EOS Centralization: Top 1.6% of Holders Own 90% of Supply

David Azaraf

EOS Centralisation and Distribution CryptoGlobe Research

After a year-long, $4bn ICO, the anticipated EOS mainnet finally went live in early June 2018. The migration of EOS tokens from the ERC-20 standard to the independent EOS blockchain has brought with it increasing scrutiny regarding the true extent of decentralization on the EOS network.

In an effort to ensure an even spread of token holdings across investors, EOS ran a phased ICO with no hard cap.

Wealth inequality on the EOS network sees the top 1.6% of token holders controlling 90% of the supply while the bottom 44% have to make do with a mere 1% of EOS.

The nature of EOS’s consensus mechanism exacerbates the centralization issue as new token supply is distributed exclusively to the delegates in the delegated proof-of-stake system. These delegates are voted in by EOS token holders, with the top 5 wallets owning a third of the tokens and therefore a third of the votes and serve as block producers on the network.

In return for their service, they are remunerated by the increasing token supply. At an estimated 5% annual inflation, the inflation pool used to reward delegates is expected to total 4.5 million EOS tokens, currently valued at $45million by the end of the year.

EOS has the highest level of centralisation in comparison to its peers. CryptoGlobe Research recently looked at the unnatural distribution of masternode coins such as DASH and NEM (see chart below), however, these cryptocurrencies are still more distributed than EOS.

DASH and NEM distribution CryptoGlobe Research

As blockchains look to scale to the point of accommodating mass adoption, projects will have to find a way around the scalability trilemma. For EOS, that means preserving their platforms transaction speed and security while ensuring a fairer distribution of wealth and power on their network.

Swiss Bank Digital Assets Head Refutes Goldman Sachs’ Bitcoin Report

Michael LaVere
  • Swissquote Bank digital assets head Chris Thomas published a rebuttal to Goldman Sachs' report dismissing bitcoin as an asset.
  • Thomas argued bitcoin's volatility is normal for an infant market and should be considered in a diversified portfolio. 

A Swiss bank executive has published a rebuttal against Goldman Sachs' scathing analysis of bitcoin which claimed that cryptocurrencies are not an asset class. 

On May 27, a leaked outlook presentation by Goldman Sachs revealed that the investment bank is bearish on the future of bitcoin. The Wall Street bank claimed that bitcoin and cryptocurrencies should not be considered an asset class and are too volatile for rational investment. 

Chris Thomas, head of digital assets at Swissquote Bank, published a point-by-point rebuttal to the Goldman report, calling the bank’s analysis of bitcoin a disservice to investors. 

According to the release, bitcoin represents an emerging asset class that will prove suitable for both retail and institutional participants. While Thomas admitted the technology is still at an “early stage,” the Swiss exec argued that crypto-assets deserve to be considered in a diversified portfolio. 

He wrote, 

Goldman Sachs is ignoring the strong foundations of this emerging asset class based on cryptographic principles and a world where many, if not all, assets will be tokenised, and trading them will be democratised.

Thomas continued, refuting Goldman’s dismissal of bitcoin due to its high price volatility. He argued that volatility is “absolutely natural” for a market in its infancy and cautioned investors against over-extending themselves in crypto. 

Thomas also took issue with the Goldman report highlighting Bitcoin’s 37% price plunge in mid-March. 

He wrote, 

Absolutely, bitcoin did fall 37% on March 12, 2020. And just one month later, Oil markets plunged 333% in the space of 24 hours, nearly 10x a greater drop, touching a low of MINUS $40 per barrel at one point. In December 2019, Goldman Sachs predicted the average oil price through 2020 would be $63 per barrel.

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