EOS and its overlord Block.one have faced an incessant barrage of criticism from the crypto community, and for good reason.
EOS first garnered attention for raising $4 billion in its initial coin offering (16 times more money raised than the next largest ICO). Speculators have accused Block.one of artificially inflating the market cap of EOS, as well as providing artificially high liquidity in exchanges with the ICO funds.
Block.one’s decision to not have a hard cap on fundraising gave them a “cash grab” image and provoked skepticism from crypto investors for having a year-long ICO.
The flack was well deserved as EOS was just a white paper, yet it was being valued at $4 billion.
To put this into perspective, Bitcoin, the world’s largest cryptocurrency, was started virtually for free and Ethereum, the world’s second largest cryptocurrency, was started for a mere $17 million.
Advisors like Brock Pierce furthered the negative publicity by bringing along their personal scandals.
The ICO hype led up to the highly anticipated main net launch in June of this year. The so-called “Ethereum Killer” was primed and ready to take over the world; however, the launch was also surrounded by scandal.
One week before the EOS main net launch, China’s most prominent cybersecurity firm, Qihoo360, found “epic vulnerabilities” in the underlying source code.
These security flaws would permit an attacker to leverage a smart contract with malicious code in order to open a security hole, then use the supernode to insert the smart contract into a new block, thus putting all network nodes under the assailant’s control.
Once this process has been completed, the attacker could then manipulate the digital currency on the EOS network, obtain user’s private keys and data, launch a cyber attack, or begin mining for other cryptocurrencies.
These bugs were supposedly patched by EOS developers and the project was finally ready to launch. EOS went on to have one of the most anti-climatic and overhyped network launches in crypto history, in which EOS struggled to receive votes from their necessary 15% of holders.
After the EOS network had launched, concerns arose about the centralized disposition of their blockchain platform. Skeptics pointed to their idiosyncratic DPOS (delegated proof of stake) consensus algorithm protocol as a potential cesspool for corruption and nefarious undertakings.
EOS boasts an alleged 1,000 transactions per second, but this comes at the significant cost of network security.
Delegated Proof of Stake, in the case of EOS, places the responsibility of block validation into the hands of only 21 block producers. To put this into perspective, anyone in the world can be a block validator on the Bitcoin and Ethereum networks, spreading the burden of network security across thousands of nodes.
This kind of decentralization is the inherent beauty of using a blockchain network because it provides a robust defense against diabolical actors by distributing the ledger worldwide to avoid having one central point of failure or attack. It should also be noted that the 21 EOS block producers are almost entirely comprised of Block.one advisors/employees and centralized exchanges, all of whom are paid roughly $10,000 a day just to maintain the network.
This disgusting aristocracy is ripe for depravity.
EOS proponents counter with the fact that, on certain issues, everyone in the network is allowed to participate in a popular vote. However, EOS’s quasi-democracy is clearly a playground for the nobility in which popular votes can easily be purchased and or fabricated.
Additionally, the radical centralization of the network is apparent in the EOS constitution, in which one clause allows for the confiscation of tokens after an extended period of dormancy.
This push for active users is furthered by a tokenomics policy of 5% annual inflation, which can be viewed as a positive incentive to be active in the community, or can be viewed as a tyrannical effort to exercise power by confiscating money from your wallet and devaluing your currency.
I personally believe their motives are the latter.
The confiscation clause caused an uproar within the crypto community which has prompted the Block.one team, led by Dan Larimer of Steemit, to revise and amend the fascist constitution. Once again, this can be taken two ways. It can be viewed as Block.one being very consumer friendly and adhering to the demands of the users, or as Block.one rushing a project while trying to overstep boundaries and see what they can get away with.
I tend to not give the benefit of the doubt to a team who raised $4,000,000,000 to construct a poorly designed blockchain platform .
Other clauses in the constitution call for “monitoring,” “adjudication,” “penalization,” and “arbitrations.” All of these clauses establish Block.one as a central authority governing the blockchain.
This sentiment is shared by many investors, developers, and most notably from renowned cryptographer Nick Szabo. More recently, a viral video this week shows a developer asking a panel about where the billions of dollars raised have gone.
He goes on to say that EOS is extremely capital inefficient and that the billions raised have not been converted into robust code and cutting-edge software.
Furthermore, he points out the EOS doesn’t even have a functioning wallet. This is astounding because projects with far less funding have their own encrypted wallets.
One would assume that $4 billion would, at the very least, be enough to construct a blockchain and develop an encrypted wallet in a year’s time.
The disgruntled software engineer also notes that huge amounts of capital do not always translate into superior products. He instead believes that the culture of the project is far more meaningful.
As of today, EOS is valued at $7.7 billion. It does not have a wallet to store tokens on or any software that is superior to what is already on the market. Their transaction speeds come at the price of network security and their low user costs are veiled behind inflation. To cap it off, EOS is controlled by a cartel of crypto nobility through the centralization of block validation and through an overbearing, Orwellian constitution which grants an excess of authority to one central parent company.