After the biggest initial coin offering (ICO) in history raising USD 4 billion, Block.one’s officially released EOS native blockchain software launched on 1 June 2018 but has since been moving very slowly. Uncertainty surrounding the project, largely blamed on centralization concerns, has caused a 30% decline in EOS price, shaving more than USD 4 billion off the market cap.
A price rally from USD 12 USD to over USD 15 occurred around the time the software was released, and price declined a little but was relatively steady following the release until the genesis block on 9 June 2018, starting the blockchain.
Worries over EOS centralization is thought to have severely affected price, however. EOS uses delegated proof of stake (DPoS), which is different than normal PoS since not every wallet that is staking will help validate transactions – only block producers will be able to validate transactions into blocks and receive rewards for doing so.
These block producers are being voted on by staking EOS, and 15% of all EOS (150 million coins) need to be staked before block producers are selected. This process has been going very slowly, with only 30 million EOS used to vote so far. The slow rate of voting is thought to be due to confusion on how to vote, made worse by the potential for getting scammed since users must expose their private key to vote.
During this intermediate time between the genesis block and the completion of voting, the EOS blockchain is being run by a single block producer, EOS New York. This was not the original plan, as there were supposed to be 21 block producers during this time. Having only one block producer makes EOS very centralized, raising serious concerns and fear in the market, leading to a price crash.
EOS began as an ERC-20 token with no special functionalities since it first started trading on the markets in July 2017, yet speculation has caused it to become the fourth largest cryptocurrency by market cap behind Bitcoin, Ethereum, Ripple, and Bitcoin Cash. This speculation was driven by Block.one’s promises that EOS would be an entire operating system for decentralized blockchain-based apps, with quick transaction times and the potential for millions of transactions per second.
Clearly, the market is skeptical about this due to the launch and voting process that has taken over ten days so far and has no end in sight.
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