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‘Fraudulent Propoganda’: Co-Founder of China’s Blockchain Uber Slams EOS

Last Updated March 4, 2021 2:33 PM
Joseph Young
Last Updated March 4, 2021 2:33 PM

By CCN.com: Weixing Chen, the founder and CEO of Kuaidi Dache, a Chinese taxi-hailing application, has expressed his concerns about crypto assets like EOS in a statement published on Weibo that prioritize scalability.

A rough translation of his statement read:

EOS is a good example. I have always said that there is no problem in trying [new] technology. The problem is the fraudulent propaganda such as ‘Million TPS” and ‘Next Generation Operating System’.

CnLedger, a trusted crypto news source based in China, confirmed to CCN.com that the Weibo account is, in fact, Chen’s and that he is well known in China’s venture capital space as an anti-EOS figure.

Why Chen May Be Anti-EOS

EOS, currently valued at $5.8 billion, is the largest initial coin offering (ICO) in the history of the crypto market. It raised $4 billion in May 2018 without  a live product.

The mainnet of the EOS blockchain protocol launched  in June 2018 with 21 “block producers,” individuals that are responsible for producing blocks on the EOS blockchain network that contain transaction and smart contract data.

Since then, EOS has demonstrated an increase in popularity from blockchain-based decentralized application (dApp) users. According to DappRadar, all top three dApps are currently based on the EOS blockchain network.

However, since its inception, experts have criticized the level of decentralization of the blockchain network, which focuses on scalability and offering a large transaction capacity to appeal to dApp developers.

Smart contracts pioneer Nick Szabo, for instance, said:

In EOS a few complete strangers can freeze what users thought was their money. Under the EOS protocol you must trust a ‘constitutional’ organization comprised of people you will likely never get to know. The EOS ‘constitution’ is socially unscalable and a security hole.

The criticism of EOS by Szabo came after a controversial section of an article explaining the governance system of the blockchain network was released, which stated that an account could be auctioned off after years of inactivity.

“A Member is automatically released from all revocable obligations under this Constitution 3 years after the last transaction signed by that Member is incorporated into the blockchain. After 3 years of inactivity an account may be put up for auction and the proceeds distributed to all Members according to the system contract provisions then in effect for such redistribution,” read Article XV of EOS.

As reportedly  said by EOS CTO Dan Larimer in October 2018, EOS is able to achieve such a high transaction capacity because its sole focus is not decentralization. He said:

Decentralization isn’t what we’re after. What we’re after is anti-censorship and robustness against being shut down.

Whether the scalability-first approach of EOS is right or wrong is to be determined by the market. So far, EOS is seemingly attracting developers and dApp users by providing a network with flexibility and large transaction capacity.

But, investors like Chen does not seem to approve of blockchain networks that do not focus on decentralization, differing from the principles established by bitcoin, which still remains as the dominant cryptocurrency 10 years after its launch.

There’s No Right Answer

So far, the dApp market is simply not large enough to determine which of the approach used by Ethereum, EOS, Cardano, TRON, and other competing smart contract protocols is the right approach.

DApps are averaging less than 10,000 users in a 24-hour span and is not comparable to centralized applications and platforms.