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Former Paypal CEO and Bitmain To Invest In Company Beind EOS

According to a press release from Block.one, the company behind the EOS project, the firm has just secured investments from some big names in the fintech world, namely billionaire venture capitalist Peter Thiel and Bitmain, headed by the well-known Jihan Wu.

Early Monday morning, Block.one closed the funding round with the aforementioned release, stating that it had a successful “strategic investment round.”

The exact details on the funding round were limited, with the firm not indicating how much they raised or at what valuation their investors valued the company at, but it is likely that the investments it received ranged in the hundreds of millions.

Speaking on the most recent influx of funds, Block.one CEO Brendan Blumer stated:

As Block.one prepares to announce its future plans, we’re excited to welcome key strategic investors aligned with our values of creating a more secure and connected world.

Aside from managing the $4 billion raised in the EOS ICO, recently setting up a venture capitalist fund set on investing on projects based on the EOS ecosystem, Block.one recently let the community take the wheel of the EOS project.

This abdication has led some to wonder what moves the blockchain-centric firm is going to take next.

Big Names Invest In Block.one

As aforementioned, Peter Thiel was one of the largest names in the most recent announcement and has become known for being one of the most prominent entrepreneurs and investors in the world. Thiel founded Paypal in 1998, leading the firm as CEO as the firm took to the stock exchange in 2002. He has since become an angel investor for Facebook, Airbnb and LinkedIn, three prominent technology firms that are right up his alley.

Keeping Thiel’s prior experience in mind, it is clear that Thiel holds high hopes with this investment, and has a lot to offer in terms of working with Block.one to make its products better.

Block’one’s prior investment rounds have also secured investment from prominent firms such as Christian Angermayer, Lansdowne Investment, and Galaxy Digital’s Mike Novogratz. The last investor in the list, Mike Novogratz, was expected by many, as he has become a premier cryptocurrency proponent after leaving the traditional assets space.

Bitmain Expands Its Circle Of Influence

Bitmain has become one of the most valuable cryptocurrency-related firms in the world, reportedly being valued at nearly $12 billion. The ASIC manufacturer has begun to diversify its holdings and operations, recently moving into the artificial intelligence industry as a chipmaker.

Bitmain has also revealed that it will be investing in a private placement round of the Opera Software, the company behind the Opera web browser.

Additionally, one of Bitmain’s subsidiaries, Antpool, has recently become one of the 21 EOS block producers, staying in-line with Bitmain CEO’s bullish stance on the EOS project. Speaking on Block.one’s flagship project, EOS, Jihan Wu, crypto billionaire and the CEO of Bitmain seemed to have high hopes for the project, stating:

The EOSIO protocol is a great example of blockchain innovation. Its performance and scalability can meet the needs of demanding consumer applications and will pave the way for mainstream blockchain adoption.

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Peter Thiel, Bitmain Co-Founder Invest in EOS Developer Block.one

EOS protocol maker Block.one has received new backing from a number of big-name investors, including PayPal co-founder Peter Thiel.

In a fresh round of funding – the amount of which was not disclosed – Block.one, the company behind what has now become the fifth-most valuable cryptocurrency by market capitalization, has added Thiel, Bitmain and hedge fund billionaires Louis Bacon and Alan Howard to its list of investors.

CEO Brendan Blumer said the firm is “excited to welcome key strategic investors aligned with our values of creating a more secure and connected world.”

“The EOSIO protocol is a great example of blockchain innovation. Its performance and scalability can meet the needs of demanding consumer applications and will pave the way for mainstream blockchain adoption,” Wu said in a statement.

While it’s not clear how the funds will enhance the roughly $4 billion raised over the course of a year-long token sale – EOS formally launched in June – it undoubtedly adds some institutional heft to Block.one’s ranks. Some of the other investors in the company include Galaxy Digital’s Mike Novogratz and the founder of Apeiron Investment Group, Christian Angermayer.

It’s been a bumpy ride since launch, with the project encountering governance-related headwinds and criticisms around an arbitration mechanism that is aimed at resolving disputes between parties on the network.

