The ethereum based EOS token has suddenly risen to great new heights of more than $17 billion from around $4 billion just a few days ago, in quite a Dan Larimer (pictured) fashion.
Far surpassing its previous all time high, the token has further seen trading volumes above $3 billion at a higher current level than even ethereum during the past 24 hours. So gaining 5th position among all cryptos, with newish South Korea driving much of it.
The stated reason is because the main-net is expected to launch this June after less than a year of development, led by Daniel Larimer of BitShares and Steem, following their ICO which finished its first stage only in July 2017.
Once that launches, the ethereum tokens are to be transferred to the EOS blockchain and in effect become just eos coins, with Binance recently stating they “confirm that we will support the EOS MainNet Token Swap. We will handle all technical requirements involved for all users holding EOS.”
What exactly happens to the Ethereum ERC20 tokens afterwards is unclear at this stage since presumably you can’t quite make tokens vanish. But that’s just one of many details that remains very much in the air.
EOS utilizes a Delegated Proof of Stake System. To simplify, this is somewhat like you voting for MPs who then represent you in Parliament or Congress. In this case, there are only 21 such MPs, or Block Producers (BPs). MPs or BPs thus have all power, but, of course, you can vote them out.
How you can vote them out is a bit of a mystery. The “technical” whitepaper describes the process not at all. It says it would be algorithmic, but unless Larimer has managed to give bots lateral thinking, we do struggle to understand how it can be algorithmic except for in a very narrow sense.
The initial voting for block producers is done quite manually. There is a website, there are stated criteria, there are requirements, the BPs have to engage in what we can call a business pitch, or put up a prospectus of sorts.
In short, it appears to be a traditional human and manual election, furnished with the bribes of we will or we won’t give you x percentage of blocks we produce (pinky promise).
Standing for election are none other than such upstanding names in this space as Bitfinex. Which recently seemingly had some half a billion dollars frozen due to allegation by authorities that it was criminal cartel money.
They are joined by others, like Bitmain, ViaBTC, OK Blockchain Capital, and more. Their reward is 0.7 eos (currently around $14) every 0.5 seconds. Their service is to ensure 2/3rd, or 15 out of 21 block producers, are honest. If they are not honest, then it is “treason.”
Such word in a whitepaper we’ve never seen before. But apparently there is an entire constitution. The “whitepaper” says:
“The EOS.IO software enables blockchains to establish a peer-to-peer terms of service agreement or a binding contract among those users who sign it, referred to as a ‘constitution’.
The content of this constitution defines obligations among the users which cannot be entirely enforced by code and facilitates dispute resolution by establishing jurisdiction and choice of law along with other mutually accepted rules.
Every transaction broadcast on the network must incorporate the hash of the constitution as part of the signature and thereby explicitly binds the signer to the contract.”
Code is… whatever the Supreme Court says after a decade long legal process. In that world, one can almost feel nostalgia for bitcoiners’ “civil war,” if it wasn’t still so fresh and even on-going in some corners.
But even that we will excuse, charitablenodes, if it wasn’t for the very next section of the “whitepaper,” which tells us all the constitution is no constitution at all, for to change its rules is as simple as “block producers propose a change to the constitution and obtains 15/21 approval.”
Bitmain, Bitfinex, in one room, not colluding. For kids is this blockchain? Are bunnies to fly here too? Not literally, but metaphorically they may well do for the “whitepaper” tells us parralelization is the ability of light clients, or SPV clients, the wallets in your smart phone, to connect to the blockchain. So ethereum’s sharding must then be ubersuperparralelization.
But let’s take this all at face value and ignore pretty much everything else. The promise here, according to Larimer himself, is 1,000 transactions a second.
If we do some napkin calculations, ethereum does around 10 transactions a second at 1MB block capacity. For 1,000 transactions a second it would need 100MB blocks.
One terabyte blocks are around 1,000x 100MB. The cost for 1 Terabyte blocks is estimated to be only $50,000 a year. If we remove those three zeros, and add one just in case, it would cost only around $500 for an ethereum node to process 1,000 transactions per second on the current network with no modifications whatever.
If we bring those 15,000 nodes currently running ethereum down to 21 nodes, we are speaking of a cost so small an individual himself of a middle class income could run the whole thing.
So then, why are they receiving $14 every half a second at current price and according to our calculations. Calculations derived by their stated planned cap of 5% inflation, which on a current supply of 900 million would mean 45,000,000 eos a year ($900 million at current price for only 21 entities).
Nearly a billion dollars for what? The $500 yearly cost of running their “supernode”? Simply as an incentive for the fear of what they might be losing if everyone rallies up and gets out their pitchforks to go to the BP parliament?
“Embedded into the EOS.IO software is the election of block producers. Before any change can be made to the blockchain these block producers must approve it. If the block producers refuse to make changes desired by the token holders then they can be voted out,” says the “whitepaper.”
Yes, get the ballots out. Go to the website and vote what some BP should do. Just make sure to use Steemit. And the BPs say we don’t care? Who exactly kicks them out and how?
The software itself obviously can’t. Maybe there could be some proof of “treason,” but how does the software know tokenholders are revolting due to BPs deciding to freeze some account, or indeed deciding to increase their own reward through inflation?
Then how much should these tokenholders lock in a “vote” for the privilege? And who exactly actually decides who is to be a BP? Block.one, or Larimer himself? Are we to guess how many of the BPs will be Larimer and Co. Ps?
Measured we must be, and measurably we say, it is a shame Dan Larimer does not use his brain for the advancement of this space, despite having the privilege to, through online forums, communicate with Nakamoto himself (he presumably never bothered, of course, to actually email him and gain some actual knowledge.)
That said, he also has the privilege of angering Nakamoto so much he gave us that famous line: “If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry.”
From project to project, the same story. One begun one day, pumped the other, ditched next week, with no care nor manner. Are the millions and the billions never enough, one does wonder.