How the competition for EOS supernodes could create the new ICO frenzy

Leo Zhang

By Leo Zhang


Editor's note

EOS is all the rage these days. Since March, the price of the token has almost triped thanks (we think) to two factors: the first being the highly lucrative supernode election process which culminates in June; the second being the EOS marketing narrative which paints the network as an "Ethereum-killer."

Unlike in Bitcoin, blocks in the EOS system cannot be minted by just anyones' hardware. Instead, the largest EOS holders can compete for the right to run block-minting infrastructure. This general approach to consensus is known as "delegated proof of stake" and was pioneered by the creator of EOS, Daniel Larimer. The major criticism of this architecture is that supernodes may collude to cheat users.

The supernode election process is interesting because its popularity (as a discussion topic) suggests the locus of innovation for public cryptocurrency networks in 2018 will be governance (as it relates to the politics of scaling the network). As for the marketing narrative that EOS beats ETH? We're awaiting proof, but that should emerge soon enough, as EOS infrastructure matures and ICOs launch on its platform. Many of the whales who have announced their candidacy for supernode were also major backers of ICOs on Ethereum and other networks.

To read more about collusion problems in delegated proof of stake systems, see this post, and Vitalik Buterin's commentary on DPoS as plutocracy. The EOS mainnet launches in June, and all supernodes must be confirmed before launch. To learn more about the race, see this article in Bitcoin Magazine.

This week's news recap

Monday:Can blockchain fix the worst thing about the internet?
Tuesday:Internet infrastructure is not as secure as you think
Wednesday:Cathedral or bazaar: what’s the right approach to blockchain governance?
Thursday:The future is here, but who is going to protect you from it?
Friday:Will EIP-999 reveal the true nature of Ethereum?

Further readings this week

Three ways Bitcoin is like regular currency
(Federal Reserve Bank of St.Louis)

"Digital currencies exist as data. The cash in your wallet exists as a blend of 75 percent cotton and 25 percent linen. Neither is inherently valuable."

How Bitcoin solves the limitations of John Nash's ICPI

"A subsidy for mining such as this would in turn make mining more lucrative. The excess profit would be sought by new mining power which would in turn be adjusted for by the difficulty adjustment algorithm. It becomes a very expensive attack, wealth is transferred from the attacker to the decentralized network of miners, and it’s all for naught as the system self-adjusts accordingly anyways."

The end of the Bitcoin natural Ponzi

"This is the mentality of everyone who looks at Bitcoin. It’s a large, inefficient data structure, that requires massive amounts of energy to be burned in order for it to work. All of this happens to be for very good reason. In fact, I might go so far as to say that Bitcoin is big and unwieldy for the same reason that government is big and unwieldy."

Q1 2018 XRP markets report
(Ripple Insights)

"Q1 was dominated by headlines across the digital asset market. Those headlines ranged from specific xRapid customer announcements to regulatory developments around the globe."

Supercharging chips by integrating optical circuits
(IEEE Spectral, by Neil Savage)

"Using the approach, the researchers built chips with all the necessary photonic components—waveguides, microring resonators, vertical grating couplers, high-speed modulators, and avalanche photodetectors—along with transistors with 65-nm feature sizes. A laser light source would sit outside the chip. The photodetectors rely on defects that absorb the photons."

The narrative giveth and the narrative taketh away
(Ben Hunt)

"This market, like all markets, needs a positive narrative on risk (the price of money) or reward (the real return on capital) to go up. Any narrative will do! But when neither risk nor reward is represented with a positive narrative, this market, like all markets, will go down. And that’s where we are today."