Centralization-decentralization is a spectrum. When others claim that EOS is “centralized,” they are likely referring to the 21 block producers in a way that lacks nuance. In ETH, anyone can theoretically become a miner. But it is not practical because the average Joe cannot outcompete a mining farm for token rewards. The average Joe must lend the farm his computer power to acquire tokens, centralizing his chain. In EOS, lending your stake (vote) for rewards also contributes to centralization, but less severely. The difference lies in the economics of rigs versus tokens.

Brendan is the CEO of B1. He is highlighting how it is harder to buy $EOS tokens to stake (vote) oneself into the top 21 spot(s) than it is to purchase hardware to become a miner with enough influence to have a say at the “code changing table.” Buying more tokens causes the price to rise due to price slippage. Buying more hardware causes the price to drop due to bulk buying discounts. Brendan’s observation of 3-4 mining pools controlling ETH remains true today. On EOS, the pie chart is split evenly in 21 ways.

BPs on EOS occasionally stake (vote) for each other, forming alliances that become stronger due to how staking (voting) works. Each $EOS token gives you up to 30 stakes (votes). Choosing 30 BPs gives you full staking (voting) power. Choosing to stake (vote) for just 1 BP gives you half the power of staking to (voting for) 2. Because the incentives dictate staking (voting) for all 30, many BPs stake (vote) for each other, forming “alliances,” derogatively referred to as “cartels.”

So far, the top BPs are generally in good standing due to their value to the EOS community. The bright side is that staking (voting) is transparent. The token holders can stage public campaigns against an alliance or other injustices. All in all, the DPOS consensus mechanism is more decentralized (more independent entities producing blocks) and transparent (on-chain governance!) than POW.

Author: Jesse Jaffe

Editor: Randall Roland/ Dario Cesaro

Translator: -

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