Last week, CoinDesk reported that Block.one is now planning to play a more active role in the network than what was perhaps originally conceived.

Peter Thiel image via CreativeCommons

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Block.One Is Taking a Bigger Role With EOS (And That's a Big Deal)

Block.One has decided to start voting with its hoard of EOS tokens.

Announced last week, the decision finds the startup that created the EOS software, now powered by the fifth most valuable cryptocurrency, breaking with precedent in a move that may have come as a surprise to those following the project’s decentralized launch.

That’s because since going live on June 14, the company has largely declined to exercise its influence over the code, preferring to encourage its users to unite, even in sometimes messy decision-making.

And there’s a good reason for that. For one, Block.One controls 10 percent of the 1 billion tokens set aside for developers prior to the network’s launch. Further, since decision-making on the platform corresponds to token holdings, the change could put the company in an extraordinarily powerful position, enabling them to decide who can determine truth on the ledger.

As of now, each wallet can vote to up to 30 candidates to serve as block producers, however, it’s worth noting that block producers with the most support on the network have less than 3 percent of the current token supply backing them.

This means that Block.One controls so many tokens, that the field of potential block producers could effectively narrow to the 30 it picked, if and when it decides to finally enter a vote.

It’s no surprise then, that the move has left some alarmed.

“I find it problematic that Block.one is now involved in selecting block producers, as it undermines their role as a neutral third party, and affords them a significant amount of influence over the network,” Arianna Simpson of Autonomous Partners told CoinDesk via email. (Simpson is not an investor in EOS.)

But others believe the decision is in line with necessity of innovation.

Christian Catalini of MIT’s Cryptoeconomics Lab argued that each new approach to crypto governance deserves a chance to be tested so the wider crypto world can benefit from its lessons, saying, “In general when you experiment you may land on solutions that may look appealing but don’t stand the test of time.”

That said, the EOS community has largely expressed excitement about the company taking an active role in governance.

On a Reddit thread about the news, this reaction was fairly representative:

“I have been waiting for this. I think this is a good thing, and will continue to align interests … If Block.One makes money, I will make money as well most likely.”

But intermixed with the positive reactions, there were also observations like this one:

“I think EOS will do great things, but this makes it Ripple 2.0. It’s essentially a blockchain that is owned and run by Block.One. I’m not even saying that’s a bad thing, but let’s not kid ourselves either.”

How voting works

By design, EOS only has 21 block producers. The small size allows them to come to consensus very quickly, which is why EOS supporters believe it can surpass the leading blockchains by overtaking it in transactions per second.

The EOS community elects these 21 block producers in a continuous election, which allows bad actors to be removed at any time. Each wallet can vote its tokens for up to 30 block producer candidates. The 21 organizations with the most votes get to do that work, for which they are rewarded with some of tokens emitted through inflation by the protocol.

One of the reasons it took EOS so long to finally activate was because the software wouldn’t go live until 15 percent of the total token supply had been staked for votes, but, as of this writing, roughly 30 percent of the tokens are staked for voting.

Block.One’s founder tokens gradually release over a 10-year period. Until then, all they can do is stake them for use of the network, including voting. They can only cast one ballot and since all their tokens are staked until they unlock, they have to vote all of them or none.

As one redditor who looked at the wallet balances in the genesis block reported, 99 percent of EOS token holders control less than 14 percent of the token supply. The top 1,000 wallets control 85 percent of the supply. So, it remains very much a network controlled by its richest users.

Block.One is the largest single holder. Joshua Kauffman, who leads governance and community efforts for one of the top block producers, EOS Canada, told CoinDesk that he believes Block.One, ironically, wants to exercise its vote to undermine other whales.

There’s a few block producers with very little support from small holders, he said, suggesting they are propped up by whale votes. Kauffman believes Block.One wants a chance to vote for the technically strongest candidates with the most community support in order to support the consensus of the most users.

“It’s in their best interest and the community’s best interest to insure the best possible producers are the ones running the network,” Kauffman said.

