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This article was published on October 1, 2018

EOS community in meltdown over allegations of voting corruption


EOS community in meltdown over allegations of voting corruption
David Canellis
Story by

David Canellis

David is a tech journalist who loves old-school adventure games, techno and the Beastie Boys. He's currently on the finance beat. David is a tech journalist who loves old-school adventure games, techno and the Beastie Boys. He's currently on the finance beat.

The EOS community is dealing with more bombshell allegations of corruption., the software firm behind EOS, has been forced to rebuff claims Chinese cryptocurrency tycoons are working together to keep control of its blockchain.

Last week, an anonymous source supposedly leaked an internal document with some pretty damning accusations. It claims that “collusion, mutual voting, and pay-offs” are commonplace amongst EOS block producers, particularly cryptocurrency exchange desk Huobi.

Primary allegations are that Huobi and other powerful block producers are mutually voting for each other in order to retain status and secure passive income. Further, it is claimed that specifically Huobi receives EOS cryptocurrency directly in exchange for its votes.

Huobi has reportedly denied being involved in any “transactions” related to EOS block producer elections.

Hard Fork has reached out to Huobi for further comment and will update this piece accordingly if we learn more.

Still, the unrest has grown so loud that a raft of EOS block producers and CEO Brendan Blumer also issued public statements.

After quickly reminding us that EOS is still in its “infancy,” Blumer said “[we] are aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims.”

“[] 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,” he added. “We continue working on our potential involvement with the goal of empowering the intent of the greater community through a transparent process that incorporates community feedback.”

EOS votes for its miners

EOS uses a consensus model called Delegated Proof-of-Stake. The idea is that those who are willing to invest in it should be rewarded with more voting power when it comes to deciding who gets to mine the EOS blockchain.

Unlike Bitcoin, which uses Proof-of-Work and rewards miners relative to the amount of computing power donated to the network, the right to add blocks to the chain is awarded to the top 21 candidates via ‘democratic’ elections.

This can be very lucrative. Currently, Huobi’s mining pool has been voted in as the third most powerful block producer, and receives 833 EOS ($4,700) per day.

A swathe of ‘back-up’ producers are also paid, even though they don’t actively mine – they’re just on stand-by.

What do the rules say?

The toughest pill to swallow could be that if the rumors are true – it means that its compulsive election process has been effectively undermined. Some block producers are calling for this to be the true test of the long, exhaustive arbitration process outlined by the EOS constitution.

“Such abuse, if it exists, may not directly or immediately impact the public perception and business reputation of the EOS mainnet, however it does raise a very serious question as to the long term viability of the network,” wrote one block producer. 

The EOS dispute resolution system is founded on timeless principles of justice, and uses a documented, fair and open process,” its statement implored. “EOS Alliance recommends giving the system a chance to work.”

However, this remains an unconvincing strategy. Dan Larimer, the lead brain behind EOS, has publicly called for the scrapping of its constitutions, citing problems with the process of official disputes.

What’s worse, is that block producers have also flouted official rules, most notably when a decision was made to freeze seven EOS accounts in order to quarantine supposedly stolen funds.

The factual foundation of these specific allegations could really be arbitrary. Consider that there is no denial that the current ecosystem allows for block producers to be corrupted – if the Huobi rumors aren’t true, then they could be premonitions.

If you’re interested in everything blockchain, chances are you’ll love Hard Fork Decentralized. Our blockchain and cryptocurrency event is coming up soon – join us to hear from experts about the industry’s future. Ticket sales are now open, check it out!

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