A closer look at exchange block producers on EOS reveals how major exchanges wield undue influence over EOS DPOS blockchains and extract the lions share of value.
This post aims at exploring the current threats to DPOS on the EOS blockchain in light of recent Steem takeover powered by exchanges activating user funds without consent.
As most of you already know, the Steem blockchain was taken over in large part thanks to the misappropriation of user funds stored on several large cryptocurrency exchanges: Binance, Huobi and Poloniex.
User tokens were powered-up (staked) in order to vote out the Top 20 community elected Steem witnesses responsible for validating transactions and securing the chain. Ultimately, this led to the Fork of Steem and the creation of the Hive blockchain.
As noted at the time by Ethereum creator Vitalik Buterin, the actions taken by top exchanges underscores an unmistakeable vulnerability in DPOS governance systems.
Former witness (now Hive witness) and long-time community member @lukestokes described the complete toppling of Steem community governance as a Sybil attack.
A Sybil attack is a kind of security threat on an online system where one person tries to take over the network by creating multiple accounts, nodes or computers.
This can be as simple as one person creating multiple social media accounts.
But in the world of cryptocurrencies, a more relevant example is where somebody runs multiple nodes on a blockchain network.
The word “Sybil” in the name comes from a case study about a woman named Sybil Dorsett, who was treated for Dissociative Identity Disorder – also called Multiple Personality Disorder.
Source: BINANCE ACADEMY
Ironically, this definition is provided to us by the Binance Academy, perhaps CZ and company should consider taking a refresher course in threat mitigation. While they're at it, they may find a course describing the importance of decentralization - illuminating.
The Steem Hostile Takeover is a stark reminder of vulnerabilities inherent in Delegated Proof-of-Stake protocols and should be a warning to other DPOS based blockchains. It also demonstrates the power and influence major crypto-exchanges have amassed in the space over the years.
The Steem blockchain is not the only instance of DPOS governance systems being taken over by large exchanges, although it's undo
ubtedly the most extreme case to date.
The EOS blockchain has long been suffering a similar fate as exchanges, powered by user funds, continue to operate their own highly profitable Block Producers onchain.
Similar to Steem and Hive, the Top 21 EOS Block Producers (BPs) earn daily rewards in EOS tokens for validating and for securing the EOS network.
Correspondently, EOS Block Producers are selected through BP voting by EOS users who have staked their tokens. The more tokens a user has, the more voting power said user has.
Over its short history, exchange BPs have solidified their position in the EOS Top 21 by using their substantial token holdings. At the same time, some of these exchange BPs have been suspected of running additional sock-puppet BPs concurrently in order to earn even greater rewards. Historically, this has lead to large EOS holders vote trading, buying and selling.
The race to maximize rewards by the Top 21 BPs has had a more serious negative side effect in that it has resulted in the displacement of value-adding community BPs outside of of the Top 21 and even outside of the back-up producer positions from ranks #22 down to #60. Typically, these BPs are experienced developers, DAPPs, tool creators and leading community thinkers who now find it increasingly difficult to sustain and fund their projects.
Registered EOS Vote Proxy Accounts
The idea behind proxy voting was to try to increase the participation of users in EOS governance and, it was hoped, to generate more support for value-adding BPs. Vote proxy services are offered for those who don't have the necessary time it takes to determine which BP candidates are providing the most value for the ecosystem.
As we can see by the registered vote proxy rankings, courtesy of Aloha Eos, community run accounts appear to be doing fairly well when it comes to proxy services.
https://www.alohaeos.com/vote/proxy#reg
@colintalkscrypto proxy leads the way with over 9.5 million EOS tokens.
We can add an additional 2.4 million EOS tokens delegated to the Colin Talks Crypto Rewards voter proxy. A total of almost 12 million tokens.Over 2,500 individual accounts have delegated their Block Producer Votes to these 2 accounts alone.
