Visit any EOS Telegram channel and some version of this question will pop up again and again: Is the mainnet live yet?
While the EOS blockchain technically launched on June 10 at 13:00 UTC, the answer to that question is effectively no. That’s because the crypto tokens created by Block.one’s $4 billion EOS initial coin offering (ICO) are locked up until the network elects 21 “block producers” (the equivalent of miners for the new network), and as that still hasn’t happened, currently no one can start using EOS just yet.
As it stands, the blockchain will go live if 15 percent of all tokens – an equivalent of 150 million – are “staked” in a vote on block producer candidates. Staking tokens allows EOS holders to vote for up to 30 block producers – the groups in charge of verifying transactions – and votes are weighted by how many tokens are staked.
And while this process is currently underway, what we’ve seemingly learned about blockchain self-governance from the EOS launch is: If people are given time, they will take it.
That magic 150 million tokens could be hit at any time, but so far votes have stacked up slowly, frustrating many Telegram inquirers, and probably plenty of others. Although, there is some evidence that staking is heating up. At the end of June 10, only about 10 million tokens had been staked, but as of this writing on June 11, just over 30 million tokens have been staked.
Still, the platform needs five times as many for the voting process to start.
Kevin Rose, community lead for one of the leading block producer candidates, EOS New York, told CoinDesk that he believes the slow start had something to do with the launch happening late at night in Asia, a continent where several countries have significant numbers of cryptocurrency users.
There seems to be some truth to that, since the next day after the launch (after Asian crypto enthusiasts would have been waking up), the number of staked tokens tripled.
Others, like Vahid Toosi of EOS SW/Eden said he believes there’s a psychological barrier – he predicts at 40 million tokens – that needs to be crossed before tokens start flooding in.
But ultimately, many members of the EOS community speculate it’s a handful of different precautions investors are taking before staking their EOS tokens – hesitation by holders that have a large quantity of EOS (or whales), the lack user-friendly tools, security concerns and general prudence.
Speaking to that, Kyle Samani of Multicoin Capital, a fund that’s bullish on EOS, told CoinDesk:
“I think voting is rightfully slow. Exchanges are figuring out operations, and whales and funds are going to bend toward being conservative.”
Block.one did not respond to a request for comment.
Whales in waiting
Sure enough, others think those with big money investments in EOS are watching and waiting.
“I think the whales want to see how the other whales vote so they can swing it their way,” Toosi said.
Steve Floyd of EOS Tribe, an EOS block producer candidate, believes some of the whales are already trying to swing it their way.
“Some of these [block producer] candidates in the top 10 came out of nowhere. How they got in the position they are in is pretty obvious – they had a lot of tokens (or access to them) and voted themselves in,” he said. “It’s a whales’ election.”
EOS New York’s Rose agrees that there are some new whales picking favorites, but he’s also more optimistic about their role, stating that anyone with significant holdings can move the needle, and those that do are looking at taking some cues from the “wisdom of the crowd” concept.
Because he told CoinDesk:
“If they were to make the wrong decision, then people lose faith in EOS and the value goes down.”
Many critics have pointed to the number of large addresses as a sign that EOS is centralized, but these estimates have been somewhat exaggerated.
First, Block.one has a significant portion of EOS tokens but has committed to not staking its tokens and voting on block producer candidates at the start. Plus, some of the biggest EOS wallets are cryptocurrency exchanges that are holding EOS tokens for their users.
Still, it’s fair to say large holders dominate the EOS landscape, and as such, many wonder what’s keeping those players from staking right away.
Hot and cold
According to some, the lack of sophisticated mechanisms for voting is keeping some investors on the sidelines.
“The majority of people are waiting for tools to be vetted and confirmed to be safe before jumping onto voting,” Syed Jafri of EOS Cafe Calgary, a block producer candidate, told CoinDesk.
Indeed, Samani of Multicoin Capital echoed this, saying the venture fund has a policy that its investors always store their private keys – a cryptocurrency equivalent of a password – in cold storage (meaning offline).
“Right now, the only tool available for voting is in a hot wallet. We will not vote until we vote from a cold wallet,” Samani said. “I’m sure many other large holders feel the same way.”
According to Jafri, it’s not just about hot or cold wallets. Part of the reason some people are waiting to vote is because, during the blockchain’s testing phase, several “epic” vulnerabilities were found.
As such, he continued:
“They want to ensure the chain is safe due to some of the recent vulnerabilities discovered. Trust builds slowly.”
Beyond just the need for cold storage staking, the messaging around how to stake and vote has been mixed and confusing at best.
As CoinDesk reported, not long before the vote, there were hardly any options for voting without using the command line, something that will be difficult for non-technical users.
Some more user-friendly tools started to pop up closer to launch, with broad support among insiders forming around a voting tool made by Scatter, but then just as the blockchain went live, a coalition of validator candidates recommended only using command line tool “CLEOS.”
One group of EOS holders that couldn’t use the command line tool if they wanted to are those holding their tokens on exchanges, since they’re locked up in the exchange’s wallet. Some exchanges have committed to building tools for their users to vote with, but CoinDesk was not able to determine at press time whether or not votes from exchanges were hitting EOS yet.
Many observers might think this one application – for easily staking and voting tokens – would have been good for Block.One to build over the last year, but Rose said Block.one has always said it would take a hands-off approach to the launch, including not building a voting tool.
Looking to sell?
Still, what could be keeping others from voting is a sell strategy.
Right now, EOS tokens are mostly frozen until the mainnet launch because most tokens are sitting in EOS wallets. But EOS tokens on exchanges continue to be able to be bought and sold.
Those eager to sell (including those that might be waiting for the mainnet launch and a possible price pump, or those that want the ability to sell should there be a massive sell-off after the launch) might be keeping tokens on exchanges and not staking them to get around the lock up.
Yet, those token holders might as well vote, since a large-scale sell-off can’t happen immediately after the protocol goes live.
That’s because once the first slate of block producers are elected, each account will go live on EOS with all but 10 of their tokens staked. While users can move to unstake the rest immediately, the command won’t go through for 72 hours.
Since all holdings will initially be staked as if each user had staked and voted, there doesn’t seem to be any reason to wait right now.
And once the chain goes live, voting will be continuous, with EOS checking staked votes for the most supported block producers roughly every two minutes. As such, the first block producers elected might not keep their position for very long.
Although it seems these issues are starting to get resolved since stakes seem to be coming in much faster now than before.
“I think in the coming days the rate at which votes are tallied will be increasing fast,” Rose said, also pointing to the deeper meaning behind this user-launched blockchain by adding:
“We’re watching a free market machine operate with no leader.”
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