Re-Ranking the Top 21 EOS Block Producers based on Governance Best Practices and Community Value-Add
TL;DR
Using a ranking methodology that I developed, I have scored each of the Top 21 EOS Block Producers across 4 key community and governance pillars: (1) Voter Concentration, (2) Disclosure & Accessibility, (3) Structure & Leadership, and (4) Value-Add Offerings. The intent of this analysis is to provide tokenholders with an additional resource to make informed decisions when voting for community-focused Block Producers.
Out of the Top 21 (as of 8/21/2018), the top 3 ranked BPs per my methodology are:
1. eoscanadacom (score 185)
2. eosauthority (score 180.5)
3. eosnewyorkio (score 174)
The bottom 3 BPs are:
1. eoshuobipool (29 points)
2. zbeosbp11111 (13.5 points)
3. eosbixinboot (8.5 points)
For a more detailed summary of the results, please scroll down to the end of the article.
BACKGROUND
Most EOS supporters agree that the network’s Delegated Proof of Stake (dPOS) consensus mechanism will be a key factor for enabling EOS to achieve its enormous scaling potential. Developed by EOS’ technical creator, Dan Larimer, dPOS provides tokenholders with a unique opportunity to vote for up to 30 Block Producers (BPs) to serve among the Top 21 BPs primarily responsible for validating transactions and recording them on the blockchain.
With this mechanism in place, each Top 21 BP has less than a 5% “share” in validating all network transactions. While fiercely debated within the broader blockchain community, EOS supporters passionately believe that this mechanism enables the network to achieve much greater decentralization than Bitcoin or Ethereum, where just a few mining pools make up >50% of the mining power.
THE ISSUE
While potentially enhancing decentralization, dPOS also puts much greater responsibility into the hands of tokenholders. EOS holders have the unique opportunity to show their support for certain Block Producers by casting their votes for them. In addition, given that 1 EOS = 1 vote, very large tokenholders (or “whales”) with significant stakes in EOS can be extremely influential in determining who becomes an elected BP, and who doesn’t.
While an argument can be made that large tokenholders, who are the most invested in EOS and therefore have the most to lose, should have the biggest say, the dPOS mechanism raises the potential for issues and conflicts. For example, large cryptocurrency exchanges, many of which hold huge quantities of EOS tokens on behalf of their customers, currently wield tremendous power within the community as a byproduct of their business model, rather than their love for the EOS project. Moreover, some fear the complex network of alliances that exists between exchanges and industry veterans promotes a “quid pro quo” mentality which has led to relatively unknown BPs quickly ascending the ranks of the BP pile.
Are the interests of these large voting powers truly aligned with the interests of the EOS community? As a BP (which some exchanges are), can they be counted on to maintain their software/hardware to the highest standards and judiciously vote on critical network and governance items? The jury is still out.
Outside of the technical knowledge and equipment that all BPs should possess, I believe that Block Producers exist for one reason and one reason only: to serve the community. Through the BP rewards system, EOS has created a competitive landscape that more generously rewards BPs that deliver the greatest value to the community. As a result, over the last three months, I have become keenly aware of many excellent contributor BPs. But, at the same time, I have also been surprised that these BPs don’t always feature among the Top 21.
THE RESPONSE
Over the last few days, I have spent several hours reviewing and re-ranking each of the Top 21 BPs based on an initial scoring methodology that I developed. Owing to my background in Finance and Corporate Governance, my inspiration came from the approach that Institutional Shareholder Services (ISS) has taken within the traditional finance world. ISS seeks to drive convergence towards a universal set of standards or governance best practices that are in the interests of shareholders by routinely publishing its reports and voting recommendations for thousands of publicly-traded companies.
The scoring methodology that I developed evaluated each of the Top 21 BPs across 4 key community and governance “pillars”: (1) Voter Concentration, (2) Disclosure & Accessibility, (3) Structure & Leadership, and (4) Value-Add Offerings. Each of these pillars is discussed in more detail below. My scoring methodology also allowed for one-time point modifications based on particularly “good” or “bad” governance features (in my opinion) that I identified.
