The EOS.IO (EOS) blockchain project remains one of the largest in the industry. They earned a record-breaking $4.1 billion USD during their year-long ICO. Touted as the next generation version of Ethereum (ETH), EOS would revolutionize the dApp space. Over a year later, EOS is shaping itself into the exact opposite of what investors had hoped. The blockchain developed high fees, low usage and innate centralization.
Created by block.one as a new ecosystem, EOS provides a platform for new projects. Much as the ERC20 standard powered the ICO boom, EOS intended to drive innovation. However, the level of control that they are exerting is concerning. As many suspected after last year’s transaction reversal, EOS is firmly under block.one’s control. Furthermore, Chinese concerns surround a potential acquisition of a controlling interest in the chain. While this may allow for stability, it is detrimental to open development.
The Perils of Centralization
Decentralization is not necessary for a blockchain project. In fact, a central network may be beneficial for some specific use cases. However, decentralization is critical for any digital currency. Any cryptocurrency openly traded on the market should be decentralized. Otherwise, users are at the mercy of the controlling instance.
As we’ve seen with EOS, the ability to reverse transactions can be used to mitigate fraudulent trades. That level of control also allows potential manipulation. While most fiat currencies work in this way, users are more inclined to trust governments over private companies. This also means that block.one would have undue control over third party dApps.
Gambling dApp Exploit
Unrelated to the overall centralization of EOS, the blockchain is still susceptible to certain attacks. An EOS-based gambling dApp, EOSPlay, unknowingly housed a potential exploit. A malicious actor flooded transaction blocks in such a way that the dApp always registered a win. Over the course of the attack, the account gained over 30,000 EOS.
While it only impacted the relatively narrow EOSPlay market, the attack exposes some vulnerabilities within the system. By overwhelming the staking system, it’s possible to ‘freeze’ EOS from validating other transactions. Without a fork or a patch, it will be difficult to remove this exploit – and exploit which makes dApp development on EOS riskier.
Article By: Adam Stone