When it announced its intention to vote, Block.One also expressed support for a code change so that it can support 50 or more block producer candidates. That way, it’s more widely spreading around its big votes, allowing the community to make the final decision about who gets into the top 21.

It would take a minimum of two months for such a code change to go live, according to Kauffman, so if Block.One waits for that change to vote, it could still be a while

Big decisions ahead

Besides changing out block producers, EOS faces other big decisions going forward, and by taking part in block producer elections, Block.One could make its say over those decisions even more decisive.

First, EOS hasn’t yet passed a constitution to govern the protocol, so it doesn’t have official rules for how block producers should resolve conflicts, as we have previously reported.

To fix it, Block.One has proposed a completely new constitution. The new constitution is much more narrow in scope than the one developed by the community. The company is asking longtime supports to jettison all that work in favor of a narrow proposal.

Block.One cofounder and EOS creator Dan Larimer wrote in a Medium post:

“”I have seen that if you give people arbitrary power to resolve arbitrary disputes then everything becomes a dispute and the decisions made are arbitrary.”

Second, the worker proposal system is coming closer to fruition. That system will allow the community to vote on paying tokens generated by inflation to teams that want to build new products to make the whole protocol serve users better.

With time, decisions about these proposals could also be important in determining the direction the network takes.
Even if Block.One abstains from votes in both of these cases, block producers with its support are likely to follow its lead, and the supporters of those block producers are likely to follow them.

By expanding the number of block producer candidates it can vote for, it might also expand the number that feel inclined to follow the company’s lead.

“I agree that Block.One has an oversized voice,” Kauffman granted, but he also pointed out that the best way for Block.One to grow its wealth is by increasing token value. Disenfranchising rank-and-file users by controlling the process won’t achieve that, he argued.

“They want this to be the community chain,” he said.

EOS is experimenting in a space that blockchains haven’t adequately grappled with, Catalini said.

He and his collaborator Joshua Gans explained in a 2016 paper, this means that EOS has dramatically lowered the cost of verification, but it’s now facing another cost also described in that work, the cost of networking.

Blockchains don’t only need to come to consensus around the truth, they also need to find a way to coordinate economic activity around the world. That’s their networking cost, and “that’s the one that really changes market power and market structure,” Catalini said.

He added:

“That’s the one we don’t really have a governance structure for; that’s why you’re seeing so many false starts.”

Whale shark image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Block.one Appoints Former Jefferies Asia CEO to Lead VC Arm

Block.one, the company that designed the EOS blockchain software, has appointed a former executive from Jefferies Group LLC to lead its $1 billion venture capital arm.

Block.one announced Thursday that Michael Alexander, who previously served as the chief executive officer of Jefferies’ Asia branch, will now head EOS VC. Based in Hong Kong, Alexander will manage both direct venture investments and EOS VC partnerships.

The startup intends to invest over $1 billion in the EOS.IO platform through its venture arm, with plans to fund companies and projects already using the protocol. Approximately $700 million has already been allocated through VC partnerships in the United States, Europe and Asia, the company said.

Block.one Group incoming president Rob Jesudason said in a statement that the startup wants to support companies building on top of the EOS platform.

He added:

Our partnerships and investment efforts through EOS VC are critical in driving adoption and innovation in the EOSIO ecosystem … [Alexander] has extensive experience in investment banking and is one of the most respected individuals in the financial services industry in Asia. I am delighted he is joining the team.”

Alexander already has 25 years of experience in Asian capital markets, according to the release. Prior to his time at Jefferies, he held an executive position at CLSA Hong Kong and led the Asian Proprietary Trading department at Deutsche Bank Hong Kong.

“Block.one is shaping the next generation of technology and the internet. The vision of its founders has resulted in it being one of the fastest-growing organizations in the world and I am excited to be joining,” Alexander said in a statement.

His appointment comes weeks after EOS officially launched, but as CoinDesk has reported, the nascent network has been beset by issues, primarily around governance. Indeed, the constitution on which the EOS network is currently governed may be rewritten entirely.

Image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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The EOS Blockchain Is Now Officially Live

The EOS blockchain is now live.

