The EOS Ship is About to Sink and Block.one Holds the Life Raft
Saturday, May 1st, 2021
- The EOS network launched after a $4 Billion token sale run by Block.one
- Block.one “abandoned” its community and the chain still needs repair 3 years later
- Since launching in January 2018, Block.one has had an exodus of its founders and team, starting with Brock Pierce leaving in March of the same year
- Co-Founder and CTO of Block.one, Dan Larimer, departed the company on the last day of 2020 to “pursue new personal projects”
- The $1 Billion promised in funding to community EOS projects has largely been unaccounted for
- Block.one’s own $150M project Voice is not using the EOSIO blockchain, and has quietly gone down with all users content and tokens missing
- The EOS Alliance launched with high profile founders but was unable to make any movement in the network
- The block producers have the ability to control the chain, and it may be the network’s only hope
In a decentral-ish ecosystem, one company can save an entire community and its market. Will Block.one save the day or will the pirates call mutiny and finally take over what is rightfully theirs? After three years of watching the turbulent EOS story unfold, a conclusion is being drawn: the boat is rocking and there is little time left.
The EOS Community
The EOS blockchain was launched by a global network of block producers, or validator nodes, consisting largely of volunteers spending their own money to run servers on the network, with the chance of earning some EOS if they were voted as a top node. This was all an intentional part of the plan to decentralize the chain away from its maker, Block.one.
At the launch of EOSIO, Block.one held global hackathons with million dollar prizes to encourage developers to create products on the network. At that time, it seemed like EOS was going to surpass Ethereum in its developer community within the first year. But something happened… Block.one lost its founders, gained a lot of lawyers, and pulled back its support of the ecosystem.
The EOS Alliance
Just as Bitcoin has the Bitcoin Foundation and Ethereum has the Ethereum Foundation, so too did EOS need a board of directors who would help with the governance of a decentralized chain that had been orphaned from its creators. The EOS Alliance launched with high profile founders with the mandate to “empower EOS for all”, but never took hold in the community because of the lack of support from Block.one. Dan Larimer’s hands were tied in corporate bureaucracy and even with the support of over four dozen block producers and Block.one’s former Chief Strategy Officer, Brock Pierce, leading the effort, the EOS Alliance was unable to succeed in its mission. The Alliance was set to run on donations after the first 90 days of private funding and largely anticipated grants coming in from Block.one.
The EOS Alliance was striving to help fulfill the mission of the core governance of the network, which if executed properly, would have created a thriving ecosystem. The Worker Proposal System, as outlined in the original EOSIO whitepaper, was another method for developers to earn for building on the network, and was set to distribute millions, or even hundreds of millions, to the community. This unfortunately didn’t take hold, but is still possible to revive and can help distribute value equally to the builders and those contributing their time and resources for EOS to succeed.
The Block Producers Hold the Keys to the Kingdom
Technically, the block producers run the network. They are voted into power by a system called DPoS (Delegated Proof of Stake) and the top 21 nodes at any given time power the network. Only 15 nodes are required to reach consensus to make a change in the system.
For instance, November 2018, the block producers reversed transactions that had previously been confirmed, without the account owner’s permission. This was done in an effort to to stop a phishing hack, but started extreme controversy over the chain being centralized.
Block.one controls 10% of the EOS network, holding 100 million of roughly 1 billion tokens. But Block.one is conflicted out of using them. If they support EOSIO development, they take ‘ownership’ of the network which was explicitly released in the terms of the ICO.
Even though Block.one settled with the SEC for running its ICO, another class action lawsuit followed, claiming that Block.one failed to deliver on its promise of decentralization.
Luke Stokes said in an article about the EOS breaking point which he appropriately launched on May 1st, or May Day, “I’ve seen first hand how a centralized company in a decentralized ecosystem can fester into a cancer which will eventually be removed by the community.”
The power is the hands of those who actually run the network. The block producers can call mutiny on Block.one at any time and decide to put their tokens to use or simply burn them to boost the overall value for the market. Why would the block producers take over the network? Because it’s build or die time.
