Hey Steemit,
Here is your Black Swan, so
We are currently working on the EOS report, in order to provide the community with an up-to-date tool to understand how one of the most hyped crypto projects actually works, and we are planning to publish it on 27 June 2018.
Studying the white paper, the various blog posts from Block.one and comparing EOS to other smart contract platforms (such as Ethereum, Waves etc..), lately we have been focusing on the voting process of Block Producers.
In fact we have some serious concerns with respect to the actual feasibility of the voting system that EOS.IO software incorporates in order to elect the 21 Block Producers.
If on the one side the BTF/DPoS system EOS.IO implemented shall allow transaction speed and scalability, on the other side the 15% threshold of EOS Token to be locked in the voting smart contracts may be flawed in its underlying assumptions: (i) there are incentives for people to actively vote the Block Producers; (ii) the votes will be casted by EOS Token holders. This article will focus on paragraph (i), and we will publish in the next few days a second article to address our concerns under (ii).
Assumption: There are incentives for people to actively vote the Block Producers
With respect to (i) we note that also in real life electoral systems increasingly more people decide not to vote for various reasons; people may do not find a candidate that reflects their core values, do not think that their vote will have a real impact on the overall elections etc… This is called voter apathy (https://en.wikipedia.org/wiki/Voter_apathy).
Also in DPoS we find the very same incentive problems as people have to actively “go to vote” and use their tokens: considering that a big shares of EOS Tokens are still on exchanges this may prove to be difficult. It has also to be noted that most of the token holders are perhaps tech savvy but do not have the technological knowledge to participate in the EOS voting system since to use Cleos (the client deployed for the voting system) it is necessary to write a few lines of code; as an alternative it is possible to use third party applications that have still to be tested (would you trust sending your EOS Tokens to an unknown third party smart contract?).
Furthermore the overall EOS.IO software architecture shall be taken into account to address whether users will have more incentives in the future to vote or not, and here we would like to share with you our preliminary thoughts.
Under EOS.IO software architecture having EOS Tokens entitle holders to use a part of the overall computational resources of the blockchain network, proportional to their holdings over the overall amount of EOS Tokens. If and when the computational resources will be used by smart contracts and dApps, companies deploying their software on EOS may find economically efficient not to buy EOS Tokens but instead to rent them from token holders.
If that proves to be the case a disalignment in the incentives provided by the system will clearly occur, as EOS Token holders will find themselves in a situation in which, notwithstanding the voter’s apathy problem:
(i) if they rent their tokens they will have a financial revenue stream;
(ii) if they participate to the voting process they are not supposed to earn any kind of rewards.
Now these are only our preliminary thoughts, but at least as the voter’s apathy problem goes, we have already seen that it has been extremely difficult to reach the 15% of the token holders’ consent, as such threshold would have not been reached would Bitfinex not cast its votes, on behalf of its customers, in the last few hours.
The fact that we are already seeing layers of representatives/intermediaries in “decentralised systems” is, per se, a serious concern, considering the fact that DPoS itself is a representative system in the context of which only a few nodes process the transactions on behalf of all token holders.
If such “representatives” are then elected by other representatives, we shall ask ourselves where blockchain decentralisation and disintermediation is going.
Please stay tuned for part II of this article and like the post if you liked it, comment and make suggestions as we are always open to debate and remember to subscribe to our Steem page if you want brand new content!
Best,
Black Swan team
