On February 14th, the founder of Tron, Justin Sun, announced the Steemit Inc takeover. Of course, his statement shook the community since the legal entity holds a huge amount of STEEM cryptocurrency. Thus began the Justing Sun Steemit drama.
Justin Sun’s Steemit Takeover is Malicious?
The community didn’t approve of Sun’s takeover as they deemed the move to be malicious and opposite to the foundations of the ecosystem. Nevertheless, despite the outrage in the community, Sun took over the platform.
As legit as it might seem since everything was done in accordance with STEEM’s rules, the way that the power shifted on the blockchain is more than dubious. Especially since it involves some major players. By major, we mean cryptocurrency exchange giants such as Binance, Huobi, and Poloniex.
But let’s take a step at the time.
The Decentralization Exercise
Following the allegedly hostile move by Sun, witnesses on the STEEM blockchain who are, in fact, network’s validators, made an unexpected action against the founder of Tron.
They exercised the right of the majority and soft forked Steemit Inc’s funds out of the game. Despite the reversible nature of the fork, the fact remained that Justin Sun was brushed aside by the community.
In the interview given to a mainstream crypto publication, a witness candidate Reidy explained:
What the witnesses did, I believe, is best for the chain during this uncertain time. There were promises from SteemIt Inc. that the stake in question would be used for certain purposes to grow the ecosystem but, more importantly, that it would be non-voting stake. This was never enshrined in code. It’s highly unlikely those promises transferred in the sale (why would they) so the witnesses moved to protect the chain until details can be agreed upon.
The post published on Steemit on February 23rd by a group of witnesses reveals deeper problems:
In an ecosystem where we are moving towards true adoption for decentralized technologies, this large amount of stake (Steemit Inc’s stake), mined at the beginning of the blockchain with an “unfair” advantage, has always been problematic in terms of creating a potential for heavy centralization.
Naturally, it isn’t just about centralization. It’s more about huge profit potential that comes from that centralization. Therefore, of course, Sun was quick to react.
Voting Out the Majority
Justin Sun Steemit drama took another U-turn when he decided to regain control. According to evidence, Binance, Huobi, and Poloniex used their traders’ STEEM deposited in their wallets to participate in Tron’s founder’s bailing out.
By voting for witnesses on the STEEM blockchain with the overwhelming amount of their users’ funds, Binance, Huobi, and Poloniex, practically, established the witness-voting monopoly.
To clarify, the voting power acts proportionally to the number of funds in the voter’s respective wallet. Of course, centralized exchanges played as whales and voted newly found witnesses into power. These witnesses were never before present on the STEEM network. And it is even more interesting if we know that Justin Sun is a part-owner of Poloniex.
The tragicomic case is even more astonishing when we know that the first witness outside of the Sun’s circle has at least 13,000 voters more than all of the new ones combined. Knowing that Sun’s new witnesses have no more than 5 voters each, we can deduce that STEEM blockchain has become almost fully centralized. And it seems that the code allows it since it allows the domination of the number of funds over the number of voters.
This move echoed throughout the community so much that even the biggest names had much to say on the matter. One of them is Ethereum’s Vitalik Buterin who described Sun’s move as a “de facto bribe attack“.
The author of the STEEM blockchain’s original code is Dan Larimer. It would be interesting to hear his comments on such a blatant example of the governance design flaw exploitation.
Dealing With “Hackers”
Proclaiming the community to be disorderly, Steemit Inc published the following release:
For the next 4-6 weeks, the Steemit team will be using the voting rights to resume the order of the community while having an open channel for meeting community members and Witnesses. The goal is to protect the Steem blockchain from bad actors, add transparency, and receive community suggestions and advice.
After the 4-6 weeks period, the Steemit team will give the governance back to the community when it’s back in order and mutual agreement.
By disorderly, Steemit Inc meant that its stake had been suspended by the majority of voters/Steemit community. Justin Sun went even further to straightforward call those voters hackers. According to Sun’s today’s Tweet, Steemit Inc “defeated the hackers” and made all (of their own) funds safe again.
Steemit Community Explodes at Justin Sun
This kind of treatment inspired outrage in the seemingly coherent Steemit community. Hence, among more than 490 comments to Sun’s Tweet, a minority had anything good to say about the crypto entrepreneur.
And our personal favorite:
Nevertheless, among all the thrashing, there are those who, instead of Sun, criticize the nature of the STEEM blockchain and centralized industry players.
However, it’s not just the community that resents the new leadership. During the last 24 hours, a few high profile Steemit Inc’s employees quit their jobs Among them the head of communications, Andrew Levine; developers, Steve Gerbino, Tim @roadscape, and Michael Vandeberg.
Any way we look at this Justin Sun Steemit crisis, it does reveal some serious shortcomings in the governance of DPoS-based blockchain. If somebody like Justin Sun can take over the whole ecosystem within the network’s rules in this way, it is a serious flaw in the decentralization plan.
If not strictly illegal, Sun’s move is perhaps unethical and not in accordance with the spirit of decentralization. What remains to be seen is will the community stay strong or bend the knee before the establishment. On the other hand, if Sun won’t budge, will they consider abandoning the platform entirely?
Or, in the end, does the STEEM community bare the guilt for holding their STEEM on centralized exchanges? Not your private keys – not your coins!When you start feeling the irresistanbe urge to share our content and click on one of the icons below, you’ll be rewarded with Sharpay (S) Tokens. Now, ain’t that cool or what? Getting paid for sharing!! Of course, to receive your tokens, you’ll need a Sharpay crypto wallet. Therefore, first you need to register on Sharpay’s OFFICIAL WEBSITE and the wallet is there.
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