Chinese dominance of EOS Governance
Article credited to cryptomandate and provided by EOS GO
There’s been talks and criticism in recent weeks about China’s dominance of the EOS network. With 8 Block Producers (BPs) in the top 21 coming from China, this means that they represent 38% of the total active BPs. Raising community concerns of centralization and integrity of the blockchain. Another underlying issue is what would happen if all Chinese BP servers were shut down by the authorities? After all, cryptocurrencies have already been banned in the country. With this article, I aim to properly address these concerns, weighing the pros and cons of Chinese dominance along the way.
Let’s quickly take a look beyond cryptocurrencies and blockchain for a second. It doesn’t take us long to realize that China has the world centralized in so many metrics. It has the second biggest economy; on track to be first. It is the market leader of manufactured goods and exports, anything from clothing to appliances to vehicles. Not to forget, it also has the world’s largest population at 1.4 Billion, 18 percent of the entire world population. Between it and India, they dominate the world population by a massive 36 percent.
How does this affect cryptocurrencies and/or blockchain tech?
When we take a look at Bitcoin, over 50 percent of its mining pools are located in China. This is mainly because China had set itself up for success early on by giving miners preferential rates on electricity and even tax deductions, until recently. It also hosts some of the biggest manufactures of cryptocurrency mining hardware in the world, such as Bitmain and Halong Mining. Consistent leaders in the innovation of faster and more efficient mining equipment.
So based on all these points, it’s no surprise at all that China, once more, is dominating the blockchain space, in this case EOS. It leads the global rankings for the manufacturing of tech and electronics. In my opinion, China’s involvement with EOS is a great testament to the quality and potential of this technology. Certainly good enough to be worth adopting or at least investing in. I remember not too long ago; we were eager for countries to participate in growing this space. China happens to have caught on much quicker than the rest.
The country has also been more active in blockchain tech than most of its western counterparts, namely the USA and the UK. For instance, China’s Center for Information and Industry Development (CCID) publishes a monthly crypto report, ranking the best blockchain tech’s based on its research. EOS led these rankings for the most part of 2019 and currently sits in 3rd place. Such initiatives promote the space and exposes Chinese citizens/investors to cryptocurrencies, whereas in the US it is less so. In the West the general population is still confused about use cases of cryptocurrencies. This mostly is a result of the governments’ stance on them as they feel threatened by this paradigm shift. Labelling them as tools for money laundering and many other forms of criminality.
On the surface It may look like the Chinese government is cracking down on cryptocurrencies but from what I’ve seen this has all been a calculated move on their side. If they were really serious about this ban, then we wouldn’t be debating Chinese dominance of cryptocurrencies and blockchains now would we? They successfully banned everything else with precision. For instance, when was the last time you watched a Chinese vlogger, or read a Chinese tweet? The internet is still blocked off the rest of the world and if they were really determined, so would anything related to blockchain. Actions speak louder than words.
Rather China might actually be doubling down on crypto with the introduction of its own sovereign cryptocurrency tied to their fiat currency, the Chinese yuan. They are without a doubt a few steps ahead and seem to know much more about this technology than their western counterparts. It wouldn’t be a shock if Satoshi was Chinese. Think about it, who needs decentralization more than the Chinese? Anyways, Satoshi could be different people from all over the world. Back to the topic at hand.
The EOS’ journey has just begun
I constantly stress out that we’re still in the early stages of blockchain’s inception – EOS is only a year old. By tech standards it is still an infant, but man how much this infant has achieved in such a competitive space. Already kicking gas and gaining market share. If EOS were a train, then this point in time is the stage for laying tracks that connect to many metros and creating scenic views for the trip.
Feeling threatened by China at this stage of our development probably shouldn’t be the main focus. This network was built to give users a voice in its governance and how it operates, currently China’s voice happens to be the loudest. The political landscape could, in future, change to be more favorable to western nations. The West’s lack of participation at this point is partly one of their own making. It is however unfortunate that we don’t have a clear communication channel with Chinese natives as they’ve been shut out from the rest of the world. Hopefully blockchain can provide solutions on that front.
All of the issues facing EOS today are ones we’ve been anticipating way before the mainnet launch. How we were to deal with them should they arise was part of the excitement of self-governance. Liberty is great but also the responsibility that comes along with it. Thus far we’ve seen a couple of proposals from community geniuses with regards to changing the rules pertaining governance. Some of them are pretty good, if I do say so myself. There’s a recent article by the Lumi Wallet team titled ‘Ideas that might fix EOS governance’. Thus there’s no point in going into further detail on that. Check it out if you’re interested.
