EOS Block Producers Are 'Colluding', Receiving 'Payoffs', and 'Mutual Voting', Token Holder Alleges

Omar Faridi
  • 30 Sep 2018
  • /
  • In #EOS
  • EOS block producers (BPs) have been accused by Twitter user MapleLeafCap of "colluding."
  • EOS's 21 BPs are allegedly receiving payoffs and engaging in "mutual voting."

Maple Leaf Capital (@MapleLeafCap), an EOS investor, recently pointed out that “an internal excel document from Huobi”, one of the 21 EOS block producers, had been “circulating in the Chinese community.” According to MapleLeafCap, the excel file reveals the “collusion, mutual voting, and payoffs” that take place between Chinese block producers (BP).

The Twitter user then shared an article, which makes the following allegations: 

(1) Huobi and many other BPs mutually vote for each other to cement their BP position (2) Huobi openly votes for a few BP candidates in exchange for EOS returns

MapleLeafCapital also shared a screenshot (above) that shows crypto firm Huobi voting for 20 different BPs - 16 of which vote for Huobi as well.

In another screenshot posted by the EOS investor, it shows that Huobi receives substantial EOS returns, or payments, from three BP candidates (eosiosg11111, cochainworld, eospaceioeos).

Commenting on the questionable actions of EOS BPs, MapleLeafCapital said:

As an EOS token holder myself, I view such action with utter disgust, and there is a reason why our Mapleleafcap proxy only votes for a very selective group of Chinese BPs.

@MapleLeafCap

The EOS token holder also claimed that EOS’ “integrity” may be “compromised” as 12 of the total 21  crypto platform’s BPs are located in China. In order to resolve these potentially serious issues, MapleLeafCapital recommended  “increased community awareness”, “higher voter participation”, and a “punishing mechanism” for bad actors.

"Blatantly" Against EOS's Mission Statement

He added that such exploitative actions must be addressed immediately as it “blatantly flies in the face of the very thesis” Block.one - the company that developed EOS - had created the crypto platform upon.

MapleLeafCapital further noted that blockchain startup Huobi had been aggressively “pushing” its Huobi Pool Token (HPT) - which he thinks is being done by “blatantly sharing the EOS block rewards with HPT holders in exchange for EOS-lockup.”

In a recent follow-up response by Huobi, crypto news source cnLedger reported that Huobi “denied having financial business” with the EOS BPs - as shown in the leaked spreadsheet. However, Huobi has not commented on the “authenticity” of the excel spreadsheet.

At present, “relevant information is still under investigation”, cnLedger said.

Failing To Understand The Serious Nature Of Collusion

Notably, the exploitative practices pointed out by MapleLeafCapital may be quite serious and could adversely affect many people. Meltem Demirors, a crypto treasury management professional, commented on the issue by stating that investors only care about “returns” and not “ideologies.”

While this may be true in many other cases, it has been seen by some as a highly inaccurate assessment of the potential harm these types of corrupt activities may have on investors.

Over 90% of dApps 'Did Not Record Transactions', dAppRadar Data Shows

Omar Faridi

Smart contract-enabled, decentralized applications (dApps) are still in their early stages of development. At present, Ethereum (ETH)-based dApps have almost no transaction volume.

This, according to data from DAppRadar - which was pointed out by Twitter user Kevin Rooke on February 9th, 2019. As Rooks explains in his tweet, 86% of ETH-based dApps had zero users last Saturday, while 93% did not record any transactions. Although there are reportedly around 40 times more developers focused on creating software for Ethereum (when compared to its closest competitors such as EOS and Tron), ETH-based dApps don’t appear to have lived up to expectations.

There are about 1,375 “live” dApps built on the Ethereum blockchain, however the number of active users have remained consistently low. According to data from DAppRadar (referenced by Rooke), there are around 1,828 “live” dApps “across all platforms”, but 77% of them had “0 users” and 85% of them “had 0 TX (transaction) volume” (on February 9th).

Do We Need DApps?

Out of the total 1,375 Ethereum-powered dApps identified, there were only 200 that actually had (one or more) users last Saturday. Meanwhile, 426 dApps out of a total of 1,828 dApps developed across all platforms had users on February 9th. As Rooke mentioned: “Among the 426 dApps that actually had users, there were 157k active addresses today.”

Commenting on the relatively low dApp usage, prominent bitcoin advocate and author, Saifedean Ammous, remarked:

A brief look at them suggests all of these would be better run as apps. I'm curious if you could give me an exception, a dApp that benefits from being distributed?

In response to Ammous’ question, Rooke said that “perhaps some gambling dApps will see traction” and that distributed apps could potentially see more adoption because they are “much more difficult for governments to regulate [and/or] shut … down.”

Interestingly, Vortex (@theonevortex), a well-known bitcoin enthusiast and popular commentator on Twitter, remarked: 

Gambling and dark markets are essentially the only use case currently for dApps.

EOS & Tron Already Have Greater "On-Chain USD Volume" Than Ethereum

As explained, dApps are in their preliminary stages of development and during their first few years (of being introduced), cryptocurrencies had also been associated with the dark web and mainly thought of as a means to help engage in illicit activities. Since then, bitcoin (BTC) and other digital assets have been more widely adopted. Cryptocurrencies also have a supportive and growing ecosystem.

It’s possible that more legitimate use cases for dApps could be developed in the foreseeable future. In late January 2019, researchers at Diar released a report in which they mentioned that: 

EOS dApps are [currently] accounting for 55%, Tron 38% leaving Ethereum applications with a mere 6% of total on-chain USD volume.

While on-chain transaction value might not be the best way to measure the performance or usefulness of dApps, the introduction of newer platforms for developing distributed applications indicates that a significant amount of development work is being done to improve the underlying technology.