The Light at the End of the Tunnel: An Honest Discussion on the EOS Token Burn, WPS, & Governance Featuring Ryan Bethem of Chintai.io
The Light at the End of the Tunnel: An Honest Discussion on the EOS Token Burn, WPS, & Governance Featuring Ryan Bethem of Chintai.io


There is no doubt that one of the biggest buzzes around the EOS town recently heavily involved the recent changes to the EOS network whereby the present BP’s reduced the inflation rate from 5% to 1% as well as the permanent burnt of 34M+ EOS tokens in the savings account reducing the overall token supply. 

Essentially, for those unaware, what this means is that there will no longer be 4% inflation going into the eosio.savings account while at the same time, the elected and standby BP’s will retain their 1% inflation reward.

It’s hard to say just how many people were against this, but we know for certain is that despite the rally cries from the general populace echoing cheer for a decreased circulating supply that not everyone was happy.  From the perspective of the other camp, why not use the tokens locked in the savings account for something beneficial to the network? With the recent network congestion caused by EIDOS for instance, the EOS in the savings account could have been used to offer out resources to dApps to give to their users.  Why were the funds not used to help fund infrastructure and projects that at this point in time are lacking in capital? Countless other proposals were made and not passed that are neither here nor there at this point, as in the end, the currently-elected BP’s decided to listen to the majority of voters and strike these 34M+ EOS tokens from existence.   

 

Although we could speculate that the reason that many of these proposals were not passed boils down to such things as deciding who would be eligible for the funds, the necessity for projects using these funds to not be able to guarantee that these EOS would not find their way to the open market and create a downward pressure on the token price, and likely a plethora of other reasons depending upon who was asked, it seems apparent that one impetus for the burn was to pave the way for a ‘worker proposal system’ on the EOS main net.    

There is a time and a place for everything.  No one was eyeing inflation so it was low priority; there were higher priorities always upfront and center.  EOS Nation and AtticLab have been working on WPS for months and removing the 4% inflation going to savings and subsequently burning the accumulated savings was always due to occur prior to WPS being proposed.

We built WPS and it doesn't require inflation or savings.

Yves La Rose - EOS Nation Telegram

What exactly this WPS actually entails is at this point uncertain, but it seems highly unlikely that the present elected BP’s would vote for a burn of all those tokens in the inflation savings account if they didn’t at the very least have faith in the fact that it was plausible.  

And when the details are released and the WPS proposal is passed, what other implications might this entail?  Far more than the majority may have thought according a recent Tweet montage by COO Chintai.io Ryan Bethem:

Burning 34M #EOS held in eosio.savings and reducing inflation is a momentous symbolic milestone.  But far more importantly, this event rolls out the red carpet for the first on-chain worker proposal system (WPS) on EOS.  I don’t think eosio.savings would’ve been ‘raided’ if a WPS was already implemented. The game theory IMHO simply suggests otherwise.  But many were worried. And maybe better safe than sorry. Regardless, with those concerns now resolved, a WPS can be activated with less political backlash, resistance, and optics concerns.  Now the system can be implemented with a ‘sandboxed’ trial period and limited funds (no more endless faucet concern).

For the first time (maybe) the #EOS community can choose to minimize and circumvent dependence on B1, who is not the benevolent god many wish they would be – they’re a private business tied up in legal webs of hell, and focused on #EOSIO software, #voice and enterprise.  Yea they could do a lot of things better. Sure. Easy to criticize. But they continue to optimize and build #EOSIO. They continue to solve problems that #EOS exposes. They continue to innovate. I digress… 

The point is that a WPS on EOS would mean the community could have more control over the outcome of the network than it did before.  And the incentive alignment could bring about some very promising outcomes.

*For the continuation of this Tweet thread please follow go to https://twitter.com/ryaneos42/status/1232583268026867713 or click the link below

And herein lies a couple of little things potentially off the radar when it comes to governance and how this whole reduction of inflation and token burn ultimately played out. 

After coming across this on his personal twitter feed I decided to catch up with Ryan for a little more insight regarding his take on what the future of this decision holds.  And with that then, let’s dive straight in!

 

Hello Ryan, and thanks so much for joining me to discuss a little further some of the ideas you have around this latest and potentially further developments happening recently on the EOS mainnet.  So in regards to your comments on Twitter, would it be a fair assumption that even though your not entirely convinced that the EOS savings account would have been raided for WPS development, you do feel overall that this was the best route for the current elected block producers to take in regards to further developments of the EOS ecosystem?  