1. Voter Concentration
It is my view that BPs with a highly diverse (i.e., less concentrated) voter base are more likely to serve the community in a way that is free from conflicts of interest. Over the last few weeks, I have observed some instances where a single voter has made up >50% of a BP’s total votes. I believe that BPs with a high voter concentration are more susceptible to coercion and manipulation by a single (or a few) entity (entities). Therefore, the lower the concentration, the better.
For each BP in the Top 21, voter concentration was measured by determining the cumulative percentage of each BP’s Top 5 voters. In terms of scoring, the lower the cumulative percentage, the most points that BP received.
2. Disclosure & Accessibility
I strongly believe in certain minimum disclosure thresholds that each BP must meet in order to fulfill its most basic requirements. In addition, I believe that each BP must provide some level of accessibility for the community it serves through its website, social media, meetup groups or other blogs.
To evaluate this component, each BP was scored based on overall website quality and functionality, the ability to view the website in multiple languages (since EOS is a global platform with a global voter base), the presence of a Code of Conduct, the presence of BP Ownership documentation, disclosure/discussion of BP technical specifications, and accessibility to BP personnel through social media links.
3. Structure & Leadership
Proper structure and effective team leadership among BPs is critical. Not only is it important to have a capable group of technicians with relevant experience, it’s also important to ensure the team is large enough to provide the necessary “bench strength” in the event that Team Leaders are unavailable for some period of time (e.g., due to travel, illness or other unforeseen emergency). Ideally, team members should also be dedicated to the EOS project with limited or no involvement in outside projects which could be a distraction. To the extent possible, it is my view that BP team members should also be free from conflicts of interest that could arrive if they serve on the leadership teams of other EOS dApps.
To measure this component, BPs were scored based on disclosed team member size, robustness of team member bios, the presence of external links to team member bios (to build/ensure trust), and the CEO/Team areas of expertise (e.g., miners, exchanges, technologists, finance professionals, etc.)
4. Value-Add Offerings
While arguably the most important component of all, value-add offerings are also the most subjective and hardest to consistently measure. As mentioned above, I believe that BPs should exist to serve the community. To that end, I consider the number and quality of community-focused applications/tools that each BP produces to be a huge differentiator in terms of BP value to the community.
Under this component, BPs were assessed based on their community contributions to-date which could be reasonably located and evaluated through their main point of contact (i.e., the website). Points were generally allocated based on the number of tools listed, and then modified based on my own familiarity with them as a community member, or their degree of functionality within the website itself.
SUMMARY RESULTS (more detailed results at the end of the article)
CONCLUSION
For those actively involved in the EOS community, I suspect the rankings above may come more as confirmation than a surprise. The unfortunate reality is that my BP Community and Governance ranking is a poor correlator with actual EOS BP Top 21 ranking. It confirmed to me that, rather than community value creation acting as a main driver of the Top 21 constituents, BP alliances and high voter concentration is (largely) driving this distribution instead.
Operating within the comfort of this environment, several Top 21 BPs have failed to provide even basic disclosures regarding their operations, team experience, ownership and structure (or, if they have provided them, they were not easily viewable/accessible to the average Joe, like me). Even worse, many appear to have contributed little or nothing in terms of community-focused tools and applications.
I strongly believe that BPs must be held accountable to a common set of governance standards above what is already encouraged, and that voters must take action using analyses like this to force a more equitable and decentralized distribution of value-adding BPs that effectively serve the community.
Depending on how useful EOS tokenholders feel this analysis is, I would be open to developing and continuing this process, and also expanding it to cover the Top 50 BPs so that voters can make more informed decisions all around.
LIMITATIONS
I do not have a technical background, so it is likely that I used incorrect terminology at some point during this discussion — my apologies. Also, I realize that my methodology is far from perfect and can be improved significantly — this was just a first pass and was intended the illustrate the point and process. Also, while I tried my best to accurately reflect the features, capabilities and offerings of each BP, it is highly likely that I made some errors or simply missed things. If you find glaring errors or omissions, please let me know and I can fix/update accordingly. Finally, as an English speaker, I acknowledge that there may be some Western bias to my analysis. I am not very active on WeChat, and also not active in the Asian or Chinese blockchain communities. It is quite possible that some Asian BPs have offerings or communications that I am simply not aware of and that have not been captured in my analysis above.
Detailed Findings (apologies, but you may need a magnifying glass):