What was perhaps one of the most hotly anticipated blockchain launches, after the company that developed its software, Block.one raised more than $4 billion during an almost year-long initial coin offering (ICO), is finally live as of 18:46 UTC on June 14.

At press time, the blockchain has received more than the 150 million votes needed to go live.

This happened after a roughly a week of deliberation and testing by block producer candidates – those groups vying for one of 21 validator node spots in which they will receive rewards for verifying transactions – from all around the world. While that testing phase uncovered several vulnerabilities that caused two groups to go head-to-head on the correct implementation and delays for the launch, on June 9, block producer candidates unanimously in favor of launching the blockchain.

As per the project’s process, that percentage was the two-thirds +1 of the candidate community to initiate the launch, but also per the plan, the blockchain wasn’t officially live until further validation hadn’t been completed, an appointed block producer launched the chain and then 15 percent of EOS holdings had voted.

And once 15 percent of token holders vote to establish the set of 21 elected block producers, the chain becomes active. This took longer than many had anticipated for many reasons, including security concerns with the voting process.

EOS Go broadcast a livestream of the final meeting of the EMLG before the mainnet went live. Despite what seemed like some aberrant behavior on the chain due to users attempting to post transactions early, they held a last symbolic “go / no go” vote and it was again unanimous. Once the chain was live, block producers moved immediately to claim their identities on the mainnet.

Blocks started flowing shortly thereafter and block producer candidates started registering their accounts, based on chatter on the livestream.

That said, the EOS token was trading at about $14.50 when the EMLG voted to launch the network. Over the days following, it fell as low as $9.44. Following the launch, tokens were trading at $10.45.

Rocket image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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EOS launches today 9 June 13:00 UTC after 100% of block producers vote to go live

EOS network to go live today as block producers line up for election

EOS is ready for take-off after 100% of block producers voted to launch the network. The mainnet goes live with EOSIO version 1.0.2 code at 13:00 UTC today.
The latest vote by EOS block producers, which took place this morning at 01:48 UTC, was streamed live, thanks to EOSGo, and can be viewed here. Community members had expressed concern about the lack of transparency of previous voting. More than 100 block producer representatives took part in the vote.

EOS is up 6% on the news at $14.67, according to coinmarketcap.

When the mainnet goes live then the serious business begins – voting for block producers.

Before voting can begin, EOS token holders will wait for a statement from block producers that it is safe to vote. Keep checking the official subreddit here or at EOSauthority.

Once the voting begins, for a chain to be enabled it has to have 15% of tokens in circulation staked to it and voting. It cannot be determined in advance how long this process might take. With EOS tokens very tightly held with, for example, just four mega whales – individuals or entities – holding 150 million tokens, which equates to 15% of total supply, the election may happen in relatively short order.

The hotly anticipated EOS launch follows a 12-month token sale that has raised $4 billion, making it the largest ICO to date.

Chain competition

EOS Mainnet Launch Group and EOS Core are two groups of block producers that are competing to garner support for their respective chains, although it looks like there may just be one chain at launch, which will make it more straightforward to get a chain up and running and less confusion for voters.

A number of portals have been set up to streamline the voting process, such as this one from EOSphere (initially showing testnet). You will need to download software called Scatter to be in position to start voting.

After a chain has reached the 15% token stake threshold it will be deemed to be valid and all normal functionality activated.

At this point the appointed block producers who have handled the process up until this point will relinquish control to elected block producers. The community of token holders will vote in a continuous process that will be updated every two minutes to elect 21 top “active” block producers who will be ultimately responsible for verifying blocks on the chain.

Once an EOSIO chain is live, EOS holders who have voted can unstake their tokens and put them to use on the network.

EOS has a 5% inflation rate and block producers are rewarded with 1% of that amount. The 21 “active” block producers receive a 0.25% pro rata block reward and the remaining block producers (together with the active BPs) earn a vote reward of 0.75%.

