Block.one released EOSIO 2.0 earlier in January 2020. The new release comprised of an upgraded set of protocol enhancements for the software that powers the $3.2 billion EOS blockchain. Some crypto exchanges like Coinbase have complained about the performance of the network. Various performance issues exist even after the release of the new version of EOSIO.
Exchanges have gone as far as halting deposits and withdrawals temporarily while trying to resolve these issues. In the meantime, the EOS community voted on a proposal to reduce the network inflation from 5% to 1%. That marked the blockchain’s second-biggest token burn event since Q2 2019.
Although EOS proponents believe that these milestones are proof of increasing decentralization, the critics believe that vote-buying and increasing Block Producers’ (BPs) control makes the project less democratic.
EOSIO 2.0 release
According to previous reports, Block.one released the EOSIO 2.0 update. The January 2020 update came after the firm confirmed the new software version in October 2019. During the January 10 release event, Block.one asserted that EOSIO 2.0 offered enhanced speed and security for the blockchain network.
Block.one declared that the new version was 16 times faster than the previous version. Other features highlighted include Quickstart Web-based Integrated Development Environment, multithreading support, and WebAuthn support.
The inclusion of the WebAuthn feature enables the signing of transactions without any need for extra browser extensions of the new software. WebAuthn will guarantee that the projects built on EOSIO 2.0 will feature more robust security mechanisms against phishing and many other data breach attack vectors.
Network degradation issues
The EOS blockchain was reportedly facing congestion challenges before the release of EOSIO 2.0. The November 2019 EIDOS launch resulted in network congestions and disruptions. The congestion from the EIDOS token airdrop was the latest in several degraded network performances for the EOS blockchain.
Coinbase stated in early February that the EOS network was experiencing “degraded performance.” The exchange halted withdrawals and deposits of the EOS token. On its part, Block.one refuted these network degradation claims stating:
“Descriptions of a ‘degraded’ EOS network performance are not accurate. The EOS network transfers and confirmation times are operating as usual. Working closely with Coinbase, we have identified scalability issues with the integration between the EOSIO software and their necessary tools that monitor all economic activity of supported digital assets.”
Block.one said that the latest EOSIO software updates made the EOS network to exceed the integration protocols being used on Coinbase. Both Coinbase and Block.one are currently working to resolve the issue:
“Block.one expects to release an update to EOSIO software that will allow Coinbase to simplify their integration… in the meantime, Block.one and Coinbase are working together to optimize the configuration and performance of the existing integration solution.”
Issues related to vote-trading, vote-buying, and general centralization of the blockchain persist even as the EOSIO 2.0 update could enable the EOS network to enter a new and enhanced phase for developers. A Binance Research report unveiled earlier in February shows that the EOS governance protocols were described as being inadequate to avert vote-buying abuses.
The current EOS incentive structure focuses on consolidation enabling Block Producers to dictate the governance of the whole ecosystem. That strategy will entrench protocols like vote-trading, which will benefit just the established few.
Hence, it is theoretically possible for the Block Producers to conspire amongst themselves to create outcomes that favour them irrespective of the rest of the network.
The current vote-buying issue comes from the departure from the draft constitution of EOS. But, the constitution failed to take off and was replaced by an end-user license agreement.
The EOS holders can now stake their tokens through voting for up to 30 Block Producers. The votes garnered by every BP are subject to the tokens staked by the user.
Voter proxies’ services have arisen to eliminate the requirement for token owners to go through the process of choosing BPs to vote. The proxies can offer a set of BPs to voters that can create voting bloc cartels since they are incentivized to offer BPs that share their inflation rewards.
The relationship between proxies, Block Producers, and some token owners describe the vote-buying problem that exists on EOS. But, some EOS stakeholders say that voter rebates do not favour EOS whales only. But, they also drive value toward token holders too.
Inflation drop and token burns
The EOS network burned 34 million tokens on February 25. All these tokens were held in the “eosio.saving” account. At the same time, the network decreased the supply growth of new tokens from 5% to 1%. This token burn was the second such action within 12 months, and it was the realization of a community vote that was held in mid-2019.
A proposal was introduced in March 2019 to reduce the annual inflation rate. Part of that proposal read:
“Eight months have passed, and there is still no defined use for this large quantity of EOS tokens that continues to flow into the eosio.saving account. This large quantity of accumulated tokens has now become excessive, and if we continue to allow it to keep growing, it will eventually become an attack vector for the network.”
Around 16.5 million of the over 17.3 million votes cast supported the proposal resulting in over $130 million worth of EOS tokens being destroyed. Based on the new 1% inflation rate, Block Producers will directly get the new tokens created annually without any fraction going to the savings account.