I’ve written about EOS, once a top 10 blockchain, now in the top 30, since the network launched.
On the whole, EOS token holders didn’t like my coverage. Every time I published a new post, it was criticized as “FUD” and occasionally even specifically attacked by Block.One founder Brendan Blumer.
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What no one ever did, however, was point out where my reporting was substantively wrong regarding the facts. In fact, members of the community occasionally admitted that the facts were correct even when they pointed to an awkward truth.
What happened, however, was I put out a report on one facet of EOS that would frustrate its proponents. I ignored the blockchain for a while, usually until someone in the ecosystem alerted me to something. Most of the time I heard voices that once exposed my former “FUD” and now deciphered EOS or its creators.
In fact, a new proposal from Block.One seems to be implicitly recognizing a number of points made in my previous reporting.
The proposal for coordinated voting and rewards for EOS essentially follows the model that blockchains like Cosmos and Cardano use and which Ethereum has worked to deliver: Share block rewards directly with users who are interested in helping validators (like the miners of Bitcoin) are involved in the network.
Effective immediately, EOS holders can use their EOS to vote for a list of block producers (BPs, which EOS refers to as validators). You could vote for only one and up to 30; All of their tokens vote equally for all block producers that a voter supports.
In addition, the coordination is basically continuous.
The top 21 candidates for block producers automatically share a quarter of the annual inflation (i.e. new supply) of new EOS that is distributed with each block. Part of the remainder went to other block producer candidates who contributed to the network in other ways.
The original plan had included some inflation for the development of the network as well, but it turned out no one really cared about it, so everything was burned up.
So let’s go over the proposal and point out how it aligns with the concerns raised in my previous reporting. Each of the bold parts below comes straight from the post linked above.
“Suggestion: We propose a stakeout pool system that can reward token holders directly for their vote (required) and secure the network.”
So that’s the crucial change: everyone who bets and votes will be rewarded for it.
When EOS started there was this high-minded idea that the block producers who did the best job for the network (not only validating but also developing apps and tools) would get the votes to get the most rewards.
However, that didn’t happen at all, and the hardest-working block producers left the network in frustration.
Instead, block producers started paying people for their votes, which is what Ethereum creator Vitalik Buterin had predicted on his blog.
As early EOS supporters left and new ones entered this new regime, the viewpoint on this reality went from a somewhat embarrassing truth to something Block.Ones CEO who matched the validators with token holders.
According to this new vision, instead of offering block producers specific offers to support the stakers, the network would itself pay for wallets involved in governance if the proposal is accepted.
“Suggestion: To close this loophole, we suggest removing bpay rewards and instead distributing all rewards through vpay.
“Suggestion: In order to enable a healthy distribution of the vpay rewards, all votes must contain 21 block producer candidates.”
Under the current system, a quarter of the inflation goes automatically to the top 21 block producers (the ones who have complete power over the network consensus), and the rest is prorated to pretty much anyone whose users vote for them. Most of it goes to the top 21 as well.
Therefore, EOS suggests removing this automatic carve-out and distributing everything proportionally, assuming the leading BPs still receive the highest payout anyway.
To me, this means that the BPs who work the most for the network are often not in the top 21. The BPs that make the most money are the BPs that are backed by whales turning their large populations into even more EOS.
Proposal: We propose that block producers who underperform or fail to produce blocks by the specified time have a penalty effect that reduces overall inflation in the system.
This was the real black mark of the previous system: many of the BPs just didn’t validate blocks. It’s kind of crazy to think about it, but the system aligned it so badly on the network that blocks are overlooked all the time. Check the data on the AlohaEOS reliability tracker.
One entrepreneur told us he had to completely revise his code strategy for an EOS-based app because he couldn’t trust it to do what he needed from block to block.
With this new approach, the entire system would be penalized if blocks were missed. The theory is that it will give all voters an incentive to support BPs who don’t miss any blocks.
This is just a suggestion, of course, and Block.One has no direct authority to impose it on EOS. However, if it catches on without much difficulty, there is a good chance the network is working much better.
That might well be, but it will highlight another problem that hangs over the network from the start.
Most crypto believers have already thought that 21 organizations are far too little for a really decentralized blockchain. However, the progress of this proposal could show that the number is even smaller: that really only one organization has power in EOS, and that is Block.One itself.