Another prominent name in the EOS community is Brock Pierce who also runs a popular voter proxy, brockpierce1, which currently sits in the #3 spot with 6.3 million EOS tokens.
A total of 378 accounts contribute to Pierce's voter proxy
All EOS Vote Proxy Accounts
The picture changes dramatically if we include ALL vote proxies.
Take a look at the number of exchange proxies that move into the top rankings.
If want to understand why so many exchange Block Producers are voted into the EOS Top 21 BPs, then this will help explain how this is accomplished.
https://www.alohaeos.com/vote/proxy#all
Binance just recently announced on March 11th their participation in EOS Block Producing, joining fellow crypto-exchanges Bitfinex and Huobi who have been running BPs since the launch of the EOS mainnet.
Already, we can see that Binance's delegated voting power in the top 12 voter proxies represents a substantial amount - 22 million EOS tokens.
But this is only the tip of the iceberg.
Three major exchanges: Binance, Huobi and Bitfinex exert a substantial amount of influence over the selection of the Top EOS Block Producers with their individual power. Taken together, their disproportionate influence over the EOS blockchain poses a significant threat to the ecosystem.
Lets widen the scope and move beyond the Top 12 proxies take into consideration the top 130 Vote Proxies on the EOS chain.
Binance Vote Proxy Accounts (min. 1 million VP)
| Rank | Proxy | EOS Amount | Primary Delegator |
|---|---|---|---|
| 2 | binanceprox1 | 7,622,648 | binancecold1 |
| 5 | binanceprox2 | 6,001,550 | binancestak2 |
| 7 | binanceprox3 | 5,001,440 | binancestak3 |
| 11 | binanceprox4 | 4,001,329 | binancestak4 |
| 18 | binanceprox5 | 3,500,891 | binancestak5 |
| 22 | binancevote1 | 3,000,888 | binancestaka |
| 23 | binancevote2 | 3,000,888 | binancestakb |
| 39 | binancevote3 | 2,500,888 | binancestakc |
| 47 | binancevote4 | 2,000,888 | binancestakd |
| 48 | binancevote5 | 2,000,888 | binancestakf |
| 83 | binanceprxy2 | 1,250,888 | binancestakh |
| 84 | binanceprxy3 | 1,250,888 | binancestaki |
| 100 | binanceprxy4 | 1,000,888 | binancestakj |
| 101 | binanceprxy5 | 1,000,888 | binancestakk |
Total VP: + 37 Million EOS
Bitfinex Vote Proxy Accounts (min. 1 million VP)
| Rank | Proxy | EOS Amount | Primary Delegator |
|---|---|---|---|
| 13 | bitfinexvp13 | 4,000,000 | bitfinexcw13 |
| 25 | bitfinexvp25 | 3,000,001 | bitfinexcw25 |
| 26 | bitfinexvp12 | 3,000,001 | bitfinexcw12 |
| 27 | bitfinexvp23 | 3,000,001 | bitfinexcw23 |
| 28 | bitfinexvp15 | 3,000,001 | bitfinexcw15 |
| 29 | bitfinexvp21 | 3,000,001 | bitfinexcw21 |
| 30 | bitfinexvp22 | 3,000,001 | bitfinexcw22 |
| 31 | bitfinexvp24 | 3,000,001 | bitfinexcw24 |