Pleasure. Thanks for having me. 

Yes it seems to be the best route. Not because someone was going to raid eosio.savings. Not because someday block producers were going to toggle some of that inflation to themselves. That would be suicide. Probably wouldn’t happen unless the goal was destroying the network. There are better ways to game the system without blowing it up. 

But if eosio.savings had continued to endlessly fill to infinity, it’s generally thought that any WPS trying to get traction would be dead on arrival. It had to be shut off before WPS could conceivably be turned on. 

Little backstory here…

The 4% inflation going into eosio.savings was an arbitrarily decided default setting with no relevance to the real time evolution of the chain and “community sentiment”. The community has grappled with this issue since day one. Early on a group in the english speaking portion of the community led an effort which proposed a WPS trial that would use a very small portion of eosio.savings. Ultimately the proposal wasn’t well received. In part because of eosio.savings being the source of funds. People yelled “abuse, socialism, centralized, inflation etc.” So in terms of paving the way for WPS, shutting off the tap seems like a logical step to gain the political momentum necessary for implementation, and controlling the narrative in and outside of EOS. 

 

The EOSIO ecosystem does have a pretty decent track record when it comes to WPS on some other chains in the EOSIO sphere, so in your opinion, what do you think the side effect of opening this up to the community for developmental purposes on the mainnet will be? Also, in terms of development, do you feel there will be any negative effect on the network if it comes to pass that WPS becomes the base layer for development on EOS?

I don’t think WPS would be a replacement for development, but a way to ignite development that isn’t happening. Block.one is committed to developing EOSIO and they’re brilliant in that sense. What a WPS could do is give the EOS community another way to nourish parts of the ecosystem that need attention. Block.one isn’t too focused on outreach, marketing, building the developer community, education, retainment, some non-revenue driving base layer infra… these sorts of things. WPS could fill the gap and give the community more fire power. This is my optimistic side speaking. WPS could fail too, either because of abuse, or because of political paralysis. 

I have far more concern about never having tried WPS on EOS than it becoming the “base layer for development” – if what you mean by that is WPS is the only source to drive innovation on mainnet. Right now there is a lot of stagnation. EOSIO is extremely powerful software. But not many people have a clue what it is, or how it works. 

In fact, most hear EOS or EOSIO and think it’s a scam. Arguments aside about EOS gov, it’s really a shame because the software itself is powerful and pushing the boundaries. If more people knew about it, and understood the underlying power, we could see a lot more innovation. More innovation, education, and growth from EOS can only mean good things for EOSIO in general.

Right now we’re an extremely underrepresented and small community with a really bad branding issue. So I’m far more worried that the community won’t take matters into our own hands to some extent and help rebrand, educate, and grow. 

 

You mentioned that you have been interested and studied governance on EOS since before the main net launch.  From a governance perspective then, it seems that the elected BP’s have finally listened to the community and voted in line with their constituents.  Although it has been a long time coming, does this change the paradigm when it comes to the narrative of the EOS network being inefficient due to vote buying or do you feel that vote paying proxies have finally come full circle to challenge the negative players and begin implementation of what is best for the network? 

“The community” never proposed an msig that would’ve shut the tap off without causing other issues. Meet.one proposed to shut off the tap back in September, but doing so would’ve caused a number of problems, like a fork from the B1 repo. It wasn’t as simple as some people think and there were tradeoffs. 

So saying BPs are inefficient doesn’t ring true to me in this case. It was a complex problem. And if people really wanted to get it passed with 15/21, they could’ve taken responsibility and done so. And some people in the community did just that. 

People often point to referendum in this situation and say BPs ignored the “community”. There were roughly 3% of tokens voting “yes” in favor of turning off the tap [in a referendum] and some loud voices on social media. 3% doesn’t equal community to me. Nor do loud voices on social. 

Additionally, I don’t think many token holders cared one bit about the process of referendum – especially in the East. Referendum was another arbitrary idea that was adopted as an uncoded, intellectual pre-launch default setting. It makes sense to people who come from representative democracies, but I don’t think it’s relevant to the a lot of the token holders elsewhere. 

Furthermore, if you define community sentiment as on-chain voting, then the community has already been voting on what they want…. as evidenced by the BPs that have been in power and how eosio.savings has been handled. If the majority of the community wanted something different, then they could have conceivably devised a plan to elect top 21 that would be in favor of turning the tap off long ago. 

