Friday, September 17, 2021

EOS: a billion dollar failure?

The Takeaway:

Since the launch of EOS, the blockchain platform has been surrounded by controversies. Earlier this month EOS Tribe decided to part ways with EOS blockchain as a block producer. Eugene Luzgin balmed governance at EOS for its potential downfall.

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EOS has a market capitalization of over $3 billion, which makes it worlds 7th largest blockchain company by market cap (according to CoinMarketCap). EOS has surrounded itself from controversies since its launch. Many from the crypto community have questioned its centralized structure. EOS raised $4.1 billion in its year-long ICO without having a live product. 


EOS Tribe calls it quits

Earlier this month EOS Tribe, one of the small companies that helped the blockchain to launch announced on Steemit to step away from EOS as block producer candidate. This decision raised many eyebrows in the crypto community. EOS Tribe’s Eugene Luzgin wrote in the post that EOS Tribe has never participated in the game of vote-trading and have stayed true to their principles. He further added that they are free to speak the truth and warned other block producers. 

What Luzgin revealed in the post opens up the possibility there might be some dispute in the company. He left because it is no longer possible to earn funds without the support from EOS whales. And those whales are favoring blockchain producers located in China. 

There have to be 21 blockchain producers present at any time to establish consensus on the chain to earn substantial rewards and make governance decision. In his post, Luzgin revealed that strongest technical proficiency has overwhelmingly been relegated to lower-tier rewards. 


21 nodes consensus method too centralized?

EOS consensus method still remains a topic of debate among the crypto community. EOS uses a model called delegated proof-of-stake in this method higher throughput is achieved by decreasing the number of nodes that participate in the consensus. This method was widely deemed as too centralized by many crypto investors. 

DPoS can be of different types, but on EOS network, only 21 nodes have all the power which earns them most of the rewards. These 21 nodes are picked by token holders who stake EOS coins in a vote for 30 blockchain producers. Who gets the most votes gets in the top 21 and blockchain producers keep on moving in and out of top 21 as vote changes. Other BPs who do not get in top 21 earn revenues as standby BPs and share a portion of 1% annual inflation of EOS tokens.

There are several blockchain producers that were once in top 21, and now they don’t even qualify to earn rewards as standby BPs. EOSSphere, GenerEOS, ShEOS, Gravity, HKEOS(Bloks), Detroit, Dublin, Blacksmith, Tribe, Amsterdam, Tokenika, Blockmatrix, Metal, Venezuela are some of the examples who don’t even reward as standby BPs.


New Dapps not a priority

EOS community members have repeatedly complained about the current slot of BPs that they don’t prioritize building new Dapps. Because of which new users are not growing on the blockchain platform. Decision making at EOS has also been in question as earlier they failed to agree on the burning of approximately $167 million in the EOS. That amount was designated for the worker proposal system. 


What’s next for EOS?

EOS is currently growing at a decent speed, but it has not proved its potential yet. When raised more than $4.1 billion in an unprecedented ICO, it attracted a lot of eyeballs. But it has failed to attract major companies looking for a highly secure database with high throughput. EOS community is waiting on to make a decision. 

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Glenn Harper
Glenn Harper
Glenn has only two interests: Bitcoin and Aviation. After completing his graduation from San Diego State University in 2006, Glenn started working in the airlines and aviation industry. Aviation was his only passion before he came to know about bitcoin in 2012 after which he decided to dedicate 8 hours of his day for aviation and 8 hours for learning and writing about bitcoin and the technology behind it. Glenn lives with his wife and a 7-year-old son who mines ethereum on his computer and is also quite passionate about cryptocurrencies.

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