Mythical Games, a next-generation game technology studio, EOS Lynx, Scatter and several highly-reputed distributed ledger technology (DLT) projects are set to launch an industry-wide initiative aimed at formalizing the fast-growing digital assets marketplace via the Distributed/Digital Goods standard (dGoods standard).
The Need for a Robust Digital Goods Ecosystem
The group hopes to establish a benchmark for creating, managing, and distributing digital products between creators, studios, and consumers, according to a report from AP News on January 23, 2019.
In a bid to create a robust and formalized digital goods industry, Mythical Games, a U.S.-based video games technology platform, focused on bringing players, developers and content creators closer to the games they love. They have also reportedly allied with EOS Lynx, Scatter, and other blockchain platforms to launch the Digital Goods standard.
As stated in a press release by the team, the initiative is looking to put in place a “commercially-endorsed benchmark for creating, managing and distributing digital products such as games, coupons, music files and more.”
The team is poised to establish a robust digital goods standard for the development community by creating Metadata Templates for 3D and 2D digital assets and more. Part of the initiative involves specifying templates for metadata according to the digital good a developer is working with.
The team says standard templates will be created to correspond with each digital good so that wallets will display the relevant information, images, and 3D objects correctly.
Digital Objects Need Certificates of Authenticity
Just like in the real world where objects have certificates of authenticity, the team plans to make it possible for digital objects to have a certificate of authenticity by building immutable fields in dGoods which will describe the object’s characteristics that make up the certificate of authenticity “as well as graphical representation to show users as a proof of the object’s attributes including its brand, creator and other details.”
“Hundreds of millions of digital items will be created, bought, and sold in the years ahead. It’s critical that we establish a meaningful digital goods standard that can support a vast array of innovative development communities,” declared Rudy Koch, Head of Blockchain at Mythical Games.
dGoods to Go Live on EOSIO
The team has made it clear that with dGoods, developers will be able to choose whether tokens created will be fungible or non-fungible as the dGoods standard has the ability to define sub-tokens within one contract.
dGoods will be rolled out first on EOSIO blockchain, with other blockchains to follow in the near future. The EOS blockchain network has seen significant adoption in recent times despite the harsh words of critics against the platform.
Earlier in December 2018, BTCManager reported that Huobi had announced plans to launch its EOS-powered crypto exchange in Q1 of 2019.
When it comes to initial coin offerings (ICOs), we tend to hear many of the negatives – about how risky they can be, how projects can target easy prey using them as scams, and how they are often wildly unregulated – but they’re not all bad.
Sometimes a fantastic project just needs a little help in the money department and a coin offering is a great way to get that extra support. And sometimes that extra support comes in the form of many, many dollars worth. Here we take a look at three of the biggest token sales this year.
The ICO sale for the DAO (Decentralized Autonomous Organisation) project brought in $152 million USD worth of ether in May 2016 and then carried with it a whole lot of scandal.
The project, set to a craft a decentralized blockchain version of a venture capital fund, hoped to offer a way in which new projects could be built on Ethereum’s blockchain.
It turns out that with great money comes great controversy, and one month after the crowd sale began, things started to unravel. It was found that there was a major compromise in the security of the DAO’s system which let in a hacker who made off with close on one-third of the sponsored funds.
After ‘the DAO hack’, as the scandal became known, the thread started to pull and things fell apart quickly from there and the project dissolved. The incident also raised an alert to the US securities and exchange commission (SEC) which declared that the sale of the DAO coins would be considered as having been issued that of a security. That means the tokens should have been subject to regulation and the endeavor sparked new ICO regulations for US based projects to consider.
It’s easy to note the negative aspects of the DAO project, but one cannot forget the success before the hack and the massive amount of money which was raised before the theft.
Hey, want a protocol which can allow you to release new ‘smart token’ cryptocurrencies easily convertible against reserve tokens? Sounds good, right? Thus enters Bancor.
The project allows that and more – the procedure is designed to lessen issues in trading such as liquidity and price discovery for newly listed tokens. Since the demand for cryptocurrencies increases so does the necessity for a user-friendly trading platform.
Held in June of last year, the ICO for a blockchain project by the company managed to pull in an impressive $153 million USD in Ether.
The prediction market project run by the exchange network allows users on the platform which hold Ethereum coins to “cut out the middleman” when exchanging them for another token listed on the network, reducing unnecessary fees.
