Friday, August 12, 2022

EOS Block Producer, Explained

The Takeaway:

Blockchain, the revolutionary technology, brought back power to the general public through decentralization. Bitcoin introduced this technology, but Blockchain has multiple use cases, including the development of dApps. However, its lack of scalability serves as its biggest liability. Developers are working tirelessly to rectify this issue, and replacement of Proof of work to Delegated Proof of stake is one prospective solution. EOS has employed Delegated POS and shown decent scalability improvement. To verify transactional data or mine blocks, Block producers are appointed by EOS' community. This article explains the need, appointment, and responsibilities of a Block Producer.

To understand what an EOS block producer is, we have to learn what EOS is and how it is connected to a block producer.


What is EOS?

EOS is a decentralized operating system which is based on blockchain and enables the development, execution, and hosting of decentralized applications (dApps) on its platform.

You may be wondering what does ‘decentralized’ mean? Decentralization means no single person or entity has the power to control the app.

The blockchain-based operating system supports businesses and individuals to create blockchain-based applications with all of the required core functionalities as web-based applications, like usage management, data hosting, and communication between the dApps and the Internet.

To build dApps, a developer needs EOS coins, so instead of spending them, he needs to save them to use network resources. Bandwidth can be rented to other token holders if one holder wants to allocate to others.

EOS is owned by the organization. Dan Larimer, who is the founder and creator of platforms like BitShares and Steem, also launched EOS. EOS’s aim is to build a capable network which can easily process millions of transactions per second. If EOS can do this, then it will solve a huge problem for the industries.

For example, in the financial industry, there is a need for a process which can support millions of transactions per second at ease. Similarly, if we talk about social media platforms like facebook, then no more than 52 thousand likes can happen per second. So there is a need for processing millions of transactions per second which EOS aims to solve and make it simple for adoption by other industries as well.

The other issue which EOS is trying to solve is the ‘issue of usability.’ Blockchains like Steem and BitShares, are able to process around 1 Lac transactions per second and use smart contract technology but functions like account recovery and task scheduling are difficult for developers to insert, so EOS by using an operating system protocol has these functions already built-in.

Now, that we know what EOS is, let’s proceed towards block producer.


What is a block producer?

Block Producers govern the EOS network as a decentralized entity. The producers are responsible for reaching a consensus and adding blocks containing transactions or data, to the EOS blockchain.

BP works in the same way as miners on a proof of work (POW) blockchain. EOS follows delegated proof of stake.

Block Producers in EOS technology are 21 delegates that are elected by the token holders, and they help in confirming the transaction of the network.


How to be a block producer?

It’s never too late to become a block producer. You have to be clear about certain things:

1.  You should have a clear mission to be a producer. You should ask yourself things like what can you give to the world as a block producer? Or why should people vote for you? Or how you will spend your EOS?

2.  You should have a unique EOS producer account name. To make sure the name is unique you can view all the current BPs and BPCs here-

3.  To kickstart, you need a few servers running a node-os operating system like virtual machines or even a desktop with a lot of RAM could work at the initial stage. You can run on desktop hardware, and all you need to provide is RAM which is required by the EOS Mainnet, which increases at 1kb/block.

4.  You should have a website with a bp.json at its root along with an ownership disclosure and a code of conduct. Also, have a logo in several formats notated in your bp.json.


How to create a unique EOS account?

Your account name will be the name of your Block Producer. EOS accounts are generally 12 characters long. Keep in mind, that while choosing a name, you should not copy or have a similar name to others as they might end up getting your vote.


