By Juan M. Villaverde
EOS (EOS, Rated “B-“) is one of the most remarkable public open blockchains ever built. But it has a problem:
Too few people own too many tokens. They have an oversized influence on voting. And there are few formal incentives to encourage other token-holders to vote.
Result: EOS’ voting structure, which is critical for network security, is not robust.
Some of the unwelcome consequences of this state of affairs were graphically illustrated recently, when EOS was forced to scrap its self-funding mechanism.
The main reason: Big incentives that EOS created for large token-holders, enabling them to potentially collude to seize the funds.
Head-in-the-sand approach to major problem-solving
EOS developers have seen the flaw in their voting scheme. But they have not offered a viable solution. To us, this amounts to an admission of defeat.
Meanwhile, Block.one, the company behind the EOS network, recently organized a glitzy event in Washington, D.C., to announce a host of new developments:
- They added a new social media platform (in the mold of Steemit).
- They introduced a new, custom-built Virtual Machine for EOS that will reportedly speed up transaction processing by a factor of 12-to-one.
- They announced new EOS compatibility with Web Authentication — like using a hardware wallet to log in to your account.
But conspicuously missing was any announcement of efforts to prevent the heavy concentration of voting power. That’s serious. In fact, it’s something that could eventually cripple the potential for EOS to reach mass adoption worldwide.
And it sends the message loud and clear that, for now at least, EOS is resigned to being a semi-centralized, distributed ledger.
Of course, it won’t be nearly as centralized as a Google or Facebook. But it’s far from the decentralization of Ethereum or Bitcoin.
So we have downgraded EOS’ tech score by a notch.
The good news: Even after this downgrade, the EOS technology score remains higher than that of most other cryptocurrencies we rate.
Plus, EOS continues to enjoy some of the best adoption metrics in the industry.
And the EOS team still has time to address the issues we’ve raised.
Juan Villaverde is an econometrician and mathematician devoted to the analysis of cryptocurrencies since 2012. He is the editor of the Weiss Cryptocurrency Portfolio service and leads the Weiss Ratings team of analysts and computer programmers who created the first-of-their-kind Weiss Cryptocurrency Ratings.
Image Sourced From Pixabay