The project’s token immediately had an initial success with a spike on its first day – hitting its highest of $4.49 USD before dipping to a low of $1.49 USD trading price.
Like Bancor, EOS’s ICO was also launched in June of last year but the project has nothing else in common.
The founders developed the project with a legally composed system in mind in order to create a system which can act as a common authority for blockchain disagreements. The platform, often compared to the sought-after Ethereum network, also hopes to tackle the scalability issues seen in its “bigger”, older counterpart and alleviate the congestion we’ve all grown to know and despise.
The project has done impressively well and has attracted a significant amount of attention – and funds – from investors especially based in China, the company’s home nation.
Bonus – Telegram
The Mac Daddy of all coin offerings entered the ring in a fashion a little different to the others.
This ICO receives a different light owing to the fact that the public token sale has not – and might not – taken place.
The company initially set an ambitious goal of $1.2 billion USD for its planned project – which will come in the form of a new blockchain dubbed the Telegram Open Network (TON) – and the company’s private token sale has just blown that figure out of the water. Currently, the coin offering (not open to public investors) has collected a staggering $1.7 billion USD in funds for the project. It gained $850 million USD in the first phase of the sale in February of last year and then managed to double that last month.
It would be unfair to hold it in the category of the top public initial coin offerings since it isn’t open to the public, but it’s a coin offering too jaw-droppingly impressive not to mention.
Mythical Games is “a next-generation game technology studio.” Their focus is online games where players own the assets they develop or acquire in the game – true digital ownership powered by the blockchain, as opposed to managed digital ownership backed by centralized servers. It’s an important difference.
When a player acquires assets in a game like World of Warcraft, Ultima Online, or Runescape, they are at the whim of the company to stay in business and keep servers online. A decentralized game built on the blockchain can keep in operation, with assets retaining value, for as long as users desire them to. Not to mention how much easier it is to transfer assets when blockchain-connected accounts are involved.
The company has yet to release a game, but today announced that it had raised $16 million in funding from five different venture capital firms including Galaxy Digital’s EOS VC fund and OKCoin.
A press release reads in part:
“The funding will support the company’s first-to-market plans to develop and co-produce a slate of high-quality game titles (on mobile / PC / console) built around new player economies and user-generated content. The investment was led by Galaxy Digital’s EOS VC Fund, with significant participation from Javelin Venture Partners as well as DDC, Fenbushi, Noris, and OkCoin joining the round.”
Made up of former Blizzard, Activision, and Yahoo! executives and employees, the company will now presumably begin building out its first offerings. According to Galaxy Digital CEO and billionaire crypto bull Mike Novogratz, gaming is an item of keen interest to the VC firm:
“We believe that gaming – and specifically players’ interaction with in-game economies and virtual goods – will play a key role in how the masses first discover the true potential of the blockchain. Mythical’s experience building rich and immersive game worlds will be invaluable to this mission.”
Given that Galaxy Digital’s EOS fund is responsible in large part of the $16 million funding round, Mythical will be building products on EOS, a dApp-focused blockchain that aims to allow developers to run blockchain applications at scale.
Mythical’s offerings will not be the first blockchain games to enter the space, with Decentraland having dominated headlines in recent times with people being able to take loans on and for virtual properties.
shEOS, a Spanish company specialized in software development, has successfully created a protocol that serves as a communication tool between Ethereum and EOS blockchain. The EOS21 protocol serves as a bridge between the two blockchains, making it possible to “teleport” Ethereum ERC 20 tokens to EOS without losing functionality.
In the project’s official GitHub, the team explains that they built the code to achieve a real token transmission and not simple cloning of tokens. This process was called “Teletransportation” because the term is very similar to what they want to achieve.
The so-called “Teleportation” is achieved by destroying the tokens of one blockchain to be immediately created in the other. This avoids an artificial number of tokens on two chains and guarantees a satisfactory blockchain swap:
“In the EOS21 protocol, we are providing another option for ERC20 contracts that do not have a built-in pause/expiry function but who want to move their token to another chain. We are calling this action: teleportation. To teleport a token from one chain to another, it will exist on the destination chain, but no longer exist in a fungible form on the source chain.”
The shEOS team is confident that the development of this technology can contribute to the growth of both blockchains by serving as an essential tool to guarantee their interoperability:
“Recently, the importance of one specific development has become clear to us, and that is inter-blockchain communication and interoperability. […] How empowering would it be for developers to have freedom to move their tokens to any chain they wanted to? To any chain they felt best addresses the needs of their particular project. It’s widely known that each blockchain offers certain qualities that make it more appealing depending on the needs of the dApp developer.”