| 32 | bitfinexvp31 | 3,000,001 | bitfinexcw31 |
| 33 | bitfinexvp32 | 3,000,001 | bitfinexcw32 |
| 34 | bitfinexvp33 | 3,000,001 | bitfinexcw33 |
| 35 | bitfinexvp14 | 3,000,001 | bitfinexcw14 |
| 36 | bitfinexvp11 | 3,000,001 | bitfinexcw11 |
Total Voting Power: + 40 Million EOS
Huobi Vote Proxy Accounts (min. 1 million VP)
| Rank | Proxy | EOS Amount | Primary Delegator |
|---|---|---|---|
| 52 | hbp111111115 | 2,000,004 | vkjvkpuacezv |
| 53 | hbp111111124 | 2,000,004 | vivqpskirjzu |
| 54 | hbp111111125 | 2,000,004 | vzianygrhbfw |
| 55 | hbp111111152 | 2,000,004 | vqcblruvzlwc |
| 56 | hbp111111153 | 2,000,004 | vjohgywduxao |
| 57 | hbp111111154 | 2,000,004 | vkoklywxljua |
| 58 | hbp111111155 | 2,000,004 | vzbidyoaimrs |
| 59 | hbp111111211 | 2,000,004 | vdxjamspwcsu |
| 60 | hbp111111214 | 2,000,004 | vbioinjpihiw |
| 61 | huobiproxy11 | 2,000,004 | vqbhjbutawdh |
| 62 | huobiproxy12 | 2,000,004 | vvxrnzjhscdd |
| 108 | hbp111111112 | 1,000,004 | vqsaeptppqwh |
| 109 | hbp111111113 | 1,000,004 | vawzvsywbzcc |
| 110 | hbp111111114 | 1,000,004 | vkjqbqmcgwhl |
| 111 | hbp111111121 | 1,000,004 | vrtazlypvgms |
| 112 | hbp111111122 | 1,000,004 | vgjfergnllqs |
| 113 | hbp111111123 | 1,000,004 | vzcfbwbopixl |
| 114 | hbp111111131 | 1,000,004 | vwfrnbatpqfk |
| 115 | hbp111111132 | 1,000,004 | vuitojlalnau |
| 116 | hbp111111133 | 1,000,004 | vuvcfrlxuybq |
| 117 | hbp111111134 | 1,000,004 | vcbvryecdfmf |
| 118 | hbp111111135 | 1,000,004 | vbfckwhdgxek |
| 119 | hbp111111141 | 1,000,004 | vcunsramljcp |
| 120 | hbp111111142 | 1,000,004 | vjzzetgbwxhy |
| 121 | hbp111111143 | 1,000,004 | vlbaknpwsbms |
| 122 | hbp111111144 | 1,000,004 | vqeqwkusyemy |
| 123 | hbp111111145 | 1,000,004 | vjlzgftdoold |
| 124 | hbp111111151 | 1,000,004 | vwwguqqvbvnl |
| 125 | hbp111111212 | 1,000,004 | vdvrbmlpacqz |
| 126 | hbp111111213 | 1,000,004 | vqgwndvowlxq |
| 127 | hbp111111215 | 1,000,004 | vdajkuqngxkp |
| 128 | hptproxy3333 | 1,000,004 | vcloumeeyyoq |
| 129 | hptproxy4444 | 1,000,004 | vmdfotdurgjj |
| 130 | huobiproxy44 | 1,000,004 | vedyutqmysbe |
Total Voting Power: + 45 Million EOS
Binance vp: 37,000,000 EOS
Bitfinex vp: 40,000,000 EOS
Huobi vp: 45,000,000 EOS
Combined vp: 122,000,000 EOS
*Block.one vp: 100,000,000 EOS
*At time of mainnet launch (10% of total supply)
The fact that the major exchanges have enough combined voting power to eclispse Block.one is worth noting.
Does this mean that they will try to overthrow EOS DPOS governance?
Of course not, but considering what we witnessed on the Steem blockchain - which includes actions by two of the very same exchanges that colluded with Justin Sun take control of Steem - it's certainly not out of the realm of possibility.