My favorite proposal to date has to be the ‘regproducer’ smart-contract introduced by EOS42, an independent EOS Block Producer. The contract’s goals are to ensure consistent infrastructure performance and security of the EOS blockchain, based upon agreed standards. It stipulates that BPs who consistently miss blocks will be voted out. Also inactivity in the network and inability to be reached for communication, are reasonable circumstances for expulsion.
Initially, to pass the contract had to be signed by at least 15 of the 21 BPs. It only got 13 BP signatures and needed two more to execute. Thankfully, Colin’s (@ColinTCrypto) efforts in raising support from the community of voters managed to get two of the lower ranked BPs, out of the top 21. Two standby BPs who were in support of the contract were then voted in as replacements.
A prime example of the power this community holds if we converge our efforts in achieving common goals. This was all done without disruptions to the regular performance of the EOS network, the general user didn’t even know it was happening. The blockchain is a system that operates 24/7, 365 and any avoidable disruptions in performance should be kept to a minimum. Even a 5 second delay in block confirmations can prove detrimental to dApps of this high speed network.
This addresses the question of what would happen if Chinese authorities shut down the servers of any of the BPs located in the country. Inactive Block Producers could then be quickly replaced by any of the capable dozens of BPs on standby. Current active BPs would still be producing and validating blocks while this takes place. Preventing downtime of the network.
I’d like to point out that the ‘regproducer’ contract could be upgraded to do the same with BPs who act maliciously against the network. Such actions could include collusion, manipulation, hacking etc. It doesn’t matter where the BPs are from, as long as they abide by certain standards and contribute to the long term health of the blockchain then all is going as planned.
I know there are standby BPs that contribute more to the EOS ecosystem than some of the current BPs in the top 21. These BPs provide essential tools and bringing us innovative, scalable dApps which open the door to mass adoption potential. Challenges such as these are natural in a democratic governance, especially in this education phase we’re in. This was the point to having only 21 BP spots because it encourages tough competition within the ecosystem and the ‘regproducer’ case is testament to that.
We’re in the education phase of this technology. The more people learn about EOS, the more apparent they’re voting decisions are going to be. For now, the ecosystem lacks the voter numbers to justify a ‘1 vote, 1 BP’ approach which I believe, in my opinion, is most ideal. The foundations of this reality are being laid down as we speak. For instance, Block One’s Secure Digital Identity will help ensure each individual uses only 1 account to vote.
With the upcoming V1.8 network upgrade (23 September), a vast amount of new possibilities is about to surface. Could these also have an effect on governance? Will the new features provision for much more than mass scale dApps such as Voice? All this is yet to be seen. A lot has been achieved with EOS in a short time span, much credit to the community of developers and the active users testing things out as they’re introduced. Our community is healthy and passionate about this blockchain.
Final Word
Can EOS replace governments in the real world? Not anytime soon, but it can provide a border-less, all-inclusive alternative for everyone. Especially in bridging the gap between the poor and the more fortunate. For both the west and east it opens up a sort of safe haven for us to securely transact, store data and interact with the world, uncensored and untracked.
A reality which seemed far-fetched not too long ago is now possible, thanks to Bitcoin. The Matrix movie dared us to dream beyond the status quo of leadership and governance. In my opinion, due to their current sociopolitical circumstances, Chinese natives are in desperate need of such a reality. Access to a network for private communication and data, free from the government’s control. As a community we have the right to be skeptical of a China dominated governance because the Chinese leadership could be directly involved.
Therefore, it is our joint responsibility to ensure everyone is involved for the betterment of the community at large. We have the power and means to exclude all those with malicious intentions within this network, those working against our goals for true liberty. Having some of the brightest minds and hearts in our community helps to ensure that solutions to such problems will be resolved if posing real threats to our freedoms.
I know I’ve said this once or twice before but it’s worth repeating. This community is so passionate about this project, it’s as if each individual is being paid a salary for their great support and contributions. We all have an innate understanding of what EOS represents, it’s either you have it or you don’t. We truly appreciate being a part of this great innovation and are eager to show it to the rest of the world. That’s when you that you’re involved in something special and worthy. This kind of genuineness just can’t be bought. Like any spaceship there will be turbulences from the initial take-off but after clearing the skies a whole new universe opens up. Let’s ride the EOS spaceship all the way to a better, safer and fairer galaxy.
I write weekly articles for EOSGo mainly focused on documenting the EOS journey. This series of articles outline the EOS dApp ecosystem, covering dApps, news, and projects that are helping to grow the ecosystem.
I’ve written three articles so far. So follow along and keep up-to-date with the ever growing EOS dApp ecosystem. Personally, I know that it’s hard to keep track of all that’s happening on your own and consistent sources of information on this topic are limited. Add this one to that list.
Thank you for reading!
Until the next one,
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