Dan Larimer, founder of the upcoming EOS blockchain, has been embroiled in an active (yet largely polite) battle of words with Ethereum leader Vitalik Buterin over some key differences in their ideologies. Larimer wrote a response piece to an essay written by Buterin, where Buterin makes the argument that delegated proof-of-stake boils down to plutocracy. In simple terms, Buterin is saying EOS may end up being “government by the wealthy” and at risk of vote buying. Larimer, however, disagrees. Read on as we go over what these two cryptocurrency titans have to say about the future of governance on the blockchain.
Quick Review – What is DPoS?
Before we get into the nitty-gritty, let’s review how DPoS is supposed to work. If you are already familiar, feel free to skip ahead.
In normal proof-of-stake, anyone who holds coins or tokens in an active online wallet is eligible to stake and earn a reward. The more coins or tokens that are held in one wallet, the higher the chance of staking during each block. DPoS, on the other hand, uses a completely different system where only a select few are even eligible at all to stake. These few are given the right to stake through a voting process. Only the nodes that received the most votes during each voting are eligible to stake and earn a reward.
That said, let’s look into Buterin’s argument.
Buterin: DPoS Could Lead to Vote Buying
Vitalik Buterin’s argument against DPoS is that it will most likely end up coming down to the formation of what he calls cartels, and vote buying. Specifically, in his article called “Plutocracy Is Still Bad,” Buterin wrote that DPoS will be plagued with issues because the EOS rewards have grown so substantially, and the “competition on who gets to run nodes has essentially become yet another frontier of US-China geopolitical economic warfare.”
Citing an article written by BlockBeats (in Chinese), Vitalik Buterin suggests that EOS DPoS will lead to vote buying. Think of it this way — an individual or group wants to become a staker. So they rally together a group of people to vote, and tell them that if they become the staker, they will share the rewards with everyone who voted. This, according to Buterin, is absolutely equivalent to vote buying. He further described these vote buying groups as cartels and suggests that such activities would be representative of the “failures of human politics” but replicated within cryptocurrency.
Dan Larimer Fires Back, Defends DPoS
Just two days later, Dan Larimer wrote an article of his own on Medium in response to Vitalik Buterin. In it, he lays out his defense for DPoS and why it is, in his opinion, superior to the solution that Ethereum is pursuing.
Larimer uses the analogy of radio stations and radio towers to explain how different blockchain systems work. He suggests that proof-of-work functions whereby only those with access to the loudest and most powerful transmitters control the network, and everyone else must “buy the airtime from those with the resources.”
Next, Larimer says that traditional proof-of-stake requires one to operate their figurative transmitter at all times, and the staker must have the technological ability and know-how to do so. Those who lack these abilities must buy airtime from those that have it. Larimer describes both proof-of-work and proof-of-stake as being the “true plutocracy.”
Going then into delegated proof-of-stake or DPoS, Larimer defends it by saying that due to the way it’s designed, having “a large stake is not sufficient to guarantee you some control over the transmitter,” and that instead, one would need to “have approval by the majority of the voting stake” in order to gain control. He says that, unlike proof-of-stake, “it is possible for the voters to create a system where airtime cannot be purchased, but where the elected transmitters are expected to give everyone their fair share of airtime based upon their stake.”
Larimer ends his article by admitting that both himself and Buterin are attempting to solve essentially the same problem, but they are going at it with a different strategy. Larimer then argues that maintaining community integrity boils down to the community having the power to control its own composition. Basically, this means that if a system allows absolutely anyone to stake or create blocks, then there is effectively no way to remove bad actors from the system.
Vitalik Buterin Strikes Back, Politely
Instead of writing a new article entirely, Buterin left a lengthy comment on Larimer’s post. In it, he admits that there are several points that they agree on and that Larimer stated a number of things that are true, but only true with caveats.
While Larimer said that he believed two-thirds of people are honest, Buterin noted that he agreed. However, Buterin felt that crypto communities are “an environment that encourages scummy behavior” such as hacks, shady ICOs, bribes to social media personalities, and the like.
Vitalik Buterin did openly disagree with Larimer on one point though. He stated that he believed once “a crypto platform becomes truly mainstream, it will be difficult for you to have holders that have values and beliefs that are far different from the general populace.” Here, he makes a comparison with investors who have morals and those looking for a free ride and a quick profit. He notes that this circumstance will “regress toward the mean” quickly. In layman’s terms, the high morality users and the quick-buck chasers will effectively balance each other out in the long run, leading to an ecosystem that is neither highly moral or short-sighted and greedy.
What Does All This Mean?
Basically speaking, Vitalik Buterin believes that there is a great risk of DPoS suffering from what is tantamount to corruption via vote-buying cartels. Assuming you are a rational individual, it would make sense that one would choose to vote for a DPoS staker that pays them for their vote. It would be, in many ways, illogical for such a voter to choose a delegate that gave them nothing in return, even if this was the most morally upright solution to make. As the amount of resources and influence required to build such a “cartel” is large, the end result, according to Vitalik Buterin, will also be that the only individuals capable of becoming a staker on EOS will be those that are already wealthy (and thus the plutocracy comment).
Larimer believes that proof-of-work and traditional proof-of-stake are in fact plutocracy, as they both rely on the need for powerful mining equipment or access to a large number of coins and a 24/7 uptime in order to stake. He feels that DPoS allows everyone an equal vote on who runs the network, and by extension, how it is ran.
The EOS blockchain will be launching in about two months’ time. It will no doubt be interesting to see how DPoS unfolds and if widespread vote buying and/or geopolitical tensions with China and the US develop as a result of the formation of Vitalik Buterin’s cartel suggestion.
What do you think of EOS and its choice to use DPoS? Will it end up with vote buying, or will the community band together to prevent such a development? Tell us your thoughts in the comments.
Images via Steemit, Trustnodes
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