While EOS launched their mainnet on June 14, 2018, alarming statistics recently emerged when it came down to the EOS Block Producer elections.
Community Speaks out
According to the EOS Reddit Community, Reddit user 8ce26f noted that Bitfinex received 50 percent of their votes from four large whales. To ensure that his data source and collection was reliable and valid, they posted their approach and findings on Reddit to query about the centralized nature of the supposedly decentralized blockchain network. “I was curious about how different block producers ended up winning the votes,” reported 8ce26f.
“Particularly if some depended on whales to vote for them more heavily than others.”
The Reddit user quickly went to eosstats.io to understand who voted for which block producer and the number of votes they cast. They then made a pie chart to visualize the distributions.
Votes for Bitfinex
Votes for eosnewyorkio
According to the visuals, Bitfinex, who has currently ranked ninth on the list of Block Producers, received 50 percent of votes from for voters. One voter (gyzdcmjwgmge) even accounted for 27 percent of votes for BItfinex. In contrast, a different block producer called eosnewyorkio required 40 voters to make up 50 percent of their votes, with the top voter accounting for just seven percent of the votes.
Reddit user montaigne85 also noted that EOS’s top voter, gyzdcmjwgmge, according to eosflare.io, also provided votes to argentinaeos, atticlabeosb, aus1genereos, bitfinexeos1, cryptolions1, cypherglasss, eos42freedom, eosafricaone, eosamsterdam, eosauthority, eoscafeblock, eoscanadacom, eosdacserver, eosliquideos, eosriobrazil, and eosunion1111.
While EOS’s consensus method allows participants of the network to have a say in block producer elections, it, however, has left it prone to whales that have significantly skewed the results to certain block producers that have control over the network.
EOS Voting Remains Very Centralized
According to EOS Authority, ten wallets held approximately 50 percent of the EOS tokens in the market. The online cryptocurrency community took to Reddit to highlight their suspicions that these wallets belonged to large exchanges such as Bithumb, OKEx, Binance, and Bitfinex. The information is, however, impossible to trace.
Some find that having a cryptocurrency exchange like Bitfinex as a block producer for EOS can be a significant conflict of interest, especially since they would have a great deal of power. “Many have concerns that the exchanges would be able to manipulate the market or collude with other big players, in order to move the consensus to their favor,” said Nick Tsakanikas, a reporter from Bitrates.
Brock Pierce’s Connection with Tether and Bitfinex
While it’s unclear who the voter gyzdcmjwgmge is, some have speculated that he may be Brock Pierce, one of EOS’s early advisers that was previously removed from the EOS project.
Brock Pierce was removed as an adviser from EOS in March 2018. While many scandals were surrounding his name, a principal concern the cryptocurrency community revolved around a potential conflict of interest, especially since he was involved in the creation of EOS, Tether, and Tether’s relationship with Bitfinex.
While Tether has never truly confirmed its relationship with Bitfinex, Phil Potter and Giancarlo Devasini are directors of both companies. Tether’s unclear audits have caused many to question whether it is a scam, while speculation of Bitfinex’s manipulation of Bitcoin prices in December 2017 through the use of Tether has made the issue worse.
Whether or not Pierce is involved, Reddit user BigG1011 commented, “if the Tether nightmare blows up, [I] hope it doesn’t affect EOS. Do we want to be associated with a potentially fraudulent entity regarding printing of Tether dollars[?]”