Block.one Stopped Building on EOS
After the $4B ICO, Block.one today holds somewhere between $10–15B in reserves. The lawyers have distanced Block.one so far from the software that the initial promise of the funds to be used from the ICO “to develop software and promote blockchains based on that software” has not come to fruition. The closest project is Voice.com, a new social network which Block.one started and funded with $150M and appointed new CEO.
The community was hopeful the Voice project would boost the EOS ecosystem, especially when Block.one bought $25M of RAM to potentially run the software, but as of today the testnet on Voice is still a private chain and appears to be a fork of EOS at best. The token that runs on Voice has not yet been released publicly and all tokens earned on the platform will be reset at the launch of mainnet.
Dan Larimer left both Block.one and Voice simultaneously, with conflicts largely stemming from what one can guess was the stifling of innovation by its own lawyers and local regulations, based on his exit comments from the company and his boycott of Twitter based on too much censorship. Since then, Dan Larimer announced his new project, ClarionOS and began work again on a governance system for EOS, called EdenOS, this March.
Block.one Promised $1B to its Community
In mid 2018, the $1 Billion EOS VC fund was announced, which aimed to provide capital to entrepreneurs by investing primarily in projects developing on the EOSIO ecosystem. Much of this capital was deployed into investment funds, but very little reporting can be found of EOSIO projects that directly benefited from this capital.
- Investment Fund: FinLab $100M
- Investment Fund: Galaxy Partners $325M
- Investment Fund: SVK Crypto $50M
- Investment Fund: Tomorrow BC $50M
- Investment Fund: EOS Global $200M
Of these funds, Tomorrow BC, a fund spun out of Eric Schmidt’s fund, is completely defunct, with no known investments. Luckily, Steemit has immutable blog posts on the official ‘eosio’ account, because the original press release for this venture was taken down. It seems to be another $50M snafu that was shoved under a virtual rug.
The most notable projects building on EOSIO that were backed directly out of this $1B fund were Everipedia ($30M led by Galaxy Ventures), Mythical Games ($19M led by Galaxy Ventures) and Moonlighting.com (unknown amount led by FinLab). After that, Block.one scaled back and offered $50,000 grants to entrepreneurs in a $1.5M+ program. According to its website, Block.one has supported 70+ companies and provided 30+ grants from the fund. According to the community, many entrepreneurs struggled to secure funding for their projects built on the chain.
According to Dapp.com, there are 402 dApps that run on the EOSIO network with over 40,000 reported users. Moonlighting.com reports 700,000 users, although it is not confirmed that after their investment they followed through with their promise of building on the network. Based on the block explorers and transaction records, it would appear not.
What is the Solution?
Just like delegating a vote in the proof of stake mining invented by Dan Larimer for EOSIO, Block.one has delegated their interest in the network. They have entrusted others to fund the future developers. They have moved on to money management and off-chain projects. So they can easily choose to delegate the management of the community, and their tokens, to another entity.
Today, the EOS Alliance appears to be evolving once again. The original domain name now redirects to eoscommunity.org which is a promising solution to engaging a community. The chain needs governance and life to survive.
At its height, the EOS token reigned as the 4th largest token by market cap. Today, it’s number 27 and falling quickly. Token holders are losing their patience as the market skyrockets around them and EOS barely holds its value. If there is no market, and no supported technology, then what is the inherent value? If Block.one entrusts their tokens to the community, developers will be encouraged back on the network to continue building the core and their own dApps. If Block.one continues to HODL the network’s largest wallet with zero movement, it might be the tipping point that causes a downward slide that won’t be able to be recovered.
Despite Block.one’s efforts to keep the talented people at bay, Dan Larimer and Brock Pierce are popping up again with projects supporting the network, this time with EdenOS and EOScommunity.org, which makes one think the EOS blockchain is due for a fork or a pivot. There is a lot at stake, and if the pirate flags are raised the network might be in danger or due for a revolution.
What will Brendan Blumer do if he’s forced to walk the plank? For this writer, the maritime puns are helping soften the pain of this situation, but a multibillion dollar network and hundreds, if not thousands, of projects and developers are at stake. It’s time to call mayday on this sinking ship and rally the community together one more time!