EOS Is Coming, If Anyone Can Figure Out How to Vote
After a roughly year-long initial coin offering (ICO), what has become perhaps the most hotly anticipated blockchain is scheduled to launch on June 2.
After a year-long initial coin offering (ICO), what has perhaps become the most hotly anticipated blockchain is scheduled to launch on June 2.
That blockchain is EOS, which has raised more than $2 billion in its token sale for Block.one, the company that created what's being touted as a dramatically more scalable and user-friendly version of today's blockchains. Those assertions rest on the project's consensus algorithm, delegated proof-of-stake (dPoS), whereby a set number of nodes – in the EOS case, 21 – will be chosen to act as validators (or "block producers").
These nodes will take turns verifying blocks at a rapid clip, with each one taking a turn every three seconds or so. The idea is that with only a few validators it becomes easy to process lots of transactions very quickly (although there have been critics of these claims).
Since these validators will have a lot of responsibility, they will, therefore, be rewarded for their work (through the governance process, the EOS community will get to decide on what the rewards should be) with newly-minted EOS tokens, similar to how bitcoin rewards miners.
As such, it not only looks highly desirable financially to be a validator node but will also come with a certain amount of power. And vying for those spots (or backup node spots, which will also receive rewards) are several dozen organizations.
Companies aiming to serve as block producers range from existing crypto-mining operations, exchanges, blockchain consultancies and teams of EOS enthusiasts. Candidates are spread out all over the world, but China shows the most interest, followed by entities in the U.S.
This question of power has been at the center of quite a bit of debate, with skeptics, led by ethereum creator Vitalik Buterin, saying that EOS's governance system is easily manipulable. According to Buterin in a post titled "Plutocracy Is Still Bad," it would be easy for cartels to form within such a small system.
Those spots, though, won't be chosen by Block.one; the company merely created the software, but once the mainnet blockchain launches, the choices made over the blockchain will no longer be Block.one's responsibility.
Sure, the company may be investing millions of dollars into the EOS ecosystem, but for now, just days before the launch, it doesn't seem to have invested in educating the community on how they can participate in its governance.
Even Katie Roman, an EOS cheerleader and self-described Dan Larimer (who co-founded Block.one) fangirl, acknowledged the issue stemming from Block.one's hands-off approach after launch.
"Block.one has said since the beginning of this project that they are not launching the chain, so the details of where and how to vote are not up to them," she told CoinDesk, adding:
Nathan James, the founder and CEO of Scatter, a Metamask-like application for storing and interacting with EOS, echoed much the same, telling CoinDesk, "A lot of this launch has fallen to the community."
Block.one has not replied to multiple requests for comment for this story.
The voting process
Still, there are a few videos and blog posts circulating about how the validator voting process will work.
The protocol uses so-called approval voting to designate validators, whereby each wallet can "approve" up to 30 validators and those approvals will determine the 21 "supernodes." Voting users don't have to pick all 30, though, but they also can't cast unused approvals to bolster their favorite validator.
Voting happens continuously. There's no election, per se, instead, an election is constantly running. With each new block, validators could potentially get ousted.
And once a token is staked for a vote, that token stays staked for a minimum of three days.
This means there is a cost to voting.
A user that stakes tokens to vote faces the risk that they can't sell those tokens if the price dips or spikes. And no doubt there's a lot of people holding EOS tokens right now hoping for a price spike right after mainnet launch. For instance, a quick scroll through the EOS Telegram channel shows that many users are excited about these potential gains.
"The whole point of the voting process is to have informed voters who have stake in the system," Syed Jafri, founder of EOS Cafe Calgary, a validator candidate, wrote CoinDesk in an email. "If you have a financial stake in the network and wish to protect it, the best way to decide the future of the system is through participation in the voting processes."
Yet, that only works if people do care about the future of the system and understand that voting helps ensure it, and aren't just in it for the financial gain.
Another mechanism of the dPoS system is that a wallet's vote is weighted by the number of EOS tokens it has staked on the network, so in this way, people with more tokens can have more of a say.
Block.one's VP of Product, Thomas Cox, wrote about this process in a blog post, acknowledging that the system does give wealthier users more power, but saying that since EOS is all about the property of financial assets, the people with the most assets should have more weight.
Since EOS is more like a glorified bank account and not a nation-state, Cox wrote:
While this type of system has proven to rub some crypto enthusiasts the wrong way, as they contend no one should have more power than any other person on the network, it is a trade-off for scale which will be now be tested.
In the code
But for many in the community, just how exactly they can participate in the system is unclear. For instance, if a user wants to stake 100 EOS tokens to vote on who he/she believes to be the best validators, how does he/she actually do that?
While there are several posts about the importance of voting and what kinds of issues users will be able to vote on, none tell users exactly how to vote.
There is an answer, though, but it's in the code.
Roman wrote that Block.one is "enabling command-line voting, but most token holders do not have the technical skills to vote that way (me included)."
And as Roman noted, that's not the easiest place for many in the community to understand. The ones that do understand it are likely those in a position to want to maximize their control over the network: potential validators.
Some community members are trying to get ahead of this problem.
For example, Roman is running a fundraising campaign to pay for the development of a user interface that she hopes it will be ready by the launch. And James has built an interface, but that's only for use on Scatter.
Plus, one of the biggest crypto exchanges, Bitfinex, which holds EOS on behalf of its users, took to Reddit to commit to building a tool that would allow its users to vote with their EOS. But the target date for that tool's release was May 16, and currently, there's been no tool launched or no update issued.
Bitfinex did not immediately respond to a request for comment.
Still, even if these tools launch in the few remaining days before the EOS mainnet launch, many users will be unaware they exist. Some even wonder whether the blockchain will be launched after all since without adequate voter participation the blockchain will not go live.
According to James, "For a chain to become 'launched' 15 percent of the total tokens must be voted."
He continued, contending user education is greatly needed right now:
And there's not much time left.
EOS coin image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.