EOS, founded by Block.one in 2017, is the 5th biggest cryptographic asset in the world by market cap and has been vaunted as a fully scalable blockchain platform for Dapp hosting. In the past year it has faced criticism for several reasons and in general, perceptions of the project are mixed. However, its ongoing mainet launch can surely be described as major botch.
The mainet was due to launch on the 2nd of June, and while it has been released 9 days later, tokens are still in limbo. In the last week EOS tokens have fallen close to 20%, currently trading at $11.09.
EOS prices last 7 days
The issues with the launch began with a hack of Block.one’s email client. A convincing phishing e-mail was used, and hackers were able to make off with millions of dollars as users were redirected to a bogus site where their details were lifted as they followed mainet related instructions within the email.
Phishing email used
EOS’s issues with security continued as the mainet migration date (June 1st) approached. Well regarded Chinese software security firm, Qihoo360, claimed it had found multiple flaws in the EOS network. Some serious enough that hackers could remotely control nodes on the network and attack any crypto built on it.
Qihoo360 claimed it had informed EOS of the vulnerabilities and that they had acknowledged them, deciding to hold back on launching the network.
However, in a tweet, EOS claimed that it had fixed or was in the process of fixing all the network’s bugs and the EOS mainet launch remained on schedule.
To make things more confusing, EOS decided to establish a bug bounty program on May 31st, one day before the new network release. The bounty program found multiple, potentially serious bugs within the network, with new issues being found as recently as two days ago.
Another issue that has been brought to light in the lead up to the launch, is the high level of centralization within the EOS governance structure. Major crypto influencer Nick Szabo was critical of Block.one’s EOS ‘constitution’ in the days leading up the 1st of June and points at the lack of social scalability in the network.
The constitution appears to prescribe a strong-armed approach to how the EOS network should be run. Words like, ‘penalties’ and ‘arbitration’ appear in the document and it appears that Block.one are not single mindedly focused on building an immutable blockchain.
For some, however, this ‘overseer’ approach may not matter, and could potentially aid EOS, in delivering the Dapps platform it promised, allowing for more straightforward dispute settlement and handling of political issues.
EOS also uses a Delegated-proof-of-stake consensus protocol. This boils down to 21 block creators who control the network on behalf of the EOS community. How much power these nodes will have in the network has been questioned. Recent minutes of meetings from a block producer group-call, suggested they could ‘print’ new tokens if they wanted to.
Where we are now
The silver lining of this story is that the main network has finally launched, however, EOS appears far from clear of its short-term logistical issues for the network.
Voting to decide on who the network’s 21 main block producers will be is ongoing and has been a challenge to implement. Initially, it was decided that once the mainet launched, 21 appointed block producers (ABP’s) would oversee and facilitate the vote to decide who the first group of new block producers (BP’s) on the network would be. Once 15% of EOS tokens had been staked to the vote, it would be completed, the new nodes could begin their duties and the network could start operating.
This plan was scrapped, though, and Dan Larimer and Block.One decided to leave the vote management to a single ABP, again raising concerns of the centralized nature of the EOS community governance
EOS developers chat on Telegram
The fact that vote collection and counting, are all being controlled by one entity, creates a clear trust issue with the community. The single ABP can potentially choose any 21 block producers it likes and because of the lack of transparency and verifiers, the community would never know.
Additionally, there does not seem to be an organized system for the EOS community to participate in voting. No proper graphical interface for the token holders to log into and register votes exists, with much of the community scratching their heads as to who the candidates are, and how to vote for them.
There is no set date to when the voting process for block producers will be completed, with days or even weeks being suggested.
The question of whether EOS’s network launch issues are short-term pain for long-term gain is a valid one. This has been a large-scale year-long project and if by the end of network migration process, an efficient and fully operating network is up a running, most will be forgiven. For the time being, however, the EOS model is a textbook example of how not to do a main network launch.