So far no details of large-scale applications have been revealed; however, there is already a growing community interested in this protocol. The shEOS team made a call to adapt its technology to other blockchains with similar characteristics such as XRP/XLM.
On a side note, another curious thing about the shEOS team is that it is founded by 100% females.
Cardano (ADA) was not doing much enough in the last week as its price dropped to $0.06 USD but by the end of week it gained a bit of momentum. The market on Thursaday, 27th September opened with most of the cryptocurrencies advancing towards a high flight. Major coins are having a better week than last one, as they witness a bullish run in last 24 hours.
Cardano started of the day with $0.079 USD, at the time of writing, ADA was trading at a price of $0.080 rising at the rate of 3.64%, having a market cap of $2.097 billion USD. Yesterday, an increase in the volume was seen as compared to last week which went up to $64 million USD. It has a volume of almost $60million USD, at the moment. Binance Exchange, one of the biggest cryptocurrency trading exchange network, ADA had a trade volume of $19.5 million USD in last 24 hours. However, Cardano (ADA) situation on Tuesday was quite different and it was dropping at the rate of 9%, it has been a good turn around for Cardano.
Weiss Ratings suggested that Cardano (ADA) will have the highest pullback along with other altcoins including IOTA, XRP and NEO. Well their prediction was right on the spot as, IOTA has surged up to 1.11%, NEO has also gained about 3% and XRP has been the stand out gaining up to 10% in last 24 hours (at the time of writing). Weiss Ratings tweeted:
“If you believe #crypto market will return to its former glory, the benchmark for a 10X gain, is a 90% retracement. As of today, here are a few of top-25 coins that are at or above a 90% pullback: #IOTA = 90%#NEO = 91%#XRP = 93%#ADA = 96%
These are absolute steals right now!”
According to some experts, Cardano (ADA) can move up to $1 USD, increasing by almost four times from know, but this can take a while. This shows that their is a lot of bullishness regarding ADA. Cardano enthusiasts on twitter are showing their happy as they think this is the time to buy more Cardano coins. This shows that ADA will surge more in next 48 hour time.
Charles Hoskinson, owner of Cardano (ADA) is in Japan to celebrate the one year anniversary of Cardano. In a video message, he stated that they are going launch ‘Infinito Wallet’ i.e a mobile wallet. It now supports users to securely send, receive, and check transaction history of ADA on mobile. Infinito Wallet is the first mobile wallet to support ADA.
Infinito Wallet is the world’s most common home to many big tokens on biggest smart contract platforms including BTC, BCH, LTC, DASH, ETC, ETH, EOS, NEO and DOGE. After adding ADA, Infinito Wallet has achieved yet another incredible milestone. It will boost up the price and increase the adoption of Cardano.
Some more news are to come from Cardano community, as Charles further stated that he will meet some dealers during his stay in Japan, Tokyo. So we can hope some big news from Cardano in next few days and it will really help ADA to surge more. So this is the best time to buy Cardano, as it will bring much more profit in coming days.
Bitcoin price corrected lower and declined below USD 6,600 and USD 6,500.
Ripple is under a lot of pressure as it declined by more than 15%.*
Ethereum and bitcoin cash are down more than 5% and moved into a bearish zone.
Yesterday, we discussed that bitcoin price could start a downside correction below USD 6,700 in the short term. BTC/USD did move down and broke a couple of important supports like USD 6,600 and USD 6,500. Similarly, major altcoins like ethereum and bitcoin cash declined between 5% – 8%. More importantly, ripple price fell by more than 15% and moved below the USD 0.500 support level. Going forward, there could be more losses, but bitcoin price must hold the USD 6,250 support.
Bitcoin price declined below the USD 6,500 support recently and is currently down around 3.2%. BTC/USD is about to test the USD 6,400 support and it seems like it could continue to move down towards the USD 6,300 and USD 6,250 support levels.
If there is an upward move, the USD 6,500 level may act as an initial resistance. Above this, the price could test the previous support near the USD 6,600 level, which is likely to act as a resistance in the near term.
Ethereum price also followed bitcoin and started a downside correction below the USD 240 level. ETH/USD may perhaps continue to move down towards the USD 200 level, which is a crucial support.
