EOS Block Producer FAQ
The EOS launch is less than 1 month away and the competition to become one of the 21 Block Producers is heating up… and for a good reason! There are potentially huge incentives to being an EOS Block Producer.
Block Producers are one of the most exciting innovations that EOS is bringing in. Why? Instead of being run by a small number of mining pools (Bitcoin and Ethereum are both currently run by less than 10 large mining entities) EOS will have a constantly changing group of 21 Block Producers. Sure, it’s not the decentralized dream of millions of independent nodes, but it’s at least 2x closer.
What is an EOS Block Producer?
Block producers (BPs) are decentralized entities that govern the EOS blockchain. Block Producers will produce the blocks of the blockchain.
BPs will earn block rewards in the form of EOS tokens produced by token inflation. According to the release of EOS Dawn 4.0 only 1% of the tokens produced through inflation will be paid to block producers out of the 5% of total inflation each year.
If EOS is worth $20, then an average block producer could be making $7MM in net revenue (this is based on a lot of assumptions).
EOS BPs will be incentivized to re-invest their rewards. For instance, they may reinvest into infrastructure growth, community support and education, and financial support for development of EOS DApps.
How many EOS Block Producer Candidates are there?
As of May 2, 2018 — there are 104 EOS Block Producer Candidates.
What are the criteria for being an EOS Block Producer?
Anyone can announce candidacy to be a Block Producer. EOSGO — an independent and community-based organization that is a self-proclaimed bridge between Block.one and EOS community/token holders has outlined it’s own 8 criteria below which have been commonly accepted by the community, but are not officially requirements to be a Block Producer.
1) PUBLIC PRESENCE: A public website URL and at least one social media account.
2) ID ON STEEMIT: Links to the following ID information, all posted to the Steem blockchain (either in one post or multiple):
- Official block producer candidate name.
- Location of company headquarters.
- Expected location of servers.
- Type of servers (cloud, bare metal, etc).
- Current employee list and pictures of at least 67% of staff.
- Relevant background qualifications for at least 67% of staff.
3) TECH SPECS: Estimate of technical specifications and total expenditure for resources by June 3, 2018 — posted to Steem blockchain. Check mark given for any estimate, modesty encouraged by permanent Steem record. Quality and accuracy of effort will be judged by the EOS community.
4) SCALING PLAN: Estimated scaling plan for hardware after June 3, 2018 — posted to Steem blockchain. Rough outlines receive a check mark, open review gauges the effort.
5) COMMUNITY BENEFIT: Community benefit project outline, only for projects expected to be public by June 3, 2018 — posted to Steem blockchain.
6) TELEGRAM+TESTNET: Listing of Telegram and Test-net node names for community testnet participation.
7) ROADMAP: Values, community project timeline, finances, transparency, or any other topic the candidate deems important. Please show the direction and future of your candidacy in a Steem post for the community.
8) DIVIDEND POSITION: (The sharing of Block Producer inflation rewards with unaffiliated voters, AKA “vote buying.”)
Each of these criteria have been designed by EOS GO to shed some light on how EOS Block Producers will be operating.
Who are the candidates to become EOS Block Producers?
People from all over the world are competing to become an EOS Block Producer.
Here is a list of the EOS Block Producer candidates as of May 30 posted by EOS GO.
This order of this list is randomly generated.
Where will the EOS Block Producers be located?
BP node locations will be dispersed throughout the world — ideally, the locations will vary geographically, politically, and organizationally. It’s possible for a single organization to have more than one BP node. These nodes can even compete with one another in elections. According to Block.One’s VP of Product, Thomas Cox, he expects the community to look poorly upon any organization with more than 2 BP node candidates.
As of May 30, 70 out of 177 BP candidates are in Northern Asia and 36 are in North America. These are the most popular regions by Block Producer Candidates, but we want to be sure that the EOS network is as distributed as possible — ideally on different continents.
How well distributed are EOS tokens?
According to EOSocal, there is an estimated 211 “whales” — however, there are 4 “mega whales” who have a large number of tokens. These mega Whales have collectively, over 150MM tokens, or 15% of the total EOS tokens. 10% of the total tokens will be owned by Block.One.
How does the EOS token distribution affect EOS Block Producer Elections?
