EOS Resource Exchange (REX) which permits the lending of EOS tokens was deployed just three days ago and is already enjoying huge success by reducing developers costs by 99,9% and giving users a return on their staked tokens. The REX system contract has been ideated by Daniel Larimer as an incentive to increase voter turnout and an attempt to reduce the amount of EOS on exchanges. While being highly beneficial for the EOS ecosystem it does have some flaws that need further improvement.
REX has been released as an open source code and anyone is free to create an interface for it. EOS already has several platforms from which it’s possible to lend the tokens and much work has been done to make them as user friendly as possible.
EOS Authority have extensively tested the REX admitting that Block.one have been very helpful. They have created a wonderful clear interface providing users with easy access to accounts as well as all REX statistics.
REX has been built at the protocol level and utilizes community funds for the distribution. Fees coming from new EOS RAM sales, from EOS names bids and from loaning CPU and NET are being distributed to the REX lenders, but the funds that have been stored in eosio.names and eosio.ramfee which accrue at 1475794.9580 EOS ≈ $7,337,982.25 USD) and 1,961,836.4023 EOS ≈ $9754688.91 USD (at 1 EOS ≈ $4.9722) respectively are not part of the REX pool and a referendum vote is needed for them to be added.
The question is if they should be added because as it stands now, REX can be gamed by bad actors to get into community funds while harming the network.
There’s one method by which it could be done and this is through a proxy. While sending tokens to REX, each user must meet the voting requirement which has mandatory voting for at least 21 Block Producers (BPs) or delegating voting power to a proxy.
In a hypothetical scenario, a whale behind a BP can simply create a proxy and vote for own sock puppets taking EOS from REX and increasing its rank in the BP standings. There’s actually no way of knowing who the BPs are and if one BP belongs to someone else or is independent. This is the major rail block to the system and many sock puppets use it to get the inflation rewards without providing any value to the network. The proxy is not even required to vote for anyone. This is not a security risk but rather highlights the problem with the proxies who have no checks on them.
Another method of gaming the system by bad actors is voting for 21 BPs belonging to the same team or to the lower rank candidates mixed with own BP nodes. This is something that could happen and shows how easy it is to exploit the voting system.
If the accumulated community funds are added to the REX pool it may be worth it for bad actors to try exploiting the system.
Proxies have shown to be a major threat to the voting system already with some exchanges using them in “not-so-clear” voting with users tokens, not always voting for at least 15 BPs which accrues for votes concentration and centralization of the network or could be involved in vote trading. The proxies have also been highly criticized when used by BP owned dApps to vote for their own BP and other collaborating BPs. This was the case with Starteos and their other games.eos BP as well as with Chintai.
Now, with REX platforms implementing a proxy requirement we can see that these platforms are being used for collecting votes from users. There’s often a notice for the user which makes it clear that in the case of not meeting REX voting requirements the platform proxy will be automatically selected. It is the case of bloks.io who send a notice and use blokspartners as their first platfom proxy.
EOS Authority randomly use technicalbps or makesfreedom proxy while EOS Titan’s REX platform use rexcoreproxy but gives the users the possibility to choose one of other several proxies listed in the TheDreamTeam drop-down menu.
Eosrex.io platform gives no choice to the user of which proxy they want to delegate to but automatically selects their eosrex.io proxy.
Eosdaq informs the user that the voting requirement needs to be met and in case it’s not they delegate users vote to eosdaqvotebp.
Token Pocket’s proxy is rexproxy1.tp.
Chintai haven’t released their REX yet.
It is a questionable topic if a BP should be providing their own proxy as the only choice for the users. They are regarded by some as the servants of the network and, in that perspective, shouldn’t be using their tools for their own profit, but rather for the benefit of the whole network. Providing a choice of all the proxies could be regarded as fair play. The BPs may disagree as they build the tools also as a way to gain votes and they want an exclusive on their platform. This is more of an ideological aspect and the community should decide what kind of culture they want to see in EOS and lobby for it.
Whatever the users decide, they are encouraged to vote or delegate to a proxy of their own choosing before heading to a REX platform and staking their EOS to REX. The list of proxies is extensive.
Many users have criticized REX lending for providing too low a profit however the premises of REX were mainly voting improvement and making EOS resources cheaper. The goal of resources has been 100% reached, the improvement to voting has been met although more should be done and the profits from lending will surely come as more dApps are built, more community resources will get added to the pool, more EOS names will be sold and more network usage will occur.
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