There are two ways of creating an EOS account:

A. This method is useful for someone having a scatter account.

Follow the steps for your account:

1.  Open your scatter account and select ‘wallet’ from the left-hand navigation.

a.  You have to select ‘generate key’ to start generating a key.

b.  Then select EOSIO.

c.  Then select a private key.

d.  Copy your private key and keep it somewhere safe.

e.  Now a pop-up window will appear which has an option of ‘create new one,’ then select it.

f.  Name your EOS account. It should be 12 characters long.

g.  Select your account name, and you’ll be asked to pay to reserve your name on the EOS blockchain.

h.  You can transfer the required amount to the account “create bridge” using the memo in your scatter account.

i.   Once the transaction is done, scatter will scan the account for 30 minutes looking for the funds and the associated accounts.


To create an account using a credit card

a.   Choose your account name which should be of 12 characters, and it should consist of lower case characters and digits up until five.

b.  Now you need to create and provide public keys.

c.   You have to provide your keys to the owner to be active.

d. Now, you have to pay for your account name. You can do this with a credit card or cryptocurrencies such as ETH or Bitcoin.


This is another method you can use to create your EOS account.

This service is called the ‘make accounts’ service. This method can be used if you already have an account.

a.  Open your scatter account and click on “add keys.”

b.  Then click on create a new EOS account.

c.  Now name your account and pay for it.

Your EOS account will be ready.


Block producer’s role

Block Producers govern the EOS network as a decentralized entity. The producers are responsible for reaching consensus and adding blocks of transactions or data to the EOS blockchain. BP’s are likely to be companies that invest in and operate data center infrastructure to support the enterprise scalability needs of EOS. They are elected by the EOS stakeholders; therefore, they are likely to campaign to attract votes from the EOS community. Their work for the community is incentivized by block rewards in the form of EOS tokens.

There are many block producers, but only the top 21 block producers form a consensus to produce the blocks in EOS’ blockchain. All block producers earn EOS tokens from inbuilt token inflation to incentivize them to perform this critical role.


So what’s about the standby block producers who aren’t on the top 21?

Standby block producers do not produce blocks; however, they are incentivized for their role. As they are in standby, they should be ready to step up in a moment’s notice to be in that top 21.

In the blockchain, rewards are expected to be reinvested in the blockchain community itself to maintain and grow the ecosystem. All block producers operate independently and are ideally distributed throughout the world.


The reinvesting options for the Block Producers are:

1.  Datacenter infrastructure and operations

2.  EOS blockchain governance

3.  EOS community support and engagement

4.  Financial support for EOS DApp development

5.  Sponsoring education and awareness

The investing of reward by the block producers results in creating a positive value feedback loop. When compounded by the 21 block producers, these activities are likely to increase the EOS ecosystem value, allowing block producers to do even more for the community.


How does an EOS block producer earn?

It’s difficult to see any blockchain that does not use a transaction fee to pay for infrastructure, but EOS is one of the few. EOS does not use any of the transaction fees to pay for other utilities; instead, they pay from inflation. At the initial stage, the inflation is set to a 5 percent annual increase, but as the time passes by and the EOS tokens are worth more, the token holders have the right to vote to increase or decrease the inflation rate.

The blockchain includes Block Producers, who run the network and the Worker proposal for improving the blockchain. The earning of Block producers is 1 percent, and the worker proposals have the remaining 4 percent.  Worker proposals are presented, and token holders vote for what improvements to make by them.

If you are thinking that only 1 percent is the total earning of the BPs, then you are wrong. BP’s have their own funds, and the top 21 BPs are paid 25 percent of the fund and rest 75 percent is paid to the BPs that are on standby but are producing blocks. It gives the BPs, that are not producing blocks, a chance to participate for network redundancy and hopes of becoming an active BP.


Who can become an EOS block producer?

Anyone can apply to become a BP. The only thing is you have to get a vote of the EOS community, and the EOS community will only vote for entities who have sufficient resources to supply the infrastructure required to ensure the proper functioning and continual growth of the EOS ecosystem. And also they have to reinvest in data center infrastructure, community support and engagement, financial support for EOS decentralized apps (DApps) developers, sponsoring education and awareness, and many others. BPs tend to be large consortium groups such as EOS New York and EOS Beijing, and major crypto changes such as Huobi and Bitfinex.