AFAIK, Block.One will not be voting with their tokens, but the other whales will be voting. So, that means these Mega Whales will be also gaming the votes to ensure that certain Block Producers are elected, and stay elected. If there is anything going sideways, Block.One has stated that they may use their votes, but only if necessary. Some people say that Dan Larimer and others from B1 have stated they will be voting, but I have not seen any links to actual information yet. If you have one, please comment here.
What are the major concerns regarding EOS Block Producers?
One of the main concerns that I have about block producers is that they are financially incentivized to cheat the system. For instance, they might pay for votes — even though EOS GO has said many times that it would be out of integrity for them to do that... it will still happen.
Another concern is that they may not operate independently and with community goals in mind. Hopefully, they will lose votes if this happens.
How do EOS Block Producer elections work?
Ongoing elections will begin on June 2 when the EOS mainnet goes live. The initial election period will end when 15% of the total 1 billion EOS tokens have voted (150 million).
During the initial election period, 21 Appointed Block Producers (ABP) will be chosen at random from the pool of candidates. Once the election period ends, the ABPs will be replaced with the elected Block Producers.
All of the EOS ERC-20 tokens will need to be registered first to be able to vote and be active on EOS’ blockchain. All registered tokens will be immediately staked 50% towards network bandwidth and 50% CPU for the duration of the election period.
Each members’ staked tokens will count as individual votes towards each of the Block Producers they have chosen. For voting purposes, tokens will need to be staked towards CPU or Bandwidth (and not RAM). Members can also delegate (“proxy”) their voting power to others who can vote on their behalf. Proxied voters can outsource the decisions to trusted friends, exchanges, or community members.
Each EOS member will get to choose 30 Block Producer candidates in their vote. Votes are weighted by the amount of tokens being staked, and the Block Producer candidates that receive the most votes will be those who will be currently producing blocks (and earning the rewards). Votes can be changed immediately, but staked tokens will be locked for 3 days after ending staking.
Elections will be ongoing, votes will be recalculated approximately every 2 minutes — so, it’s possible that Block Producers will be changing as often as every few minutes.
Who will win the EOS Block Producer elections?
Out of the current candidates, it is very likely that major mining pools and exchanges will be elected in the first 21 block producers. This includes:
Huobi global — Major investor in Block.One, very large crypto exchange
Bitfinex — Major investor in Block.One, very large crypto exchange
Antpool — A BTC mining pool with 15% of BTC hash power
What criteria is most important to consider when choosing a Block Producer?
In addition to the criteria outlined by EOS GO, these are my criteria for casting my votes for Block Producers.
Transparent governance & clearly-written constitutions.
I want to see really BPs with transparent governance models constitutions that are written well and easy to understand.
Experienced internal teams.
Teams are important. I want to see teams that have a lot of experience running large datacenter infrastructure, security, and development.
Top-notch hardware — plenty of RAM, CPU, and Bandwidth.
BP candidates who have clearly not spared any expense in building their initial infrastructure are in it for the long haul. Ideally, I want to see >24 cores and > 200GB RAM in each node, 10G switches, and 10G fiber uplinks. Additional bonuses are strong firewalls, reverse proxies, and georedundancy.
Ideally, I want to see Block Producers get elected that are in diverse geopolitical locations.
Willingness to participate in 3rd party audits.
3rd party audits of security and infrastructure — perhaps even spending would be amazing. Block Producers have a responsibility to the community to be as transparent as possible.
Sending a good chunk of earnings dedicated to DApp and community projects development would be smart. Since they technically should not be paying for votes, this is a good strategy to keep the community behind the BP.
Cooperation, but not collusion.
Having intention to work together with other BPs from around the world in regard to technology hardware, software, security, and EOS blockchain standards is good. However, acting in collusion with other BPs to manipulate the EOS governance for your own gain is just not cool with me.
How do I become an EOS Block Producer?
If you haven’t started, get started now. There is a lot of work to get things setup properly — especially the technical infrastructure. If a BP goes live and cannot produce blocks, they will lose reputation very quickly.
I am working with a few teams now to build strategy and structure for their BPs. If you are interested in working together, feel free to reach out and let me know what help you need.
If you have similar values as I do and are interested in proxying your votes, also reach out to me.
The easiest way to message me is @bensig on Twitter.
Updated June 6, 2018