Staking and future token value

Developers who want to build decentralized apps (dapps) on the network must stake EOS tokens in order to secure network resource such as RAM and bandwidth, although there are no fees for transactions. Block.one, the developer of EOS claim it can deliver enterprise scale transactions per second that could go into the millions. The chief technical officer at block.one Dan Larimer already has two successful blockchain projects under his belt – Steemit and BitShares.

Developers have been building dapps to run on the platform prior to launch and two that have been closely watched are Everipedia, which has the backing of Wikipedia founder Jimmy Wales and Iryo with its decentralized medical record storage solution.

Because of the staking system, app developers will have to tie-up tokens on the network. That should mean that in the event of dapps becoming popular more tokens will need to be staked on the network to secure the resource to keep dapps running efficiently. The effect of this should be to increase the value of outstanding tokens even after taking into account the 5% inflation rate.

Smart contracts cannot be created for three days after the block producers have been elected.

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EOS Price Analysis: Where Buyers Are Waiting

EOS was previously consolidating inside a symmetrical triangle pattern and has broken to the upside to signal that bulls gained the upper hand. However, price hit resistance at 15.50 and is currently retreating from the climb.

Applying the Fib retracement tool on the latest swing low and high shows that the 61.8% level is close to the broken triangle resistance, which might now hold as support. This also lines up with a former horizontal resistance and the 100 SMA dynamic inflection point.

Speaking of moving averages, the 100 SMA is still below the longer-term 200 SMA to suggest that the path of least resistance is to the downside. In other words, the drop is more likely to persist than to reverse.

The 200 SMA also recently held as dynamic resistance and might continue to do so. Then again, the gap between the moving averages is narrowing to signal a slowdown in selling momentum and a potential upward crossover.

RSI is on the move down so EOS could follow suit while bears remain in control. Stochastic is also heading lower but is approaching oversold levels to reflect exhaustion among sellers. Turning back up could mean a return in bullish pressure and a possible bounce for EOS.

EOS made its mainnet launch but it has been days but the blockchain has yet to go live. Block.One released version 1.0.0 of the EOS software on Saturday and has left it to the community to get it off the ground.

As it is, participants in the EOS ICO have purchased all the initial ethereum tokens that will ever be used to bootstrap the project. These tokens are frozen until the official blockchain is live, and so far exchanges have been able to adapt to this change.

With that, EOS price could stay in limbo until actual updates, whether negative or positive, are announced. Any major glitches could lead to a large drop in price while blockchain developments could lead to a bounce.

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Block.one Launches EOSIO, Signs $50 million JV Partnership with SVK Crypto

Block.one has announced the launch of the EOSIO blockchain software. The release of the open source EOSIO 1.0 was revealed via a blog post on the company’s website on June 2, 2018. EOSIO is touted as a revolutionary decentralized protocol for both enterprise and community applications. The EOSIO launch also coincides with the establishment of a $50 million partnership between Block.one and SVK Crypto.

EOSIO 1.0 From Block.one

These appear to be exciting times for the EOS movement as a whole with the mainnet launch and now the release of the EOSIO blockchain software. EOSIO can operate without the need for accompanying digital token assets. However, the program can also be configured to allocate resources via market fees, voting, or staking protocols. Thus, EOSIO can be implemented for both public community-focused blockchains and corporate enterprise blockchain solutions.

EOSIO is designed to use either of two Web Assembly engine configurations – Binaryen and WAVM. According to Block.one, EOSIO encompasses the following design features:

  • Free Rate Limited Transactions
  • Low Latency Block confirmation (0.5 seconds)
  • Low-overhead Byzantine Fault Tolerant Finality
  • Optional high-overhead, low-latency BFT finality
  • Smart contract platform powered by Web Assembly
  • Designed for Sparse Header Light Client Validation
  • Scheduled Recurring Transactions
  • Time Delay Security
  • Hierarchical Role Based Permissions
  • Support for Biometric Hardware Secured Keys (e.g., Apple Secure Enclave)
  • Parallel Execution of Context Free Validation Logic
  • Inter Blockchain Communication

EOS is currently experiencing a marked increase in price. The token is now up by more than 16 percent in the last 24 hours according to CoinMarketCap. Much of that increase occurred during a four-hour period on today, June 2, 2018.