On the upside, an initial resistance is near the USD 220 level, followed by the all-important USD 235 level. Above this last, the price will most likely retest USD 250.
Bitcoin cash and ripple price
Bitcoin cash price broke the USD 460 and USD 450 support levels to move into a bearish zone. BCH/USD is currently under pressure and it could test the USD 420 support. The most important support is close to USD 400. On the upside, the USD 460 level must be breached for a push towards USD 480.
Ripple price was one of the worst performers as it declined around 18% and settled below the USD 0.500 support. The next important supports for XRP/USD are USD 0.430 and USD 0.422.
Other altcoins market today
Today, many small cap altcoins declined between 5%-15%, including AION, MONA, WAN, EOS, SNT, ONT, ADA, FUN, SC, XLM, ICX and TRX.
Overall, the current price action for bitcoin is slightly bearish below the USD 6,600 level. On the downside, the USD 6,250 support could play an important role for the next move in BTC/USD and altcoins in the near term.
Hackers were able to steal nearly $58,000 worth of cryptocurrency from the Newdex exchange by exploiting a vulnerability in the exchange, according to TheNextWeb. The hackers flooded the Newdex exchange with fake EOS tokens they created themselves to buy ADD, BLACK and IQ tokens from the centralized platform.
Newdex acknowledged that an EOS account issued 1 billion phony EOS tokens. The EOS account, oo1122334455, placed purchase orders for ADD, BLACK and IQ. A total of 11,800 phony EOS orders were made. The hackers then exchanged the tokens for real EOS.
Newdex acknowledged the hackers nabbed 4,028 real EOS tokens, worth around $20,000, and sent them to Bitfinex, leaving Newdex users with cumulative losses around $58,000.
Newdex stopped the service at 15:52 on Sept. 18 after discovering an exception and activated an emergency response repair system, according to an observer on Reddit. The repair was completed at 16:33, and normal operation was resumed.
Newdex apologized for the loss, but has no plans to compensate people, according to the report.
EOS Users Warned About Newdex
Several days prior to the incident, the EOS community noted on Reddit that Newdex is not a genuine decentralized exchange (DEX) despite its “misleading marketing.” The PSA said not to trust Newdex since it does use a smart contract and has not published the source code of its centralized matching server.
Instead, Newdex matches orders off-chain in a centralized server, according to the Reddit post. The post also presented a response form Newdex’s support stating it is “the first global decentralized exchange built on EOS,” and requires no deposit, no withdrawal, safe assets, and is open and transparent.
In addition, Scatter (an ecosystem for creating accountability and security in the blockchain space) is used as a login and trading interface so that Newdex would appear to be a genuine DEX, the Reddit post noted. The reality is that users were sending funds to regular EOS accounts that don’t have any kind of smart contract running on them.
According to Trybe, a tokenized knowledge and content sharing platform, Newdex has been plagued with trade issues, token issues, and extensive transfer times.
After allegedly encountering issues trading EOS on Newdex and communicating these issues to the exchange, Newdex responded that there are issues with the EOS network.
Trybe posted a note from Newdex claiming that there has been instability with the EOS mainnet causing unstable trades on all major exchanges, causing some exchanges such as Bithumb and Huobi Pro to withdraw service for EOS, ADD, and IQ.
Trybe noted, however, that it has not encountered issues trading EOS on other exchanges.
Bancor, one of the most popular and valuable decentralized applications on ethereum, is expanding to the EOS blockchain.
According to a company announcement, the “decentralized liquidity network,” which allows users to trade a range of ethereum-based tokens without depositing funds in an exchange or matching trades in an order book, will bring that capability to EOS.
The new cross-chain product, called BancorX, will allow users to trade between select EOS-based tokens – which have yet to be specified – as well as between EOS- and ethereum-based tokens.
“Bancor is now evolving into a cross-chain liquidity protocol,” the company explained in the announcement, adding that it has published code for open-source smart contracts on EOS, allowing users to experiment with the protocol in a testing environment.
No timeline was set for BancorX’s launch on EOS’ live blockchain.
Explaining the decision to launch on EOS, Bancor’s announcement cited the blockchain network’s transaction speeds, which are faster than ethereum’s, as well as its lack of fees – in contrast to the often-costly “gas” fees ethereum users must pay to call smart contracts.
As a corollary to the lack of fees, Bancor said that EOS eliminates “front-running risk,” since transactions aren’t prioritized in exchange for paying higher fees.