Exchange Block Producers
Currently, the EOS Top 21 Bps are a mix of exchange BPs, community accounts and large stake holder accounts.
https://bloks.io/
https://www.alohaeos.com/vote
Exchange Block Producers in the Top 40
| Exchange | Account | Daily/EOS | *Est.Month/EOS | *Est.Month/USD |
|---|---|---|---|---|
| Huobi | eoshuobipool | 899.1712 | 26,975.136 | $ 73,642.00 USD |
| NewDex | newdex.bp | 897.4522 | 26,923.566 | $ 73,500.00 USD |
| BigOne | big.one | 897.362 | 26,920.860 | $ 73,492.00 USD |
| Bitfinex | bitfinexeos1 | 896.4238 | 26,892.714 | $ 73,418.00 USD |
| OkEx | okcapitalbp1 | 895.2143 | 26,856.429 | $ 73,317.00 USD |
| WhaleEx | whaleex.com | 893.9053 | 26,817.159 | $ 73,202.00 USD |
| Binance | binancestake | 390.0114 | 11,700.342 | $ 31,914.00 USD |
| Hoo | hoo.com | 292.9837 | 8,789.511 | $ 23,994.00 USD |
| Binance | truststaking | 216.2218 | 6,486.654 | $ 17,710.00 USD |
[* Estimated based on EOS valuation of $2.73 USD]
The Top EOS BP is Huobi's eoshuobipool which earns roughly $74k per month from producing blocks (at time of writing).
Huobi proxies vote for a mix of exchanges and community accounts. However, there is a pattern of vote trading with other exchange BPs.
Presently, Huobi doesn't vote for Binance BPs but does provide alternating votes for: bitfinexeos1, big.one, whaleex.com, okcapitalbp1, hoo.com and newdex.bp.
Though Binance could soon push to the top of EOS BPs, for the time being, they are content to sit just outside of the Top 21 at #25.
Binance proxies provide interspersed votes to several other exchange BPs : bitfinexeos1, whaleex.com, big.one, and hoo.com.
Perhaps the exchange prefers not to attract too much attention since launching their two BPs on March 11th 2020. That's right, there are two Binance BPs in the Top 40 after being in operation for less than 30 days.
Binance launched a second BP on March 11th - truststaking BP. Together, Binance's BPs earn close to $50k monthly for the exchange in just their first month of operations. A sum only expected to increase as Binance climbs the BP rankings into the Top 21.
Rankings
#25 Binancestake
#35 Truststaking
binancestake
https://bloks.io/account/binancestake
Created: Feb. 5, 2020
Registered BP: March 11, 2020
Website: www.binance.com
truststaking
https://bloks.io/account/truststaking
Created Feb. 10, 2020
Registered BP: March 11, 2020
Website: www.binance.com
Exchanges Extracting Profits
Exchanges provide important services by supporting various crypto-currency tokens, such as providing liquidity and access to potential buyers and traders.
But what is the benefit to the native blockchain having multiple exchanges extracting hundreds of thousands of dollars worth of tokens and providing little in return?
Block.one
For more than a year, Block One's CEO Brendan Blumer has repeatedly stated that the system is working exactly how it was designed.
It's hard to imagine how multiple exchange and whale accounts continuously milking the ecosystem for profits is going according to plan.
Blumer argues that no public blockchain is immune to cartels and that the best solution is to incorporate vote buying and selling into the ecosystem. This way, he claims, overtime the majority interests will be aligned.
From his perspective, the B1 CEO sees that onchain governance will be controlled by the largest stakeholders regardless. That take overs are a feature of blockchains and not a flaw.
Staking on Exchanges
The majority of the leading crypto exchanges are now rolling out a variety of "staking" features of some of the most popular tokens on the market. Binance, Bitfinex, OkEx, along with Huobi are offering their customers the chance to earn passive income on their holdings by staking them to their exchanges.
https://www.binance.com/en/staking
https://www.huobiwallet.com/en/staking
https://staking.bitfinex.com/
[For informational purposes only, do not stake your tokens here]
Effectively, customers are asked to forfeit their voting rights as token holders in exchange for earning a small dividend/rebate.
This new flood of announcements regarding 'staking' comes at a curious time. For instance, both Huobi and Bitfinex have been employing user funds without providing any rewards for the entire existence of the EOS blockchain. Why the change of heart?