Sure you can poke holes in my argument. We have exchanges voting with tokens that aren’t technically their own. That’s a serious concern. Yes, there is vote buying and trading. The community sentiment isn’t optimally represented on-chain. It could be better. But when it comes down to it, voting on-chain is the best metric we have for community sentiment. And the people holding tokens have been making the decisions we see today. All of the moral judgements and idealism we have as individuals are secondary in my view.

 

EOS often gets a bad rap both from the greater crypto sphere, many advocates of sister chains, and even the community.  Personally, what do you believe is the best model for voting and rewards that you have come across (ie. 1 token 1 vote, Dan’s EOS Governance Proposal, EOS New York Governance Proposal etc.)?  

The New York proposal is by far the most interesting one to me by far.

From one angle, the “problems” with EOS governance can more or less be boiled down to greed. And when I say greed I don’t pass a judgement or mean this in a negative connotation. Greed is a natural part of human existence and behavior. We all have it to varying degrees and it’s adaptive. 

But rather than try and create subjective rules, off-chain promises, or something of that nature, The New York proposal fully embraces the reality of greed and gives it a proper home. 

By that I mean this… greed is incentivized and diverted from being a network operator with a more lucrative opportunity in staking rewards. You can get your greed fill elsewhere. It removes the BP honey pot. And opens the door for BPs to be elected more based on thoughtful consideration, value add, and prestige. Because when you vote for, or become a BP with the tokens in your possession, you are basically choosing to make a lot less money than simply staking for profit. So in my view, your motive to be a BP must be far more thoughtful, because if you just want money you can get it elsewhere. 

I think the value add from BPs would be far more optimized, and the token itself would be far more attractive on the basis of staking rewards. If there’s one thing that many pubic chains have in common, it’s that people really, really, really like staking rewards. Not a shocker that people like money. 

I don’t know the full extent of the talks that occurred offline about the proposal. I know a lot of people seemed to like, or at least be intrigued by it from what I gathered. Publicly on twitter, telegram, and elsewhere in the english speaking world, people seemed to think it was too confusing or screamed inflation etc. Really a shame if I’m being honest because I don’t think people gave it the time and attention it deserved . It has some complex game theory, but I think it is fairly sound overall in terms achieving desired outcomes.

You should link it here for sure. I hope to see it come online at some point with a high-cap EOSIO chain. 

 

Of course as the original mover in the EOSIO space all eyes are on the EOS mainnet when it comes to these sorts of governance issues.  That said, are there other chains that have succeeded in changing the paradigm in many’s opinion for the better. In your view then are there any models from other EOSIO sister chains that should be implemented to better the overall infrastructure of the EOS main net? 

First, sister chains are forks. I believe “sister chain” was a term that was used when a bunch of BPs who initially joined Worbli that didn’t want political backlash for producing on two chains. Yes, that was a thing believe it or not.

But to answer your question, it depends on the problem you’re trying to solve. For example, Worbli is essentially a permissioned chain for finance. Very different than a chain trying to be general purpose for dApps.

Every notable general purpose EOSIO chain besides EOS is permissioned, semi-permissioned, has a different value proposition, and has a low market cap. So I don’t draw direct comparisons because the game theory and basic setup is so different. It would be like comparing a drone to an airplane or something. The social and monetary load that EOS carries is tremendous compared to any other chain. If there was more at stake on the other EOSIO chains then we would start to get a better sense of how their configurations could hold up. But until there is more interest and more at stake, we can’t know, and I also haven’t seen anything that convinces me that alternative models on general purpose chains would fair better than EOS.

Take for example Telos – they have made a rule that exchanges can’t vote with customer tokens. If they do vote then Telos can take exchanges to arbitration. 

Two major problems with this. 

First, you need exchanges. They offer a very important service. So saying you can’t vote is going to turn a lot of them off. And you need liquidity, which Telos doesn’t have. 

But that problem aside, say a major exchange did list Telos and there was a lot more interest and money at stake. What is going to stop that exchange from fractionalizing cold wallets? Are BPs going to run around tracking this somehow? Are they going to KYC all the accounts? It’s not possible to stop in this manner. And I’d bet a lot of people from Telos would be turned off by this statement I’ve made, but I don’t even mean to pass a particular judgement because it’s sound logic.

This exchange issue is only one of many with EOS governance. But overall, I haven’t seen a solution to governance yet with a chain operating at the scale EOS is. Other chains are having success with different configurations, but it’s in large part because the playing field is wildly different. 