It is worth noting, however, that while EOS transactions are fee-free for users, deploying dapps on the blockchain can be costly for developers, unless they choose to pass the costs on to users.
An emergency brake?
One feature of EOS that Bancor’s announcement did not cite, but which may be relevant to Bancor’s offering, is the ability for a supermajority of the network’s block producers – who maintain the EOS blockchain in a way analogous to ethereum’s miners – to effectively reverse transactions.
While block producers cannot erase completed transactions, they can forcibly transfer tokens from one address to another.
Nate Hindman, Bancor’s communications director, denied that this feature of EOS influenced Bancor’s decision to expand to that network, instead reiterating the benefits mentioned in the company’s announcement: faster transactions, zero fees and resistance to front-running.
The freezing and reversal of EOS transactions has proved controversial, as many in the cryptocurrency community see the inability to do these things as a core appeal of blockchains. Indeed, many commentators reacted negatively to EOS block producers’ decision to freeze transactions from a number of compromised accounts soon after the network’s launch. Subsequently, the network’s arbitration body ordered block producers to freeze yet more accounts.
Bancor, in a similar vein, is notable for its decision to write the ability to freeze and reverse certain transactions into its ethereum smart contract, as cryptocurrency developer Udi Wertheimer detailed in a blog post last year.
Eyal Hertzog, Bancor’s co-founder and product architect, defended these design choices, citing the infamous DAO hack, which saw millions in funds siphoned away from smart contracts with no way to stop the theft. The incident eventually led the ethereum community to hard-fork the chain in order to reverse the damage.
Bancor made use of these capabilities following a security breach in July, when it blocked the transfer of 2.5 million BNT tokens, worth around $10 million at the time. The company was not able to prevent the theft of around $12.5 million worth of ether, however.
EOS, in contrast to ethereum, provides the ability to refer alleged thefts to arbitration and to have block producers reverse the damage through accepted – if controversial – methods.
Bancor’s protocol is already being used on the EOS network to govern the market for RAM, a resource necessary for the creation of EOS accounts. Bancor also operates a block producer, LiquidEOS.
2018 has already been another stellar year for organizations raising money for blockchain and cryptocurrency projects. While initial coin offerings (ICOs) reportedly raised more than $3.69 billion in 2017, the total amount raised this year already stands at a staggering $17.25 billion in late July, according to CoinSchedule.
Should the current trend I’ve observed in crowdsourced funding for technology companies continue, it will be important for investors to discern the nuances of investing in blockchain technologies and the virtual assets created on top of them, as ICO investors usually receive virtual assets in the form of coins or tokens in return for ether or bitcoin. Here’s what you need to know about common blockchains and assets.
Fundamentals Of Currency
To understand cryptocurrencies, investors should first recall the fundamental tenets of currencies: They are typically units of measurement, stores of value and mediums of exchange. Blockchain-based virtual assets — such as cryptographic tokens — often demonstrate these three characteristics of currency. However, as an investor, I advise you to consider if and when these functions are only a byproduct of the objective inscribed by the creators into the asset’s software code before investing in a cryptocurrency.
Ether is a virtual asset on Ethereum. Even in the current bear market, one ether trades at about $292 as of this writing, according to CoinDesk. That puts the market cap of the Ethereum blockchain at $29.66 billion — which isn’t far off from the current valuation of NASDAQ-traded Vanguard Total Bond Market ETF.
Ethereum’s Virtual Machine, which allows developers to write programs called “smart contracts,” executes if the user makes a payment in its native currency ether. These transaction costs on the Ethereum blockchain are consequently labeled as “gas.” Like its real-world counterpart, gasoline, I believe this virtual gas should be valued by investors — not for its currency properties or inherent value but for the utility it fulfills in the Ethereum network. The more applications that are being built and used on the blockchain, the more demand ether is likely to have.
EOS is the virtual asset native to the recently launched blockchain EOS.IO. While providing similar functions as Ethereum, users of the EOS.IO blockchain are not required to pay for transactions in the blockchain’s native asset, “EOS.” Block.one, which raised a reported $4 billion to fund the launch and rollout of EOS.IO, has according to a July 2018 report allocated about $700 million to grow the EOS.IO ecosystem. Like with other cryptocurrencies, one benefit to investors is that EOS token holders may receive free tokens from projects funded by venture firms supporting blockchain in what is referred to as an airdrop. I believe investors in Ethereum’s ether might also find it valuable to keep at least a small number of EOS in their digital wallets as an easy way to keep track of applications being launched on EOS.IO.
