EOSIO is in many ways unique in its operations compared to other blockchains. At the core of these operations lies its consensus algorithm model for verifying and validating all transactions on the network. Most blockchains either use a Proof of Work (PoW) or a Proof of Stake (PoS) algorithm. EOSIO uses a unique consensus algorithm known as Delegated Proof of Stake (DPoS) which was invented by the man himself, Daniel Larimer.
Delegated Proof of Stake
As the name suggests this algorithm is similar to Proof of Stake but made a bit more interesting by its delegation aspect. It is the reason why EOS can make decisions and solve new problems quicker than any other blockchain. Yet without having to compromise on decentralization. In a DPoS algorithm users stake their EOS tokens before they can delegate the task of securing the EOS network to a select group of block producers. Delegated Proof of Stake cleverly involves every EOS token holder in the governing and decision making regarding the blockchain’s future.
This type of approach encourages participation in the EOS ecosystem. Whilst giving every single token holder the power to voice out the direction they’d like to see EOS move in. Unlike on most chains where a few individuals make all the decisions for the entire community, EOS recognizes that token holders deserve to have a say. After all it’s the token holders that are personally and financially invested in this blockchain. Every single one of these voters hopes to see it succeed.
EOS holders know a lot about its blockchain. They interact with it on a daily basis, I guess we can say they’re its permanent testers. Token holders understand what works and what doesn’t work, which parts are working smoothly and which one’s need further improvement. Thus the decision to include token holders in EOS’ governance was an ingenious one! The governance participation process for EOS holders is pretty simple and one worth noting as it is highly encouraged that everyone partakes in it.
Anyone who has EOS in their accounts can participate in the voting process. Voting is a form of communication which allows all users to express their needs. By voting, users provide valuable feedback which can then be used by the voted upon delegates to better serve the greater EOS community. This feedback influences improvements and future upgrades to be made to the blockchain. In other words, the voters help scale the blockchain in a direction that better serves them.
To vote users simply need to stake their tokens and choose 30 delegates with whom they feel their motives most align. It’s as simple as that. The votes will then be instantly calculated and the 21 delegates with the most votes become the governing body. This governing body is responsible for carrying out actions on behalf of the EOS community. The actions of these 21 delegates should mostly reflect the desires of the community that voted them into the position to govern EOS.
Voting on EOS is an ongoing process, 24/7/365, every year. Votes are automatically re-calculated by the second as each user casts new votes or changes their current ones. There is no limit to the number of times a user can change their votes as long as they pick a total of 30 candidates. This allows for a quick removal of malicious or inadequate delegates. The governing body is excluded in the counting of votes to maintain the integrity of the results. This voting process is transparent and the EOSIO smart contract does all the calculations of votes to guarantee an accurate process.
Block Producers (BPs)
The elected candidates then become the 21 Block Producers and the governing body of the EOS blockchain. As BPs their job is to validate and verify all transactions on EOS. Since EOS is designed to be the fastest and most secure decentralized blockchain in the world, BPs are held to very high standards. They need to execute actions as quickly and as efficiently as possible. A BP that slacks off and misses too many blocks is noticed by the community and replaced with a more qualified candidate. This entire process is transparent, thus the community is in constant surveillance.
As the governing body, BPs are responsible for EOS’ governance. They must see to it that the community’s concerns are attended to. That fixes for vulnerabilities on the chain are implemented, no matter how small they may be. They must also report issues they uncover, with regards to the chain’s operations, back to the community. Assistance in the testing of such fixes and upgrades is a prerequisite for BPs and the implementation of such upgrades thereafter.
Proposals of possible updates/upgrades to the chain need to pass 15-21, in order to be implemented. If not, then the proposal fails and is considered not viable for implementation. Failed proposals can be modified to fit the proposed requirements and voted upon again at a later stage. Depending on the state of the blockchain and the proposal, focus will be directed to proposals that are deemed to be of an urgent concern.
There’s currently over 500 Block Producer candidates all looking to be one of the 21 BPs to govern EOS. Which makes it a daunting task for the average user to research every single one, until they can come up with the best 30 to vote for. What ends up happening is users will choose a few candidates their familiar with then fill the rest of the spots with candidates picked at random. A solution to this time consuming undertaking is for users to pick a single trustworthy proxy to vote for. A proxy is a person/entity that is delegated rights, by the user, to vote on their behalf. A proxy then exercises that right by picking 30 BP candidates they feel will better serve the community and the blockchain.
The best way to pick a proxy is to find one that closely aligns to your ideals for EOS’ future. Proxies of all kinds exist out there and voters are encouraged to browse AlohaEOS’s proxy listing page to get more information about the philosophies behind each proxy as well as the list of Block Producers that are currently supported by the proxy. Some of the proxies offer to redistribute a portion the inflation to their voters (voter rewards) while other proxies are designed to allocate all their votes’ rewards to the Block Producers it supports. It’s up to each voter to decide what kind of Block Producers they want to support and proxies are a practical way to do so.
Earlier on we mentioned that the EOS blockchain charges no fees for use nor for transactions. This is only made possible by the structure of its governance – the Delegated Proof of Stake (DPoS) system. All the candidates that are elected to become a part of the 21 Block Producers, are rewarded handsomely by the EOS smart contract. Included in the smart contract’s code is an annual inflation rate of 1% for the minting of new EOS tokens. These newly minted tokens are awarded to the current top 21 Block Producers. Some of those EOS tokens are also given to standby BPs who act as replacements for any inadequate ones in the top 21.
The purpose for these newly minted EOS tokens is to not only reward the Block Producers for their amazing work. This reward also ensures that they can afford to keep their block producing and testing equipment updated. As the EOS blockchain continues to scale BPs need to maintain or upgrade their equipment in order to keep up with the technological demands. The same goes for the standby BPs. In order for them to be fit candidates to make a replacement, they need to update their equipment as well.
In their own discretion some of these BPs have chosen to share some the token rewards with their voters. BPs have many reasons for this such as it being a token of their appreciation for the support of their voters. Other members of the community see this rewarding of voters as a means for vote buying. This is a topic of great debate among the community and one that won’t be going away anytime soon.
Working as intended.
The way I see it though is that this is a healthy debate that confirms people do care about the EOS ecosystem and wish to see it thrive. Such is the beauty of this blockchain; if people aren’t happy with BPs rewarding their voters, then they can buy more tokens and make their voices heard through voting for a change.
This is what it’s all about; EOSIO is “working as intended” and if the majority of people feel that it isn’t then they have the power to instill change. Where else in the blockchain space was this possible before EOSIO? It’s such a beautiful transparent feature that not even the traditional brick and mortar voting processes can compete!
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