What I think will used far more in the near term are private chains. Take Chintai as an example. We’ve been approaching and talking with institutional finance for well over a year. They aren’t putting billions of securitized assets on public chains. Too much risk. You can’t say “oops, we lost a billion dollars in assets and have no resource because it’s on a public chain”. They’re going to launch (eventually) on private, industry led chains that have configurations and controls specifically for their needs. 

 

At this point the finer details of the EOS Nation WPS proposal have yet to be released to the broader community, so all we can do really is speculate on the broader details.  But if as Yves La Rose stated in the EOS Nation telegram this new WPS proposal can be fully operational without requiring inflation or savings, could this be a game changer not only for the EOS mainnet but also for other sister chains?  And what, if any, do you think the ramifications of the WPS updates will have on the broader EOSIO ecosystem and those already implemented on other chains on the EOS mainnet.

I won’t speculate on the inflation bit and the knock-on effects because I don’t know all of their plans. They need to release the full details before I say anything. From what I know, it has been thoughtfully considered and I think a trial is worth it. I have some concerns about the system but I still support a trial. 

But what could it mean for forks? Well you might be seeing some talent coming back, or coming to EOS. And anything EOS does to help repair its brand is going to help the reputation of EOSIO. All forks benefit when EOS does well. EOS is the brand that needs to succeed. Otherwise it’s not going to be good for EOSIO chains. 

 

Thanks for all these insights Ryan.  Before we go is there anything else we did not touch upon that you would like to offer up some comments on in regards to the inflation reduction and burn, governance, WPS, even some connection we may have missed that relates to how this change will affect you guys over at Chintai.io

Ah man. If people really got this far reading all my rambling, kudos to them! I can get into Chintai another time. This was a good chat and thanks for the questions. Was a nice break from running around with Chintai all day every day. Cheers

 

Haha.  Seriously though, it was an honor and a pleasure to hear all your thoughts on this.  As for all you do with Chintai all day, everyday, we will definitely have to catch up sometime somewhere in the not too distant future to gain a better understanding on what you guys are up to over there.  From all that I can gather there is a lot to be excited about and I’m definitely looking forward to that.

 

Of course lots of people have a variety of perspectives, but I’m really happy to have had the opportunity to touch base with Ryan on this.  Personally, a lot was brought to my attention that I had not thought about or considered whilst my two day scan of a plethora of social media comments, videos, and posts as the announcements unveiled themselves to the community.  For those that know me it should come as no surprise that although I like to think of myself as somewhat crypto agnostic, EOSIO has found a fond place in heart.  Despite the fact just like every other blockchain out there, there are occasional squabbles between the various chains I’m of the belief that in the end all will be prosperous in their own unique and beneficial ways.

That said, it is easy to recognize that no where in the EOSIO space does there seem to be more differing opinions than in the area of governance – granted that is to be expected considering the key foundational pillars that EOSIO was born from.  All in all though, it appears at least that things are moving in the right direction and even though it may not be the direction that everyone is happy about, it seems like maybe we can finally begin to put some of the concerns we all have at some point in time had about how the EOS main net was faltering and seemingly putting itself at risk of segregation of ‘governors’ and ‘community’, ‘corporations’ and ‘investors’, and ‘sinners’ and ‘saints’.  I for one prefer to think of this grand experiment within an even grander experiment of crypto inline with Eastern paradigm of Yin and Yang – you just got have that bendable line in the middle in order to formulate an understanding from the inside of the ‘other’, and on this occasion I for one believe that this whole experience brought about even if only a little on the long road ahead some semblance of togetherness which we all can find some kind of value in.

Thanks as always for stopping by and do take care of yourselves until next time whence by we have the pleasure to cross paths once again.

Jimmy D

Cover image adapted from a photo by Clark Little featured on The Inertia: Inside the Tube

For more from Ryan Bethem don’ forget to subscribe to his Twitter feed at https://twitter.com/ryaneos42

And of course you can catch up with more from yours truly Jimmy D at all the usual hangouts TRYBE.ONEMinds.comPublishOxTwitterJimmy D Presents Facebook Group, and Murmur (kansaikrypto).

*Please note, nothing in this post represents financial or legal advice as is merely an attempt to educate the community on various personalized perspectives from the respective parties involved.  Before taking action on anything gleaned from the contents of this post, please do your own due diligence and verify your information first hand before acting on anything presented above*


Jimmy D [Upliftnation.io l Trybe.One]
Jimmy D [Upliftnation.io l Trybe.One]

Philosopher, historian, educator, permaculturalist, writer, and crypto/blockchain enthusiast.


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