Weiss Ratings: Bitfinex allegedly using traders’ tokens to vote itself in EOS?

The Weiss Rating is a rating agency that provides ratings for stocks, mutual funds, bonds and many other financial instruments in the market, they also have started rating cryptocurrencies, Weiss ratings have already published a complete list of 93 cryptocurrency ratings.

Recently, Weiss was favorable towards EOS’ consensus mechanism, where the block producers are elected in order to govern the chain(EOS Chain) but it had its own concerns regarding the actual performance of the blockchain.

An article from Weiss quoted the following:

While the EOS community continues to work on finalizing its MainNet release, we have some serious questions about its centralization that remain unanswered.

Their concern is also legit as the problem lies in a very fundamental aspect of a decentralized ledger, whether it is decentralized in actual terms or not.

The consensus mechanism that EOS uses is DPOS (Delegated Proof-of-Stake) and BFT (Byzantine Fault Tolerance) in order to arrive at a consensus in the network.

The problem with the current consensus mechanism in terms of actual performance:

  • The top 10 EOS token holders will effectively run and operate this network
  • They will elect a group of 21 block producers (“miners”)
  • Via the block producers, the top 10 will assert their dominance of the entire ecosystem.

This creates a dominance factor by the Block Producers( who will validate the transactions) and creates a form of centralization, which is not the motto of the network, it is supposed to be decentralized in a manner where the governance is distributed not the token to be distributed.

Weiss has concerns over the EOS becoming a platform which is more centralized   Image Source: Twitter

The voting for the block producers still continues, the election of one block producer won’t affect the network that much because the block producers keep on changing, however, the possibility that the block producers will gain influence again is a worrying fact.

A couple of days ago Bitfinex also rolled out a special tool that allows users to vote through exchange wallets, the timing couldn’t be more perfect as the EOS voting is also ongoing.

The analysis of EOS voting also pointed out that Bitfinex has gathered half of its votes from several larger wallets and whales. Bitfinex’s block producer in the EOS network is one of the largest block producer, which earns a lot of votes.

Account history of the Birfinex block producer  Image Source: eosnetworkmonitor.io

The chief developer of EOS, Dan Larimer, refused to these claims, he believes that human governance is always needed in Blockchains:

“There is widespread belief that there is no “governance” of Bitcoin or Ethereum and that these protocols are decentralized. There is further a belief that the code should be law. In reality all blockchains have human governance processes that reveal themselves in emergencies and when the protocol upgrades.”

EOS is one of the most advanced chains we have in our ecosystem but if the core of the technology would have problems of governance at this level then it is a matter of concern, EOS has been in the news for some days, 7 accounts frozen for the breach, a bug found in the network before the launch.

But still, we believe that EOS would answer to all these queries and come up with an explanation and solution.

Image Source for featured image: medium.com

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