Tokens On The Ethereum Blockchain
The Ethereum blockchain provides an easy-to-navigate, token-generation interface referred to as the ERC20 Token Standard. This standard ensures that all people who control electronic wallets that comply with this standard can receive new tokens generated this way. These tokens can also easily be listed on exchanges that support this Ethereum standard, and most of the more than 200 virtual asset exchanges do.
Tokens created by software engineers on the public Ethereum blockchain are usually coded to fulfill a specific function, such as triggering an event, allowing access or assigning other rights. These tokens are therefore not created as “units of measurement.” Consequently, I advise investors to value these tokens according to the overall validity of the system they are being deployed in, using startup investment criteria such as the state of the technology, experience of the team and product market fit. Good starting points for an investor’s research are the LinkedIn profiles of the team members (for qualifications) and activity of the GitHub repository of the project (to track progress). Positive signs are teams led by previously successful technologists and depositories with code development stretching back over a year or more.
The Bitcoin blockchain and its currency, bitcoin (the lower case “b” differentiates the currency from the blockchain and concept), is identified by its original creators in their 2008 whitepaper on the currency as electronic cash (registration required). However, unlike fiat currencies — which are created continuously and as needed by governments — bitcoin’s total supply is limited by code to a total of 21 million, making bitcoin inherently scarce. Even though a number of major currencies accept bitcoin as a form of payment, most signals seem to suggest that bitcoin is mostly bought for its “store of value” function. I recommend, therefore, that investors approach bitcoin purchases in the same manner as they would approach the purchase of gold: as a hedge against their stocks or bond holdings.
A few virtual assets were created for the specific purpose of functioning solely as a cryptocurrency. These cryptocurrencies include Zcash, Dash, Monero and Bitcoin Cash. Zcash publishes transactions on its public blockchain, but the currency’s privacy features enable users to conceal the sender, recipient and amount being transacted. Dash — launched as “Darkcoin” — also provides privacy functions to users and is using a self-governed organizational structure referred to as a Decentralized Autonomous Organization.
The value of any currency is mostly determined by the soundness of its monetary policies and inflationary tendencies. Investors seeking to add cryptocurrencies to their portfolio should familiarize themselves with the government models of the blockchains these assets are being created on and follow their specific use cases, which can generally be found in the whitepapers published by these projects. Mainstream adoption, such as when well-known merchants accept the currencies and when U.S. exchanges such as Coinbase add them, is also a positive signal for investors to look as they build a cryptocurrency portfolio.
I believe that blockchains and their applications, such as cryptocurrencies, are likely to play a central role in the future of any investment strategy. However, investing in these assets is not yet well understood. This is likely in part because of their nascent history and because of contradictory handling by government agencies in the U.S. and abroad that seem to incorrectly conflate cryptocurrencies with other blockchain-based assets and functions. I advise investors to look at each blockchain project’s individual merits. They should use standard venture investment criteria such as the team or community supporting the technology, the size of the market opportunity and the current development status of the product while differentiating cryptographic currencies from cryptographic assets.
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There’s an account on the EOS blockchain with $35 million worth of tokens in it that no one can touch – and its balance is growing constantly.
At the end of EOS’ first 12 months as a live blockchain, this account (called eosio.saving) will be worth close to $192 million, assuming the recent EOS market price of $4.79.
In theory, that money is being set aside to fund all sorts of initiatives that might be beneficial to the EOS community: building out new tech features, conducting security audits, sponsoring meetups, hiring lawyers and lobbyists.
But there’s one problem: there’s currently no system in place to actually allocate the funds.
The EOS blockchain network was incomplete when it went live in June, with much of the functionality stipulated in the network’s “constitution” and white paper remaining unbuilt. A key aspect of the EOS protocol was, according to the white paper, “a defined governance process” which avoided other blockchains’ “ad hoc, informal, and often controversial governance processes that result in unpredictable outcomes.”
That governance process included the ability for token holders to vote in referenda based on the number of tokens they held. But that process of voting doesn’t exist yet, and as such, EOS’ governance system has been in flux since launch.
The referendum system, as the voting mechanism is known, seems to be at the heart of the question about where the eosio.saving money will eventually go.