Here, we come full circle to the Steem Hostile Take Over. Exchanges were caught red handed misappropriating user funds and 'staking' the tokens to control the Steem blockchain.
Exchanges are rushing to gloss over the fact that they make a handsome profit off of their user funds.
Suddenly however, they have had a change of heart and would like to 'give back to the community'! It seems that hijacking of the Steem blockchain by centralized exchanges has also exposed their boundless profiteering.
"Dear valued customers, out of pure generosity we've decided it's about time that we share our rewards with our stakeholders. We're now offering you a 1%-3% reward for staking your tokens on our exchange. It's a win-win situation!"
Except...
Not your keys. Not your crypto.
You have no say in governance and your tokens are now controlled by a single entity that will act in their best interest - not the best interests of the token holder.
Exchanges are purely profit driven, their objective is to extract as much value from the ecosystem as possible. They do not care about their users and they do not care about decentralized governance.
Solutions to Centralized Control
Keep your tokens off of centralized exchanges.
There are other ways to earn passive income ONCHAIN. Users can stake their EOS CPU and NET then proxy your votes to a community based vote proxy. If you stake to @colintlakscrypto's reward proxy you will earn daily. He makes zero profit from the account and has pledged to only vote for BPs that add value to the EOS chain with full transparency.
Conclusion
Staking to the major exchanges helps to calcify exchanges in the EOS top producer ranks and centralizes EOS DPOS governance.
If we listen to those defending vote trading, buying and selling as an inevitable feature of DPOS governance then we're essentially consenting to being ruled by crypto cartels as monarchs of the space.
Let's do better.
Let's build better governance models rather than settling for rule by the richest and most powerful.
My prediction is that the Binance BPs will slowly but surely enter the Top 21 BPs, joining their fellow exchanges Huobi and Bitfinex in order to extract even greater rewards.
Update
These Tweets were posted just as this post was being completed...
The underlying problem isn't really DPoS or any blockchain model, it's that so many people are content to hold their tokens on exchanges. It makes sense - holding your own crypto is both difficult and requires taking personal responsibility, which most people don't want to do. But the result is that the exchanges are given all of the power just the same as how the banks are given all of the power by people keeping their money there.
In addition to controlling DPoS systems, exchanges can also rehypothecate crypto holdings to manipulate prices just like banks can do with their assets. This means that even though there will only ever be 21M bitcoin, exchanges can effectively increase that supply at will and no one will ever know unless enough people try to withdraw their coins.
It's a really sad situation but I don't see what can be done about it other than to keep trying in vain to get people not to hold tokens on exchanges.
Thanks for adding your thoughts on the situation and I think your points are well made. Many businesses models gravitate around making things faster, easier, cheaper and more convenient. I agree that the average user or noob just doesn't want to go through the hassle of managing their tokens on several different blockchains and/or exchanges - they want a one-stop-shop type of solution. The reality is that many token holders are not terribly interested in anything aside from price speculation so therefore they could care less about chain governance.
I've been thinking a lot lately about how things in the crypto space are evolving and how exchanges, in particular, are becoming like finance 1.0 banks. Just look at all the fancy products they're coming out with - 101 ways to lose your tokens if you ask me - leverage trading and the likes. When we add price manipulation into the mix it really seems more like a casino where you can lose everything in the matter of seconds.
I'll be honest here, I hadn't considered that the exchanges may not even possess the amount of tokens they claim and the possibility that they could increase the supply of tokens as they see fit, damn that's shady. I have looked into the Tether USD manipulation in the past however so I shouldn't be that surprised.
Shady indeed. Fractional reserve banking is completely possible with exchanges. It's so easy to do it's scary.
It's even easier for exchanges because if they ran out of real crypto for withdrawal requests they could just do the dumb "wallet maintenance" thing and people are used to that. I've never heard a bank say "sorry no withdrawals today". There'd be a riot.
