EOS Wealth Inequality: Top 1.6% of Holders Own 90% of Supply
One year and $4 billion raised from their ICO, EOS has finally launched their mainnnet, which went live in the first week of June, 2018. Increasing scrutiny brought on by the migration of EOS tokens from the ERC-20 standard to the independent EOS blockchain has also brought the true extent of decentralization on the EOS network.
To ensure an even spread of token holdings across all investors, EOS ran a phased ICO with no hard cap.
Wealth inequality on the EOS Network has also increased scrutiny, with the top 1.6% of EOS token holders controlling over 90% of the supply while the bottom 44% own a mere 1% of EOS tokens in distribution.
The nature of EOS’s consensus mechanism exacerbates the centralization issue as new token supply is distributed exclusively to the delegates in the delegated proof-of-stake system. Delegates are voted in by EOS token holders, with the top five wallets owning a third of all tokens, thus a third of all votes and serve as block producers on the network.
The reward for being a EOS Delegate, they are compensated by the increasing token supply. With an estimated 5% annual inflation, the inflation pool used to reward delegates is expected to total 4.5 million EOS tokens, valued at $45 million by the end of the year.
EOS has the highest level of centralization when compared to similar decentralized app blockchain cryptocurrencies. CryptoGlobe Research reviewed the unnatural distribution of masternode coins such as DASH and NEM, but as the chart shows, these cryptocurrencies are much more evenly distributed than EOS.
The scalability “trilemma” will be an ongoing hurdle as blockchains increase focus on properly scaling for mass adoption. What this means for EOS is that it’s imperitive that they preserve their platforms security and transaction speed while also ensuring a fairer distribution of wealth and power among token holders.
Originally published at fortuneinsider.com on June 14, 2018.