While the white paper doesn’t mention referendum voting, the EOS constitution explicitly requires the process for making decisions that affect the entire network, like setting up a system to spend the eosio.savings account funds. Also, in a twist of circular logic, a referendum is needed to ratify the still-provisional constitution itself.
Highlighting what needs to be done to push EOS forward, Daniel Keyes, the co-founder and COO of EOS Nation, a standby block producer, told CoinDesk:
“There was no referendum system built in at launch, so it’s up to us as a community to come together and build that.”
And moving on that advice, Keyes is acting as project manager for a team composed of different block producer candidates, who are working together to build the referendum system.
At the same time, a group known as the EOS Core WPS Working Group is developing the “worker proposal system” or WPS, a mechanism described in the EOS white paper that would be used to submit proposals and allow token holders to vote on whether to fund them using tokens from the eosio.saving account.
And already, the working group has published the back-end code for the WPS. Although, as mentioned, the WPS code must be approved in a one-token, one-vote referendum, so the working group is waiting for the referendum system to be put in place.
That said, the WPS carries added significance now as the EOS community is split on what to do with the funds.
While some, including members of the working group, would like to see the money used for the benefit of the community, prominent voices are urging the community to scuttle the WPS, remove its source of funding, and perhaps “burn” or destroy all the tokens currently held in the eosio.saving account.
Stepping back, the money currently accruing in the savings account is funded by “inflation,” which in this context refers to a predictable increase in the total supply of EOS tokens.
Every year, the supply rises by 5 percent, and four-fifths of that increase automatically goes into the account. This process is made possible by a funding mechanism that was coded into the EOS protocol at launch.
With that, the working group suggested in a recent blog post that one million EOS tokens (around $4.8 million) be transferred out of the eosio.saving account and used to fund high-priority projects like the EOS arbitration body – which rules on disputes among token holders – security tests, and an online portal for the WPS.
They also want to set up an “emergency committee” to assess project proposals, though they promise to dissolve the committee once the “emergency” situation has passed. Proposals approved by the committee will then be put up for votes by token holders (these will be similar to referenda, but have a lower minimum threshold for token holder participation).
According to Orchid Kim, a community builder at the block producer candidate EOSYS and a member of the working group, creating the referendum voting mechanism and allocating the savings to future projects is the only way “for EOS to live up to its expectations.”
“We should not rely on Block.one, the block producers or continued volunteerism,” she continued.
Block.one is the company headed by Dan Larimer that developed the code behind the EOS protocol and conducted the $4 billion ICO, but did not participate in the network launch.
“Bootstrapping any decentralized process is a complicated and daunting task. There are many things to build and fix.”
Some community members disagree with Kim, though, arguing that EOS should ditch the WPS and the token inflation that funds it. Most notably, Block.one CEO Brendan Blumer endorsed this view in late July.
At the time, Blumer was responding to a Twitter user’s observation that “even with the wonders of compounding,” the 1 percent inflation that top block producers – those that verify transactions on the network – divvy up among themselves, might seem insufficient.
As such, the user expected “whale” block producers –those that hold a large number of tokens – to go after the larger 4 percent inflation by awarding WPS contracts to themselves.
“We already saw how the voting system works,” another user commented on Reddit, referring to the perception that whales vote friendly block producers into the top spots in exchange for a cut of the earnings.
Unlike the referendum system, the voting system for electing block producers is already in place. Because the system is based on the one-token-one-vote approach, many of those both inside and outside the EOS community see accounts with large numbers of tokens as determining the outcomes of votes.
The user then added: “Getting rid of [the WPS] completely is the only best option.”
Yet Kim said that EOS Core WPS Working Group members “recognize the fears that some in the community have” and have put in place numerous checks and balances to safeguard the system.
For example, the working group proposes burning half the tokens in the eosio.saving account on an ongoing basis.
It’s likely that the situation will come to a head soon, though, since Keyes told CoinDesk that testing on a minimum viable product for making referendum proposals and conducting votes could begin as soon as next week. The full rollout of the implementation will follow sometime after that.
Much like the debate around the WPS, there remains a continued debate around the EOS constitution, which is currently in “interim” status because it has not been ratified through a referendum (again, there is no referendum mechanism available on EOS right now).
As such, Keyes underscored the importance of using the new referendum system to solve EOS’ lingering questions, telling CoinDesk:
“We’ve got this worker proposal fund collecting a million dollars a day that we can’t do anything with, we’ve got an interim constitution that people are eager to make changes to, so we want to get something to market as soon as possible.”
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