You'd have to make a wallet that's more convenient than an exchange.
It's very difficult, would likely have to have fiat-to-crypto and a DEX built right in for people to skip the exchange entirely.
And some kind of social log-in so that people don't have to worry about private keys.
There’s a certain degree of irony in seeing Binance there as EOS BP given that they recently published this research report, titled “ Decentralisation, governance and EOS - a lost case?“ (published Feb. 20, 2020, before they registered their BPs)
One of the most interesting points, under collusion resistance is IMHO
Great post. Interesting DPOS is interesting DPOS.
I really see this as the starting point in these systems and sort of wild wild west.
But its absolute true that exchanges just keep geting bigger and bigger with more power.
If this continues in the end they will compound power and we will see just another corporate structures emerge.
Right, it sure seems that's what's happening. For all the talk about creating a new financial system and how revolutionary blockchain tech is - it's really starting to mirror finance 1.0 in so many ways.
We're seeing more and more of the same trading markets and tools like margin trading and futures coming out. I feel like we're seeing less innovation not more.
We claim our chains are decentralized. Now we need to proof this and block centralization attacks
we have to get rid of these people..
but through which mechanic?
Terrific research. I've seen similar numbers in other articles, and they all point to the same obvious conclusion - EOS is broken (as are most DPoS chains). Cartels/plutocracies in decentralized networks is the worst of all worlds. I've criticized DPoS enough over the years, so I'll stop right here.
PS: Centralized exchanges and subsequent turnkey staking solutions will always exist, and will arguably continue to grow as more of the mainstream starts adopting crypto. All blockchains must account for this eventuality. If your system is not resilient to this potential attack vector, then it's existentially flawed and must be replaced with a better mechanism.
Thank you, I appreciate that. I was worried about losing people in the weeds. Yes, I had questioned some more experienced Steemians a few years back about what would happen if a competitor like Facebook would simply purchase a super-majority stake in Steem or any DPOS.
One of the answers I got was "Steem would activate their full stake to defend the chain" or the blockchain would simply fork as that feature which ensures decentralizations. Well, at the time I couldn't have predicted that a blockchain company would be the one to actually hijack the blockchain using the "ninja mined stake". I always assumed it would be an outside force. Yet, after all the drama a fork finally did happen in reaction to the threat, so maybe it's a positive take away from this situation.
Thanks for reading and commenting!
Unfortunately, tribalism and bias is rampant in this space. DPoS fanboys will see the whole drama around Hive/Steem as a victory for DPoS, but anyone else with any objectivity would see it as a catastrophic failure. Some would argue that Hive is more decentralized now, and it is, but what happens if Facebook (or Justin Sun) simply acquires a super-majority stake on Hive now? There's no longer Steemit Inc's stake to defend against anything. Participation is still low, and it's not all that difficult to obtain an influential majority, whether by hook or by crook (bribes and collusion). Not to mention, some of the smaller DPoS chains have completely failed and become effectively centralized a long time ago.
It's simply a bad system with an endless can of worms. I can understand why security and decentralization needed to be compromised to achieve time-to-market on scalability, but today, there are effective Layer 2 scaling solutions available, with Ethereum 2.0 and Cardano (among other so-called "3rd generation blockchains") having proposed better mechanisms for the future. Yes, they are still unproven, but it's really cool to see attackers being slashed even attempting funny business on the Ethereum 2.0 testnet. All eyes are on Ethereum 2.0's mainnet PoS release later this year, if it works as intended, it's game over for DPoS.
The real shame is that DPoS chains failed to leverage this time-to-market advantage on scalability. Today, all DPoS chains combined have negligible economic activity compared to bitcoin or ethereum networks. It's a clear signal that the market will not compromise on security and decentralization.
Great detailed article. Thank you.
Also, thank you for your clarity breaking down the Steem Hostile Takeover - I think it's important for outsiders to know what actually occurred. Cheers!
