DPoS shouldn’t be Made Scapegoat Amid Steem Community’s Disputes With Justin Sun
The recent struggle between Steem community and Justin Sun, the founder of Tron, shocks the cryptocurrency community over the world. Many people blame DPoS (delegated-proof-of-stake) as they believe the disputes wouldn’t happen if Steem adopts PoW. So is that true?
This article is to explain that the problem may not be solved even if Steem adopts PoW. What this event exposed is the problem that most cryptocurrencies face now.
By purchasing Steemit, Justin Sun gained control of a sizable share of Steem’s consensus voting weight. This fact is due to the platform’s delegated proof-of-stake (DPoS) architecture, and Steemit being by-far the most active element of the network. Fearing Sun’s potential to cause mayhem, last week the Steem team initiated a soft fork that eliminated Steemit’s influence. some major exchanges using depositors’ tokens to cast votes on Steem’s DPOS blockchain, essentially taking over the blockchain using their clients’ tokens in what one user describes as a “hostile takeover.”
“Apparently Steem DPOS got taken over by big exchanges voting with depositors’ funds. Can anyone confirm and/or provide details? Seems like the first big instance of a ‘de facto bribe attack’ on coin voting (the bribe being exchs giving hodlers convenience and taking their votes).”
Vitalik Buterin, the Ethereum co-founder, spoke about this in a recent tweet, noting that this may be the first clear instance of a “de facto bribe attack on coin voting.”
Who is to blame for this incident?
This incident wouldn’t happen if there is no pre-mining by Steemit. However, pre-mining is a common phenomenon in the crypto space, and Ethereum is no exception.
Justin Sun bought Steemit, and Steemit promise to sell the coins to him is actually a normal business behavior, which shouldn’t be criticized.
Is the soft fork launched by Steem community to blame? It is really unethical to violate other people’s assets without their consent. From the perspective of Steem community, Sun’s intervention really makes them feel threatened.
The intervention of major exchanges stemmed from the irrational behavior of Steem community and their relationship with Justin Sun.
There seems to be a reasonable explanation for all the above behaviors, so all the people blame the DPoS mechanism.
Most cryptocurrencies are centralized
Many people regard bitcoin as the embodiment of PoW but ignore Steem’s size. As early as June 2016, Ethereum, which had a market value of $1 billion at that time, was forced to roll back the blockchain in the way of hard fork because of nearly $60 million worth Ethereum in The Dao smart contract hacked. Bitcoin, a PoW project with a market value of more than 10 times that of Steem also took such extreme measures because of the loss suffered by some people.
Assuming that Steem adopted PoW instead of DPoS? What will happen?
At present, almost all PoW coins including bitcoin are joint mining through the way of mining pool, so the miners will actually entrust their voting rights to the pool operators.
In this sense, PoW coins actually adopt DPW, so as long as it can persuade operators of several large mining pools, it can realize such operations as rolling back. Regarding Steem’s volume, the operators of mining pools may be easily persuaded by Justin Sun to retrieve his assets.
The reason for the attack can be understood as an academic word – miner’s extractable value (MeV). This value may be the economic return promised by the persuader or the relationship value. As long as the value is greater than the loss caused by the attack, it is worth it. So PoW can’t solve this problem.
Of course, the degree of decentralization of PoW and DPoS, is higher than that of the latter, because the mining pool is unable to force the retention of miners, while the exchange can restrict the holders to withdraw coins.
However, in this incident, the two cannot play a decisive role. Is there any way to stop this kind of thing?
The existence of mining protocols like Stratum V2 can realize the return of the voting right of the mining pool to the miners. Or waiting for the maturity of DEX. Then PoS and DPoS coins can achieve a higher degree of decentralization. Before those above are realized, most cryptocurrencies now are still pretty centralized.