A few Words of Caution

While launching EOSIO, Block.one provided a few words of caution for potential users. The blockchain program is presented “AS IS.” Thus, users must take care to verify the viability of the companies that build protocols on top of EOSIO before interacting with them. The company also urged developers to take note that the third-party libraries used are provided in “AS IS” conditions as well. Block.one bears no liabilities for any damages that might occur while using the EOSIO blockchain software.

The Block.one – SVK Crypto JV

In a related development, Block.one has also announced a $50 million partnership with SVK Crypto. The collaboration aims to develop useful applications built on the EOSIO blockchain software.

Commenting on the partnership, Brendan Blumer, the CEO of Block.one said that:

Working with a market-leader such as SVK Crypto is a positive step as we grow the impact and footprint of the EOSIO developer ecosystem. This fund further strengthens our top-notch roster of VC partners focused on identifying and fostering projects that are building a decentralized, open future.

The $50 million partnership is the fifth funding round carried out via Block.one’s EOS VC initiative. According to the announcement, SVK will be in charge of the funds. Speaking on the collaboration, Hugh Cochrane, the co-founder of SVK said that:

Block.one has created the world’s most powerful infrastructure for decentralized applications and is the most forward-thinking company driving growth in the blockchain space. SVK Crypto is thrilled to partner with Block.one to establish a fund that enables developers to thrive. We look forward to helping to produce innovative game-changing DAPPs in the coming months and years.

Will Block.one’s EOSIO blockchain software contribute to taking EOS tokens “to the moon?” Do you think the partnership between Block.one and SVK Crypto will create more use-cases for the EOSIO blockchain? Keep the conversation going in the comment section below.

Images courtesy of Block.one and CoinMarketCap.

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EOS Is Coming, If Anyone Can Figure Out How to Vote

After a year-long initial coin offering (ICO), perhaps what has become the most hotly anticipated blockchain is scheduled to launch on June 2.

That blockchain is EOS, which has raised more than $2 billion in its token sale for Block.one, the company that created what’s being touted as a dramatically more scalable and user-friendly version of today’s blockchains. Those assertions rest on the projects consensus algorithm, delegated proof-of-stake (dPoS), whereby a set number of nodes – in the EOS case, 21 – will be chosen to act as validators (or “block producers”).

These nodes will take turns verifying blocks at a rapid clip, with each one taking a turn every three seconds or so. The idea is that with only a few validators it becomes easy to process lots of transactions very quickly (although there have been critics of these claims).

Since these validators will have a lot of responsibility, they will, therefore, be rewarded for their work (through the governance process, the EOS community will get to decide on what the rewards should be) with newly-minted EOS tokens, similar to how bitcoin rewards miners.

As such, it not only looks highly desirable financially to be a validator node but will also come with a certain amount of power. And vying for those spots (or backup node spots, which will also receive rewards) are several dozen organizations.

Companies aiming to serve as block producers range from existing crypto-mining operations, exchanges, blockchain consultancies and teams of EOS enthusiasts. Candidates are spread out all over the world, but China shows the most interest, followed by entities in the U.S.

This question of power has been at the center of quite a bit of debate, with skeptics, led by ethereum creator Vitalik Buterin, saying that EOS’s governance system is easily manipulable. According to Buterin in a post titled  “Plutocracy Is Still Bad,” it would be easy for cartels to form within such a small system.

Those spots, though, won’t be chosen by Block.one; the company merely created the software, but once the mainnet blockchain launches, the choices made over the blockchain will no longer be Block.one’s responsibility.

Sure, the company may be investing millions of dollars into the EOS ecosystem, but for now, just days before the launch, it doesn’t seem to have invested in educating the community on how they can participate in its governance.

Even Katie Roman, an EOS cheerleader and self-described Dan Larimer (who co-founded Block.one) fangirl, acknowledged the issue stemming from Block.one’s hands-off approach after launch.