What if a Block Producer fails to produce a block?

If you understand what should be the reasons behind the failure of a block producer, then surely you can be a block producer one day. Few reasons we may state as:

1.  Network connectivity issues

2.  Hardware failure issues

3.  Capacity extend limit

4.  Regulation in their jurisdiction prohibits them from counting.

According to the rule, The white paper states that unreliable producers- who miss a block or have not produced blocks in the last 32 hours- will not be considered. This measure reduces the number of missed blocks, and these producers are reconsidered when they inform the blockchain about their intentions to produce blocks again. So in this event of not producing any block, the transactions will be picked up by the next Block producer in line, and the circle continues.


Governance Structure

It is all about vote. You should vote wisely because a block producer holds strong powers like they can revisit the transaction that has already been done if they have to, and this power should not be taken lightly. The blockchain system has Arbitrators, like a Supreme Court judge, they would hear a full case which is brought to them. If needed, they would research on it and gather more facts and figures from the parties and then issue a judgment. After the judgment passed by the arbitrator, the BPs have to enact whatever the judgment is and work accordingly.

So BPs are expected to pay respect to the judgment and not impose their own rules or opinions. They should be able to correct faulty errors.


Distributed file storage 

BP requires storage space for the network. They should have a large storage capacity to scale along with the expansion of the network. They should have enough available space to create DApps and run other applications.


Order of generating blocks

So, how does a block producer generate a block? Let’s understand this.

When a producer signs a new block, they also sign a new order. Their blocks are only accepted when they are planned. Orders of producers vary among the top 21 producers. They confirm the reliability and also ensure that two orders cannot be done at the same time due to the reason of not meeting completion time for two orders. Blocks are generally produced in 126 rounds so during one round one producer can produce to a limit of 6 blocks. The votes are recounted in the initial stage of every round, and if any changes happen in the top 21 block producers, the standby block producers take the place of the top 21 block producers list.



EOS is a decentralized operating blockchain system which enables the development, hosting, and execution of commercial-scale decentralized applications (dApps) on its platform.

Decentralized applications mean that no one or an individual entity can have control of it. EOS is one of the newest cryptocurrencies in the market which aims to process millions of transactions per second. It also has an aim to solve the issue of usability in the frontier industries to make the applications user-friendly and at the same time give developers their free hand to make the best use of the applications.

EOS block producers govern the EOS network as a decentralized entity. The producers are responsible for reaching consensus and adding blocks of transactions or data to the EOS blockchain. They have the top 21 list of producers who are producing blocks. A blockchain producer can produce the blocks within a limit of 6 blocks. The EOS block producers who are at the top 21 place earns 1 percent from a total of 5 percent where rest 4 percent is given to the Workers proposals. The top 21 block producer delegates who are chosen by the token holders get the 25 percent of the Block Producers fund, and the rest 75 percent is given to the block producers who are in standby but are producing blocks.

To be an EOS block producer, you should prove that you have sufficient resources to supply the infrastructure required to ensure the proper functioning and continual growth of the EOS ecosystem. And also they have to reinvest in data center infrastructure, community support and engagement, financial support for EOS decentralized apps (DApps) developers, sponsoring education and awareness, and many others.

To be on the top 21 block producers list, you should get enough votes by the token holders, and also you should be producing blocks every 32 hours or else you will get removed from the top 21 and be moved to standby block producers. And this process is cyclic in the blockchain system.

Block producers should have enough disk space to expand the network and run other DApps.

EOS blockchain community expects the Block Producers to invest in the community to make it easily accessible and to make the community even bigger.

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.

Jesse Kirby
Jesse Kirby
Since his childhood days, Jesse was fond of writing and learning new things. He developed a special interest in bitcoin back in 2011 and started to get deep into the crypto space. After completing his masters degree from Bnos Menachem School, New York, Jesse became a full time writer and crypto analyst.

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