In February 2020 Justin Sun – the founder of Tron, bought Steemit-Inc. Steemit.Inc has Steem accounts holding a substantial amount of STEEM tokens. The current Steem Witnesses (21 Block-producers) soft-forked the Steem protocol and froze the stake of Steemit.Inc. Justin Sun saw this an attack or “hack” and used his new stake, including stake of the exchanges Binance and Huobi to majority support a new soft-fork.
Binance “just in a supportive role”
How the exchanges play into this is not clear. Exchanges store tokens of people and in this case they stake the tokens to participate in the consensus process.
The “hostile takeover” of the Steem chain by Justin Sun is only a symptom. Lets view the cause:
The Ninja Mining Problem
“Ninja miner is a nickname for a person who digs small unauthorized mines or pans dirt for gold in Mongolia.[1] The miners are so named because the green bowls they use for panning, when carried on their backs, are said to resemble the shells of the Teenage Mutant Ninja Turtles.[1][2][3]“ (source: Wikipedia)
How STEEM token were distributed
STEEM, the currency of the Steem chain was issued by Proof-of-Work mining. The first who knew about the opportunity were the members of Steemit-inc. like Dan Larimer and Ned Scott. The distribution was announced in a thread on bitcoin-talk.org. The first attempt failed due to a bug in the script and the second attempt also was not without problems.
This is why people see the distribution as unfair – hence “Ninja-Mining”.
Ninja-Accounts
The other people who joined the token distribution are random users of bitcoin-talk.org.
Dan and Ned have mined their stake by using Amazon-cloud-computing. Dan Larimer introduced Steem by mining, because he was aware of the legal implications of ICOs (which is selling Tokens).
After a while Dan Larimer left Steemit.Inc and the Steem project to start Eos and projekts like Voice (a platform Dan calls “Steemit 2.0”).
After Dan, Ned Scott was CEO and owner of Steemit Inc. Users criticized Ned for being inactive and avoiding any communication with the community. In 2020 Ned sold Steemit Inc. to Justin Sun the founder of Tron.
This is why the Ninja-Stake is still a problem
The problem with token based voting (delegated Proof-of-Stake) and Ninja-Stake is, that voting with early mined token is voting with low or no skin in the game. When you use your money for voting without risking it, it is called plutocracy. Stake =/= expertise.
A Study shows that dPOS is still not optimal
In a 2019 study Li and Palanisamy showed, that one Ninja-Stake account dominates the top witnesses. This is the aftermath of an unfair token distribution. The problem here is that the stake of normal users is not coordinated. Normal users are un-informed and participation in the election is low. The typical problems of a democracy.
Justin Sun a Game-changer?
Now, in February 2020 Justin Sun came and bought Steemit-Inc. With the company he also bought the ninja mined stake of the Steemit-accounts. Steemit-Inc. under Ned Scott has not used its stake for witness voting but now the current Steem witnesses were skeptical about the new situation. They soft-forked the Steemit.Inc stake into a state where it cant be used for witness-voting.
probably just a communication problem
Justin Sun saw this as an attack or “hack” and used his stake to majority-support another software version where he decides new 20 top witnesses.
Here you can see how the top 20 more “organically” voted witnesses (green) got replaced by witnesses voted by Justin Suns stake (red).
This is how resilient dPOS is against attacks
A few hours later, the steem-community has re-elected by coordinating their votes:
Still not enough decentralization – Together we will fix this!
This level of resilience is still not sufficient. The good thing with dPOS is that the chain is in normally operating state. Politically pending and centralized but operating, this gives users time to coordinate and prevent the attack from having permanent consequences. So any news that the Steem chain is down are wrong! It should be seen as an interesting experiment. In the end we should join forces and not fight each other.
These articles will also interest you:
- ✅ Gaming on the blockchain – just a niche or the next big thing?
- ✅ Can you still earn money with Steemit.com in 2020?
- ✅ How to earn bitcoin and crypto in 2020 with Publish0x
