EOS Governance Failure ExposedThere has been a wealth of speculation surrounding EOS and the EOS ecosystems governance over the past week or so. This comes off the back of a leak which seemed to prove that Chinese cryptocurrency exchange Huobi had been accepting donations in order to support certain voters within the EOS network that in turn contribute to how decisions are made within the project. The essence of this is that many believe Huobi have been receiving payments that in turn could be used to manipulate voting on the EOS network - this is how the layman would understand it anyway. As it stands, on the EOS network there are 21 block producers, all of whom are elected to vote on decisions that are being made within the EOS ecosystem. For being a block producer, rewards in EOS token payments are paid out. The theory is that these block producers have paid other entities, such as Huobi, to vote for them.Block.One, the team behind the EOSIO software have spoken out about these allegations, who according to Coindesk, have said:
"We are aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims. We believe it is important to ensure a free and democratic election process within EOS and may, as we deem appropriate, vote with other holders to reinforce the integrity of this process."
Block.One seem to be admitting that this has taken place, though at this stage they don’t seem to recognise how this could be deemed as a breach of investor confidence and of course, a breach of the democracy that EOS claims to withhold. There is still no official word from Huobi.Why is this an issue?Many argue that block producers should not be allowed to pay others to vote for them. As a matter of fact ‘vote buying’ as it is known is actually banned on the EOS network, so why are Block.One letting it happen?Their argument is that vote buying in this instance is allowing block producers to help block producers and that therefore, it’s democratic in a community sense, although many do argue that this is an especially weak argument. Block producers earn tokens for their votes, therefore these tokens really shouldn’t be used to ‘pay’ other people to vote on their behalf.There are some other things to note too - this goes against the entire ethos of EOS, the ethos that investors buy into when they purchase EOS tokens.According to Coindesk:
“EOS has on-chain governance, albeit a system in which only one decision can be made by the EOS token holders. That is, they can decide which companies have those 21 block producer seats that control EOS's ledger. Every other decision is up to those 21 block producers. They can even lock up accounts they believe to be operating maliciously.”
Simply put, EOS investors get to vote on who these 21 block producers are, they get to vote on who makes the decisions, so is it fair that the decision makers are giving away tokens in order to allow other entities to vote? No, it’s not, it’s also very undemocratic. Next up, as mentioned earlier, vote buying is actually outlawed on EOS, as per Coindesk:
“EOS has a constitution that forbids buying votes, but it's never been ratified. (It isn't even clear what ratification means in that the software was released without a way to agree on rules.) The interim constitution was put together by a committee of block producer hopefuls leading up to the EOS launch. Its last article acknowledges that it is an interim constitution until a new one can be ratified, but not only has ratification not proceeded: there isn't even a a legitimized way to ratify it.”
It’s all starting to sound like a botched job, as if they are making the rules up as they go along, right? What does it mean for EOS?Okay, enough breaking down the problems within EOS, what does this mean for the future of the project? Firstly, this clearly hasn’t had a huge impact on the value of EOS, which in turn is a good thing. What does need to be considered though is the fact that a lot of investors may be feeling let down by this and could use it to justify a sell off if EOS manages to move past $10.00 again. You can’t blame them really, it’s only a slight breach of trust in a way, but for a project that claims to be based upon democracy, one can hardly say these findings are very democratic, can they?Overall, this isn’t a devastating problem. EOS will recover from this, though a more in depth announcement or explaination from Block.One would go a long way in ensuring this can happen. We would also like to see an announcement from Huobi, they should at least be given the chance to defend themselves.Either way, it’s not game over just yet, thankfully, though we expect that going forward, new investors are going to be a little wary of this project now to say the least. ReferencesCoindesk
I'm responsible for filming fresh, daily market, blockchain and crypto news for Crypto Daily's YouTube Channel. We cover a variety topics and coins to suit the taste of different investors, traders and crypto enthusiasts. For many years my background was mainly in Recruiting and Marketing. I also enjoy running a musical YouTube channel in my spare time.