BitMEX Report on EOS: It’s Not Actually a Blockchain

BitMEX, a Bitcoin/greenback derivatives market based mostly within the Seychelles, has launched an in depth report on EOS. The outcomes weren’t nice – BitMEX concluded that EOS would must be considerably redesigned whether it is ever to perform because the world laptop that it desires to be.

$four billion 

As Finance Magnates has coated up to now, EOS has many options which contradict its declare of being democratic and decentralised. The primary subject is that transactions on the community are all validated by solely 21 nodes.

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Along with this, quite a few technical issues have dogged the system – not excellent for a corporation that raised $four billion in crowdfunding earlier than it even opened.

Distributed database system

To start with essentially the most damning factor – BitMEX says that EOS isn’t, in reality, a blockchain-base community in any respect. Its operations are extra just like a ‘distributed database system’.

With Ethereum, actions carried out by way of good contracts are cryptographically validated and indelibly recorded on the blockchain by the use of really chaning the blockchain’s state. In distinction to this, EOS transactions don’t lead to state adjustments on the blockchain, solely on the database recorded upon it.

EOS’s important intention is to be a greater model of Ethereum, that’s, able to dealing with way more transactions per second. Nonetheless, BitMEX discovered that EOS “doesn’t alleviate congestion, although fairly circumvents it.”

Furthermore, it found that whereas EOS does exceed the 15 transactions per second fee at present out there on Ethereum: “…the transaction throughput within the system doesn’t exceed 250 TPS even in optimum settings… Throughout assessments with actual world situations … efficiency dropped under 50 TPS placing the system in shut proximity to the efficiency that exists in Ethereum.”

Focus of energy

The report focuses lots on the 21 block producers. In a traditional proof-of-work blockchain system, corresponding to Ethereum, all transactions are recorded on the distributed ledger and visual to all nodes. With EOS, the 21 do that. These nodes are voted in by customers who’ve staked a certain quantity of tokens.

Finance Magnates has mentioned up to now that these block producers are all main firms that ran publicity campaigns to attain votes. BitMEX discovered that the capability for corruption within the system goes deep.

The block producers are liable for internet hosting, delivering, and managing “many of the sources consumed by the shoppers.”

Firstly, these nodes earn roughly $10,000 day by day for his or her work, and there’s nothing to cease them from working collectively – “there is no such thing as a technique to algorithmically forestall the formation of cartels” – or from opening new accounts/paying customers to vote for them. Since voter turnout within the system could be very low, “those that do vote are greater than possible aligned with a selected block producer.”

Block producers are additionally empowered to blacklist customers. They need to all agree on such a choice earlier than it’s reached, however the data isn’t broadcast. This results in two completely different vulnerabilities:

1. If the block producers are working collectively, they will comply with blacklist customers that don’t vote for them.
2. If the block producers are usually not working collectively, malicious events can create new accounts a lot quicker than it takes for a consensus to be reached between the block producers.

A community of non clear knowledge centres

Financially, the report discovered that whereas it’s “in opposition to the EOS structure for a member to carry greater than 10% of the token provide”, this rule can’t be enforced ” as one member may management a number of accounts.”

In conclusion, BitMEX describes EOS as “a community of non clear knowledge facilities” and means that it redesign “a good portion of its infrastructure” if it desires to “efficiently act as a foundational base layer protocol”.

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