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Binance Research Case Study: Is EOS Too Centralized?

2020-02-25

Binance Research, the market research and analysis arm of Binance, published a new case study that analyzed the governance of EOS and assessed if it is centralized inclinations mean that the blockchain misses out on the benefits of decentralization, such as collusion resistance.

“Owing to its high market cap, EOS, a delegated Proof of Stake consensus network, has oftentimes been picked out and labeled as a victim of its governance, where the largest EOS holders further consolidate their position and hold all the power,” according to the report titled “Decentralisation, Governance and EOS - A Lost Cause?” 

In its latest report, Binance Research surmised that the decentralization of EOS governance may be assessed by looking at proxies thereof, specifically the blockchain’s performance regarding Collusion Resistance, Fault Tolerance, and Attack Resistance.

Here are some of the findings within the report:

Collusion Resistance: The governance of EOS reinforces consolidation, by promoting vote trading and selfish acts. Individual parties, such as proxies or block.one, have the influence to drastically change votes.

Fault Tolerance: Using operational metrics that measure reliability and capability to react, we found that 2 out of 3 exchanges operating as block producers (BP) had the worst performance among the 21 BPs.

Attack Resistance: According to Binance Research’s assessment, there appear to be two clusters of block producers, evidently displayed in correlations between voting patterns and regional distribution.

“EOS problems seem to be enabled and aggravated by a number of issues such as low voter turnouts, little resistance to Sybil attacks, coherently little transparency, the 1-token-30-votes system, and the changed block rewards,” according to Binance Research.

Read the full report here.

About Binance Research 

Binance Research provides professional, data-driven insights and analysis for investors in the crypto space to increase the level of transparency and improve the quality of information within the current crypto ecosystem. The team consists of professionals with experience in blockchain engineering, investment banking, strategy consulting, academic research, and data science. For more information, visit: https://research.binance.com/