The hostile takeover of the Steem platform points to a fundamental POS risk
2 min read
There have been events on the Steem platform in recent days that illustrate the risk of blockchains with a proof of stake (POS) consensus. Justin Sun, founder of the Altcoin Tron, recently purchased the Steemit blogging platform, which runs on the Steem platform. A large number of Steem tokens were part of the Steemit purchase.
After Sun’s acquisition, the community decided to limit the rights of his tokens with the help of a temporary softfork. Sun then made use of his contacts with the owners of large exchanges (Binance, Huobi, Poloniex), and with the help of Steem tokens from these exchanges, he beat the softfork.
In other words, exchanges used tokens that they do not own (they are stock exchange users) but that they can dispose of. In this way, Sun has mastered the entire platform, which in theory should be fully decentralized and in the hands of its users. As Sun’s custom, he interprets the whole situation in his favor as saving the platform from “hackers”.
#STEEM has successfully defeated the hackers & all funds are super #SAFU. @SteemNetwork and @steemit community is now stronger than ever since we united & solved the difficulties! Full details below?
— Justin Sun (@justinsuntron) March 3, 2020
The Steem platform is the second major project with a POS consensus (or more precisely, DPOS), where power was concentrated in the hands of a narrow circle of stakeholders. The first project in this context is EOS.
These examples are a warning signal for the planned transition of Etherea to POS. As some commentators have noted in the past, a strong centralization of power in the hands of stock exchanges is inevitable within the POS:
My understanding: Liquid is a federated sidechain. You trust that federation not to steal your money. Honest behavior is encouraged by future cashflows and reputational damage.
— Hasu (@hasufl) November 17, 2019
Coindesk gave a detailed analysis of the situation surrounding the takeover of Steem.
NEW: The implications reach much further than just @SteemNetwork or @Tronfoundation, underlining the fundamental message of the "not your keys, not your crypto" mantra.https://t.co/GVOXYFD9O0@BradyDale reports
— CoinDesk (@coindesk) March 2, 2020