“Block.one has said since the beginning of this project that they are not launching the chain, so the details of where and how to vote are not up to them,” she told CoinDesk, adding:

“This is the hard part about decentralization and DPOS in general. Anyone can lead an effort, but that also means that there is a chance that no one leads an effort.”

Nathan James, the founder and CEO of Scatter, a Metamask-like application for storing and interacting with EOS, echoed much the same, telling CoinDesk, “A lot of this launch has fallen to the community.”

Block.One has not replied to multiple requests for comment for this story.

The voting process

Still, there are a few videos and blog posts circulating about how the validator voting process will work.

The protocol uses so-called approval voting to designate validators, whereby each wallet can “approve” up to 30 validators and those approvals will determine the 21 “supernodes.” Voting users don’t have to pick all 30, though, but they also can’t cast unused approvals to bolster their favorite validator.

Voting happens continuously. There’s no election, per se, instead, an election is constantly running. With each new block, validators could potentially get ousted.

And once a token is staked for a vote, that token stays staked for a minimum of three days.

This means there is a cost to voting.

A user that stakes tokens to vote faces the risk that they can’t sell those tokens if the price dips or spikes. And no doubt there’s a lot of people holding EOS tokens right now hoping for a price spike right after mainnet launch. For instance, a quick scroll through the EOS Telegram channel shows that many users are excited about these potential gains.

“The whole point of the voting process is to have informed voters who have stake in the system,” Syed Jafri, founder of EOS Cafe Calgary, a validator candidate, wrote CoinDesk in an email. “If you have a financial stake in the network and wish to protect it, the best way to decide the future of the system is through participation in the voting processes.”

Yet, that only works if people do care about the future of the system and understand that voting helps ensure it, and aren’t just in it for the financial gain.

Another mechanism of the dPoS system is that a wallet’s vote is weighted by the number of EOS tokens it has staked on the network, so in this way, people with more tokens can have more of a say.

Block.One’s VP of Product, Thomas Cox, wrote about this process in a blog post, acknowledging that the system does give wealthier users more power, but saying that since EOS is all about the property of financial assets, the people with the most assets should have more weight.

Since EOS is more like a glorified bank account and not a nation-state, Cox wrote:

“Blockchains don’t run prisons and they can’t prosecute people for violent crimes. The very reasons that make ‘one person, one vote’ so important in a real-world government, are simply not present in a property based blockchain.”

While this type of system has proven to rub some crypto enthusiasts the wrong way, as they contend no one should have more power than any other person on the network, it is a trade-off for scale which will be now be tested.

In the code

But for many in the community, just how exactly they can participate in the system is unclear. For instance, if a user wants to stake 100 EOS tokens to vote on who he/she believes to be the best validators, how does he/she actually do that?

While there are several posts about the importance of voting and what kinds of issues users will be able to vote on, none tell users exactly how to vote.

There is an answer, though, but it’s in the code.

Roman wrote that Block.One is “enabling command-line voting, but most token holders do not have the technical skills to vote that way (me included).”

And as Roman noted, that’s not the easiest place for many in the community to understand. The ones that do understand it are likely those in a position to want to maximize their control over the network: potential validators.

Some community members are trying to get ahead of this problem.

For example, Roman is running a fundraising campaign to pay for the development of a user interface that she hopes it will be ready by the launch. And James has built an interface but that’s only for use on Scatter.

Plus, one of the biggest crypto exchanges, Bitfinex, which holds EOS on behalf of its users, took to Reddit to commit to building a tool that would allow its users to vote their EOS. But the target date for that tool’s release was May 16, and currently, there’s been no tool launched or no update issued.

Bitfinex did not immediately respond to a request for comment.

Still, even if these tools launch in the few remaining days before the EOS mainnet launch, many users will be unaware they exist. Some even wonder whether the blockchain will be launched after all since without adequate voter participation the blockchain will not go live.

According to James, “For a chain to become ‘launched’ 15 percent of the total tokens must be voted.”

He continued, contending user education is greatly needed right now:

“What we need right now is people to come together and create informational videos, posts and tutorials about the process and the importance of voting.”

And there’s not much time left.

EOS coin image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.