EOS Mainnet – A ‘Diamond in the rough’ or a ‘Cautionary tale’?

By Amie Parnaby

EOS Mainnet launched on June 10th, but in its short life has had much turmoil. Regarding the axiom “that which doesn’t kill you, makes you stronger”, will the initials struggles mean death for the much-anticipated release of Block.one’s software or will it be tempered by the experience and thrive?

A treacherous path to launch…

Block.one’s much-touted EOS mainnet release has been plagued by bugs and hacks even before a release date was agreed. A hack to Block.one’s Zendesk account on May 31st brought about fraudulent, but legitimate-looking, emails being sent out announcing an ‘unsold tokens giveaway’, which resulted in investors losing millions of dollars. Before that, a Chinese cybersecurity company identified some severely critical flaws and loopholes in the EOS system, including the error that hackers could take control of the entire network through a single network node.

Block.one promptly launched a bug bounty programme which saw many more security professionals trying to find further bugs and weaknesses. It doesn’t say much for a $4 billion project if one man can discover 12 vulnerabilities in just a few weeks (earning $10,000 per bug, Guido Vranken made a name for himself).

In addition to the bugs, flaws and hacks the EOS ‘charter’ also came under fire from crypto community heavy-hitters with Nick Szabo calling it “naively drafted” and would lead to EOS being “labour-intensive.” and having “poor social scalability.” It was not a good omen for a project that held a year-long ICO (you would expect better).

… they made it to the launch pad

Yes, they made it to launch-day, June 10^th, amid troubled democratic discussion of the date and some highly controversial content in the conference call between developers and potential “Block Producers” (BPs are the Proof-of-Stake equivalent to miners on the Bitcoin blockchain). When the ConCall transcript was published investors, and other community members were left perturbed by the disorganisation and general havoc as well as the discussion to allow BPs the ability to ‘print’ EOS tokens.

This launch isn’t going to the moon

It was not a successful launch. Four days lapsed between launch and ‘live’. For all the hype and anticipation surrounding the project, it took four days for 15% of the total EOS tokens to be staked against the potential BPs.  The Proof-of-Stake protocol that allows coin-holders to stake their coins on the BP group that best reflects their needs and values proved a hard nut to crack. Some of the main reasons for the slow launch I have listed below.

• Voting for BPs meant exposing private wallet keys to prove the holding of tokens
• There was only one third-party, security-tested, voting tool, which is a command-line tool that can be challenging for the non-technically minded. (CLEOS, created by Block.one)
• There is a lot of mistrust in the financial industry, and the lack of security tested voting tools was a cause for concern within the community, and many didn’t want to trust the security of their holdings to untested voting software.
• Selling strategy. To vote for a BP all but 10 of the tokens held would be staked against that vote and to sell tokens would require ‘unstaking’ those coins and waiting 72 hours after the blockchain went live for the tokens to be released. Not beneficial for holders betting on a steep increase in price after launch.
• Whales and BPs. The vast majority of EOS tokens are held in quite a small number of wallets, leading people to believe that the BPs have “bought” their votes. It is more probable that the voting was held up by deals and discussions between block producer groups while deciding where the best bets were going.
• The realisation that small investors have very little reason to vote (voting is weighted according to the number of tokens held) and that it isn’t worth their risk on untested software when their vote would mean so very little.

It’s a long list of reasons for a stalled start, and there were still more bumps in the road.

They’ll be lucky to reach orbit

More problems have arisen since the dreary beginning. Less than 48 hours after the Mainnet going live there was a bug that caused the network to freeze. While this only created a five-hour network blackout, it was not something that should have been anticipated at such a delicate time. Some from the BP groups have posited that the ‘bug’ could only have come from a hacking attempt, while others have kept quiet on the subject.

If that wasn’t enough, the controversy was sparked when BPs froze seven accounts under the belief that they were stolen. The controversial part of this is that they didn’t wait for an arbitration ruling, which is what should have happened according to the EOS charter. The BPs acted in consensus with each other, but they should not have had the right or ability to freeze accounts without arbiter approval. Unfortunately, it appears that Nick Szabo was correct in his derision about the charter. The EOS Core Arbitration Forum (ECAF) claim that they didn’t have the right to make a formal ruling on the situation because the charter hadn’t been fully ratified. ECAF still hadn’t made a decision less than 24 hours before the 72-hour unstacking period was over, which would have allowed the stolen EOS tokens to be sold and the owners losing out.

Some BP groups and also BP groups ‘in-waiting.’ have spoken out in defense of the move, saying that they would have done the same thing in protecting genuine owners from theft, while others have said they agreed to the freeze reluctantly, in the absence of an ECAF ruling.

Can EOS Mainnet recover this launch or will it crash and burn?

For a short life, EOS has seen a long line of troubles. It’s only to be expected that such highly publicised problems plague a well-hyped launch. Each of the issues that have faced the EOS community of holders, block producers, and arbiters has drawn into sharp relief severe issues in the areas of security, user-friendliness, decentralisation and self-regulation.

The hacks, protocol loopholes, and voting parameters show a distinct lack of due diligence on the part of Block.one to create a functional and secure blockchain. Block.one responded to the query about the voting tool by saying they were taking a “hands-off approach” and that it was up to the community to create the tools, yet they still produced the CLEOS tool. Would it have been too much to ask for them to create a universally functional tool?

The question of decentralisation keeps rearing its ugly head, and in this case, it has been highlighted. How can this genuinely be a decentralised system if BP groups could agree to freeze accounts? The block producers were voted in by the weighty votes of the EOS whales, which indicates that power is, once again, in the hands of the rich alone.

Let’s not start on the self-regulation part of the problem. In fairness, the system of splitting the EOS community into Block Producers, Holders, and Arbiters to correspond with the executive, constituency and judicial areas of any governed system is a good idea. However, lack of defined parameters and ratified rights and responsibilities have let the EOS charter down in a spectacular way.

So what is there to salvage?

EOS is not dead yet, but it will be up to the community (and maybe a little help from Block.one) to fix the bugs, vulnerabilities, development needs and governance of the EOS Mainnet. Only time and good (stable and timely) fixes will prove whether EOS Mainnet can survive this diabolical start to life.

A lot has happened in protracted time-span space of time. EOS wasn’t the only ICO proposing PoS as a means to compete with PoW to reduce associated costs and scalability issues. Any other project intending to use the PoS protocol has learned a lot about ‘How-NOT-to-do-it.’

For a Blockchain development that was supposed to rival and then supersede Ethereum, it isn’t doing too well. However, we can’t rule it out just yet; everyone is entitled to their second chance. In the meantime, we will have to watch as other projects learn from the mistakes made here and start making a raft of new ones.

 

About the Author:

Amie Parnaby is a professional writer with an experience in a broad range of industries, from I.T to training, from optics to banking. Within these settings, Amie has provided quality web content, training materials and technical documentation. She is currently an in-house Content Writer at Leverate.