Once again, EOS is in trouble, and the constitutional crisis is possibly more severe than all the bugs found on its network or the email scams robbing investors of their tokens. Several accounts have been frozen in apparent violation of the EOS constitution. The actions were taken on June 17, 2018, by the network’s 21 block producers to close the accounts of alleged thieves who were operating phishing scams. The decision was made over video conference.
The matter of the accounts was to be investigated by the appropriate authority – ECAF (EOS Core Arbitration Forum) – as per article IX of the EOS constitution. ECAF initially refused to order the block producers to freeze the accounts. The block developers froze the accounts and then asked ECAF to issue a ruling on the matter by June 19. ECAF issued a statement on the 19th indicating that the freeze should be maintained.
However, the block producers had already frozen the accounts, leading some to claim that the constitution was violated. In an explanation, EOS New York stated that they were put in a difficult position and were forced to review the issue themselves. In the same post, they outline that EOS is a model governed by its constitution, which they violated knowingly.
“We plead with the accompanying Block Producers/Candidates that the ECAF must step forward to issue the emergency freeze action on the affected accounts. Without this, we proceeded as a group to review the evidence ourselves, and came to a difficult decision of executing based upon the evidence.”
What appears to have happened is that ECAF indicated that they did not have authority on the matter since the constitution was not yet verified by EOS users, which makes sense. Technically speaking, the constitution was not violated because it was not ratified, and according to EOS New York, they acted in the interests of the community. Whether or not this is true, the fact is that a group of top block producers essentially took action on their own without due process or community input to freeze several accounts. This is a terrible precedent, regardless of the individual circumstances or the severity of the case in hand. As fair and reasonable as it may be, stakeholders did not elect block producers as arbitrators, though the hackers would have otherwise gotten away with the funds.
EOS is under heavy fire from influential cryptocurrency figures after its constitution crisis. Nick Szabo stated via Twitter that, with EOS, a few strangers could freeze what users thought was their money. Dean Eigenmann referred to EOS as an oligarchy veiled as a democracy on Medium. Users have claimed that it is decision via “conference call” and a comedy show. The main point is made by Charlie Shrem, who says that the whole concept of Bitcoin and other cryptocurrencies revolves around a decentralization of such power. Otherwise, it is no different from a traditional nation-state.
In the end, the constitutional crisis comes down to ideological preferences, with many stating that the block producers acted sensibly given the circumstances and that human intervention is necessary to fight scammers. On the other hand, with this reasoning, we could be back to square one with centralized forces having too much control over the network.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.