EOS Keeps Worrying Skeptics with Too Much Centralization

 In Altcoins, Exchanges, Governments and Regulations

As the rules of EOS get more widely known, there are worries that owning assets on the chain comes with too many risks.

EOS has set up a blockchain with governance – not worrying per se, as there are other networks that run nodes. Even the Bitcoin Cash and Bitcoin networks allow for personal intervention in very rare cases, where a transaction can be mined again by a trusted miner. But in the case of EOS, there are at least two known instances when user funds can be frozen and accounts revoked.

Ownership of EOS is defined in Article III of the interim constitution:

“The Members grant the right of contract and of private property to each other, therefore no property shall change hands except with the consent of the owner, by a valid Arbitrator’s order, or via community referendum.”

The latest freeze of seven accounts happened solely on the decision of the current set of block producers, instead of the entity called the EOS Core Arbitration Forum (ECAF). In the rules of EOS, block producers are not supposed to take those decisions – but they did anyway, due to an emergency with compromised accounts.

While the EOS community accepted this option as a way to secure user funds, others believe blockchain projects actually lose value if there is even the vaguest possibility that user balances can be frozen by third parties. Nick Szabo, Bitcoin developer, has been worried that EOS is compromising the chief principle of crypto coin ownership:

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https://twitter.com/NickSzabo4/status/1008974899690463232

The Reddit community has also raised the matter of potential government interference and pressure to freeze accounts. One of the block producers, EOS New York, replied:

“We will refuse to comply and if necessary resign. We’ve set up our corporate structure in a way that protects ourselves and the assets of EOS New York as much as possible. We are saving Block Rewards right now so that we can build up a reserve. We have a very good law firm that we are working to put on retainer.”

Additionally, even with pressure against one block producer, the account freeze cannot be completed. And since EOS block producers are scattered globally in various jurisdictions, pressure on the whole network would be more difficult.

While the EOS launch went on and faced hurdles, the price stagnated a bit above $10. EOS is now at $10.27, with a trading profile supported most significantly by the Korean Won, with a 34% weight of trading against Tether (USDT).

Despite the criticism, the EOS market price has remained surprisingly resistant to negative comments. One of the reasons may be the ongoing elections, where around 23% of tokens have been staked for voting and temporarily suspended. The other reason may be a concerted attempt to support the price, which was suspected even during the period of daily auctions.

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