.
Experts Insist EOS is Flawed at a Software Level
Now let’s return to the Cornell Professor. According to the Qihoo 360 team, the vulnerability enables hackers to exploit and compromise the EOS Supernode. China-based cybersecurity firm Qihoo 360, Emin Gün Sirer, a professor at the prestigious Cornell University and others believe the problems of EOS are going to get worse:
According to the Chinese cybersecurity experts at the firm, the vulnerability enables hackers to exploit and compromise the EOS Supernode.
Critics are not just attacking the confusion of EOS’s mainnet launch but saying the software has serious flaws in security.
Crypto Fraud by Oligarchy
The EOS constitution seems highly bureaucratic and its implementation also flawed. This suggests that those making the real decisions point to a centralization mechanism of authority.
Dean Eigenmann, founder of protocol governance project Harbour, argued on Medium that EOS is structured to give too much power to block producers, making it an “oligarchy veiled in a democracy” and prone to corruption. I rather agress superficially with this assessment.
“The sheer centralization of the entire governance system of EOS and the network itself is concerning. I fear many users are not actually aware of how centralized it really is,” he wrote. “The governance of EOS seems like it started off with the right intentions, but by trying to solve for every possible edge case turned into a centralized system where power to do absolutely everything is given to the block producers. — Dean Eigenmann
EOS is expanding our vocabulary of how not to implement decentralization. ICOs already have a bad reputation, by the early history of EOS points to massive disorganization, and the advent of malicious arbitrators as bad actors where voting is deeply flawed. Market manipulation is so rampant with cryptocurrencies, and here it would seem the possibility of collusion on new platforms is very high, where block producers become deity like figures of a farcical blockchain experiment, where Brendan Blumer and Daniel Larimer look like amateurs. It’s honestly a bit embarrassing to see what ICOs and the quest for the next dApp platforms have come to.
Dan Larimer’s arrogance does not help his case, Grand Unified Political Theories aside, EOS could become a bad joke of cryptocurrency history; a far cry from being a serious challenger to Ethereum, Cardano, NEO and others. It’s not hard to see the kinds of legal and centralization problems EOS has ahead of itself. How would the SEC not call this a security? Meanwhile, Cornell blockchain researcher Emin Gün Sirer has predicted that EOS’ governance model will lead to a legal firestorm.
The realistic prospects of EOS are cryptic at best.
What do you think as a fellow crypto enthusiast, is EOS a good example of a “decentralized” dApp platform and Mainnet Launch? I invite you to vote on Twitter below: