Crypto Cartel? Collusion Allegations Hit Chinese EOS Block Producers

Crypto Cartel? Collusion Allegations Hit Chinese EOS Block Producers

A report published by self-described non-profit block producer supervisor EOSONE detailing alleged collusion among Chinese EOS block producers has started to make the rounds in the West. The report hones in on an Excel spreadsheet said to be an accidental internal leak from Huobi, the global exchange power and currently third-ranked block producer. Now, cries for fairness and accusations of FUD have been met with “told you so’s” in kind — but the precise truth remains elusive, at least for now. 

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EOSONE Says Spreadsheet Details Mutual Vote Exchanges, More

Published on WeChat, the EOSONE report examines what the group “inferred” was a leaked internal Excel spreadsheet from Huobi. The document appears to detail cartel-like “mutual vote exchanges” and “benefit sharing” among more than a dozen Chinese block producers, including Huobi’s BP.

EOSONE, who has billed itself as a “non-profit block producer supervisor and builder of [the] EOS ecosystem,” has published multiple reports relating to block producers this September.

Generally speaking, the coordination of unfair advantages and acting self-interestedly underpin an oft-cited conventional critique of the Delegated-Proof-of-Stake consensus algorithm forming the EOS.IO software, namely that DPoS systems can give rise to cartels.

In the EOS.IO software, the DPoS model involves 126-block voting rounds that activate 21 leading block producers, who then respectively produce six blocks each per round.

Huobi’s BP, specifically EOSHUOBIPOOL, is the third-ranked BP in the current producer round.

EOS
Huobi’s BP in 3rd-place in the current round. Image via EOS Titan.

EOSONE has thus argued that as many as 16 Chinese BPs are surreptitiously coordinating their efforts in order to further empower — and enrich — their positions within their wider community. Doing so would be a violation of the “No Vote Buying” Article IV of the EOS Constitution.

Huobi did not immediately respond to Bitsonline’s request for comment. We will update this article immediately if they choose to do so.

Vitalik Buterin, Vlad Zamfir Chime In

The EOS.IO mainnet is still in its early days, having launched and having its inaugural BPs voted on in June 2018. With that fledgling dynamic in mind, it’s no surprise that its community is being faced with potential tribulations early on.

Conversely, Ethereum’s leading Proof-of-Stake theorists Vitalik Buterin and Vlad Zamfir weren’t surprised themselves over the report, both of whom have been longtime critics of cartel vectors in DPoS systems and both of whom have since chimed in on Twitter regarding EOSONE’s vote exchanging report.

For his part, Buterin called EOSONE’s findings “completely predictable.”

Buterin then added that he thought it was “best to minimize incentives for collusion from the start.”

Zamfir concurred with Buterin’s “predictable” assertion, commenting that “this is the way the dPoS game is played.”

‘Anyone Trying to Buy Votes Gets Voted Out’

On the flip side, some users have called EOSONE’s report “FUD” and a “hit piece,” while other BPs — like EOS Force, EOS Israel, EOS Impera, EOS Dubai, and others — have expressed indignation on social media over the allegations therein.

The charges come after a bit of chop after the blockchain’s mainnet launch in June.

For one, BPs scrambled for a fix on June 16th after the EOS blockchain unexpectedly paused. Later that month, the project’s co-founder Dan Larimer proposed a change to the project’s constitution to create a new BP voting system.

From the outside looking in, EOS fork Telos — led by disgruntled former EOS.IO contributor Douglas Horn — has attempted to mitigate cartel-like incentivizations on its own network.

But, even in the face of possible BP collusion, there are those remaining steadfast and who argue the EOS governance model gives a clear avenue to right nefariousness.

“This is the beauty of a liquid democracy,” one Redditor said in r/eos. “Community can just vote em’ out as block producers. Anyone trying to buy votes gets voted out plain and simple.”

What’s your take? Do you think DPoS can adequately resist cartels? Let us know what you think in the comments section below. 


Images via EOS Titan, Pixabay

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