This post is too difficult for me to understand. I have no idea what it's about. Pity.
It is about exchanges taking over the blockchain governance process. Exchanges do not need to have tokens staked but they do it because they get rewards the way our witnesses do. They are essentially stealing money, they only are supposed to buy and sell tokens to people, instead they are holding witness spots, and can reject changes in what we decide for our governance.
Let's see if the google translate to German helps, I do not speak German at all so please forgive me. You speak German from what I remember, yes?
Es geht um den Austausch, der den Blockchain-Governance-Prozess übernimmt. Beim Austausch müssen keine Token eingesetzt werden, aber sie tun dies, weil sie wie unsere Zeugen belohnt werden. Sie stehlen im Wesentlichen Geld, sie sollen nur Token kaufen und an Menschen verkaufen, stattdessen halten sie Zeugenplätze und können Änderungen in unserer Entscheidung für unsere Regierungsführung ablehnen.
I am not sure if you are Dutch, it seems like it from looking at your profile so here is the google translate version for Dutch, again sorry but I don't speak the language!
Het gaat over uitwisselingen die het blockchain-governanceproces overnemen. Uitwisselingen hoeven geen penningen te hebben, maar ze doen het omdat ze beloningen krijgen zoals onze getuigen. Ze stelen in wezen geld, ze mogen alleen tokens kopen en verkopen aan mensen, in plaats daarvan houden ze getuigenplaatsen vast en kunnen ze veranderingen in wat we voor ons bestuur beslissen, afwijzen.
Thank you for taking the time to explain and most of all translate. The German version made me wiser (it's better as the Dutch one). You remembered it well I am Dutch.
Once again thanks and enjoy your day. 💕
Good, I'm glad! I am more than happy to use a translator for these things. I remember seeing you did not hear of things happening before the Hive transition because no one translated it for the German community. I am sad no one did but more than willing to help out so you and others can understand it!
Enjoy your day as well!
Yes,it's a problem if no one helps to translate especially if it comes to not easy to understand subjects. Thanks again. I wish you a great day.
Never use stakings on exchanges.
I only stake in Coinbase, the Tezos. Maybe I'll actually look at their product and stake on themselves rather than use Coinbase.
We shouldn't judge all exchanges equally.
But staking is a trend these days. They offer their clients a 12% annual interest. This does not look like a bad idea.
But we have been able to witness in the first row the damage it can cause to DPoS-based Blockchains.
It is not only that, but the damage caused to the entire Blockchain philosophy. The same that has benefited many since the birth of BTC.
What does "stakings" mean?
I only use Bitvavo.
It is a process similar to steemit powerup.
You then "give up" part of your assets to the exchange. In return, they promise to pay you annual interest.
Meanwhile the exchange can use "your assets" deposited, to upvote accounts and achieve supremacy in some DPoS-based blockchain.
Okay thanks now I understand.
Awesome post! I'm glad these control structures starting to form with exchanges are getting the visibility they deserve.
Agreed, they certainly are not used to getting scrutinized by their users in the crypto community and they're reacting to this backlash. More light shed on exchange practices is needed imho.
Great analysis mate.
Great research. Now, what do you think will happen to ETH now that it's nearing to launch its staking feature?
From what I've seen recently, I think that certain exchanges are also looking to provide staking for ETH 2.0. Judging by Vitalik's interest in what's happened recently with exchanges I hope that the ETH developers have some idea of how to mitigate the formation of cartels. I'm sure they're learning from the situation as we all are.
There are some possibilities such as Dan Larimer's 6 stages of staking proposal and others within EOS community. I believe that his proposal is to have 6 separate staking terms. Those that stake longer (eg. 1 year) will have more influence than those that stake for shorter periods (eg.1 month).
Nice post! I dont under it all but what I do understand is helping understand. Lolololol. Im so silly. But really great post, shared to Twitter!