My reflection on EOS history and current state

It has been a roller-coaster year and I think it’s a good point in time to reflect on this History and share my personal opinion on a state of EOS Blockchain today.

It all started with a small community of technical geeks who started very first EOS testnets.
We have gone through many iterations of Testnets while testing software and different concepts.
Later we had a community split into BIOS BOOT and Ghostbusters who argued for a right to launch Mainnet, and while we had few personality clashes at the end of the day it all lead to improvements in code and launch procedures.

Everyone was super busy in May - June time-period working out last bugs and delaying Mainnet launch. Finally on June 12th, 2018 on the last day of Tulip conference the community decided to go for a launch. The next several days were fueled by excitement and very little sleep.

The EOS Mainnet went live and it still took a few days until activation.
EOS Sweden had a well deserved honour of producing first blocks and hence making a History.

What happened after activation many BPs remember well as new Block Producers nobody in the EOS community knew about came online and took top positions with large amount of votes.
Some of those new BPs were large Crypto Exchanges and Mining companies located in China that commanded large quantities of EOS and hence demanded higher position in DPoS system.

And while some of the technical teams were crushed in spirit, we had to accept it as rules of the game of DPoS that we had to comply with. There was at least a comfort in the fact that most core technical BPs were kept if not in top 21 - then at least close by in standby positions to allow them enough profit to run the companies and invest into development.

Those technical BP teams who ended up in unpaid range collaborated and started a new Telos chain based on the same EOSIO codebase with modified rules for Governance to minimize the impact of whales. This created significant tensions between EOS and Telos communities and prevented some of the BPs to openly support Telos for fear of losing votes on EOS chain.

Then there was an issue of ECAF and constitution as a Governance layer. Both ECAF and constitution were valid only as long as top 21 BPs complied with those rules. Over time some of the top 21 BPs chose not to comply with those rules and community at large was facing a dilemma on what to do next: find a way to prosecute violators or otherwise throw away both ECAF and a Constitution. A later approach was taken: BPs anonymously stopped executing ECAF orders and organization was dismantled. Constitution being completely unenforceable became a worthless text nobody was taking seriously and replaced by a simpler User Agreement.

With the constitution out of the window a vote buying and vote exchange practice went mainstream and wide-spread among BPs. The dynamic was the following: if you commanded 500K votes - you could exchange those 500K votes with 30 other BPs for a total of 30 x 500K or 15 million of votes pushing your BP significantly higher.

And while EOS Tribe chose to adhere to its initial pledge of no vote buying or vote exchange - we watched our position on chain slowly eroding and eostribeprod losing rank.
After running for a year as a paid standby BP we finally ended up in an unpaid range after we lost our last whale support from Bitfinex as the later one changed its strategy and unvoted many Western BPs.

There are two groups of BPs whom I call “Miners” and “Builders”, with “Miners” taking a minimalistic approach of running producer node on a good enough hardware and claiming rewards. Their principal is to maximize profit while minimizing costs.
“Builders” are those idealistic BP teams, most of whom are active members of EOS community from the beginning who are investing what little rewards they get into providing free services to EOS community and building dApps to drive more usage and adoption to the chain.

The problem however is that often short term greed is overshadowing a long term benefit for the chain. The point of view of the Miner is to maximize profit. Given existing system and current incentives system encourages following behaviour:
Vote trading to maximize your position and hence the rewards
Launching other anonymous BPs and voting them up to gain more rewards
Not investing a lot into server infrastructure or development
Possibly reward sharing in exchange for more votes.

Overtime this leads to higher centralization of power and control to a smaller group of largest EOS holders who take all top 21 BP positions on chain.
The next logical step for this model is bringing in so called “socket puppet” BPs into higher standby BP positions for secondary revenue stream. This comes at the expense of existing standby BPs who are pushed down in rank and often out of paid range.
Many of those BPs are independent technical teams who use their rewards to develop tools and dApps for the EOS Blockchain.
As those technical teams are losing their source of revenue and significantly curtailing their development or leaving EOS community for other projects - we all stand to lose.

Needless to say in EOS Governance we reproduced the same problem of corruption we see in most Governments Worldwide to a varying degree. A closed circuit of those in power tend to solidify their control of that power and bar entry for outsiders. Short term gains overshadow long term losses.

This corruption has a price to pay however - since selection of top BPs is not based on merit but rather vote deals, you get mediocre performance from some of the top BPs. It only takes a few non performing BPs who miss blocks or full rounds to start seeing degradation in the overall network performance including failed transactions.

EOS protocol has no built-in mechanism to protect itself from non-performing BPs. It’s left to other BPs to take actions to try to exclude non-performing BPs from production schedule.
Often other top BPs are hesitant to speak up or take any actions against the offender for a fear of losing vote support from that party and losing it’s ranking.

Hence status quo prevails and no changes or improvements are made.
We at EOS Tribe have never participated in the game of vote trading and stayed true to our principles, and hence while we leave EOS as Block Producer, we are also free to speak truth and give warnings to the rest.

As EOS chain at least appears to get more centralized and plagued by issues - it becomes less attractive for new dApps and businesses to run on.
Luckily there are alternatives to EOS on side chains like Telos, Worbli, BOS and Meet.One.
Those side chains are running the same EOSIO codebase with many Governance issues resolved. Those side chains had an opportunity to observe problems on the EOS chain and change the rules and often make code changes to resolve those issues.

For example: EOS has a problem of standby nodes never getting a chance to produce blocks and thus testing their configurations. Some standby nodes lower in rank knowing that their chances to make to top 21 are close to zero, choose to turn off their servers completely to save the costs. Others while running standby nodes have never tested those nodes in production mode signing blocks. There are certain factors besides nodeos configuration that can lead BP node to miss blocks or miss their turns to sign blocks completely. This defeats the purpose of having standby nodes in the first place and reduces stability of the overall chain.

Telos is a perfect example of resolving the above issue of standby nodes by randomly rotating standby nodes into production and thus testing their readiness. Telos also managed to more evenly distribute BP rewards across larger number of Block Producers to support thriving community. Telos preserved a sense of the community as well as Worker Proposal Fund where funds are directly towards projects that benefit Telos network.

The only creating idea EOS community was able to produce regarding it’s savings account is to burn them all - to remove the risk of a large account being attacked and taken over.
Now if you are a regular token holder reading this article, you might be thinking “why would I care what happens with EOS BPs? I am just waiting for EOS to hit $20 so that I could make a killer profit and finally buy that Tesla or Lambo”.

The value of EOS Blockchain is primarily derived from its utility and general adoption. Hence the more dApps are running on EOS Blockchain and the more people are using it - the higher ultimately is the value of the token.
Degradation of Blockchain performance may cause issues for token holders like transactions not making it on chain or new dApps choosing to deploy on another chains.
Then ultimately bad press about centralization and corruption on EOS chain will have a negative impact on the value of the EOS.

Hence in the long run ultimately the EOS account holders will stand to lose.
Smaller account holders should make their voices heard by either directly voting for Block Producers they support or delegating their vote to a proxy which they trust to make a good balanced voting decisions.

Eugene Luzgin, EOS Tribe, September 2019