One altcoin that has seen tremendous interest over the last few weeks is EOS. However, not all is golden as Weiss Cryptocurrency Ratings said that, while they love the coin, they hate its centralization.
Interest in EOS has reached fever pitch. The coin’s developer, Block.One, raised $4 billion through the sale of the cryptocurrency, and crypto enthusiasts hope that the platform can fulfill its promise of eliminating transaction fees while processing millions of transactions per second.
A Troubled Kingdom
Alas, not all is golden sunshine in the kingdom of EOS. Weiss Cryptocurrency Ratings issued a blog post detailing their concerns over the project. Weiss stressed that they’re fully on board with the goal of the cryptocurrency, stating:
EOS is a great project. It still merits a good Weiss Rating overall. And it still has the potential to do what Ethereum promised — take the crypto world to the next level, and establish a foundation for the smart economies of the future.
Indeed, EOS is the first fully scalable, complete, third-generation, distributed-ledger platform ever to be released to the public. I know that’s a mouthful. But that’s exactly what it is.
However, the bloom comes off the rose for Weiss when it comes to the coin’s massive centralization. The firm notes that the stated goal of EOS is decentralization and that future development lies in the hands of the community. Yet there are some major issues.
Power Concentrated into a Few Hands
Weiss notes that they have “identified EOS as a platform with one of the most centralized distributed ledgers in the world today.” In fact, the platform earns a staggering 97 (out of 100) on the Gini coefficient. This means that the platform is essentially a “feudal kingdom” where a few lords reign supreme.
Basically, the top 10 EOS token holders can effectively control the entire network. There are only 21 block producers for the platform, and each individual token allows its holder to vote for 30 different block producers. The result is that a small group of people holding the majority of tokens can determine who those block producers are, and there’s nothing that the rest of the token holders can do about it.
Weiss does offer some solutions to this dilemma. First, the largest token holders should identify themselves, allowing for greater transparency. Second, each token should not get 30 votes. Third, the platform should increase the number of block producers to more than 21. Lastly, Weiss suggests that the voting power of the big token holders should be capped at 2.5% of the token total supply.
It’ll be interesting to see how EOS shakes out. The launch of its mainnet has been delayed, and a number of security issues were recently discovered (they’ve since been fixed). Overall, Weiss Cryptocurrency Ratings gives EOS a B-.
Do you agree with the assessment by Weiss over the centralization aspects of EOS? Let us know in the comments below.
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