The majority of the main block producers decided on the vote. Previously, part of the funds went to a savings account for developers.
Members of the EOS community decided to reduce the annual inflation of the network from 5%, which was written in the code to 1%. This was defined by a vote among the block producers (BP) of the network, responsible for the validation and maintenance of EOS.
It can be verified through the EOS Authority site that the main 17 EOS block producers approved the proposal introduced last February 25th. According to the statutes of the network, this type of proposal requires the approval of at least 15 of the top 21 network validators. Therefore, this proposal was approved with the participation described above.
Along with the change in the protocol, the network participants decided to burn all the available funds in the eosio.savings account. Until now, this fund has been the repository of most of the tokens generated by inflation. Of the previous 5%, 4% went to that fund, whilst the remaining 1% was allocated to block producers.
A total of 34,106,869.1596 EOS are eliminated, a figure that is calculated at the current price of the asset in the market, which is equivalent to almost USD 120,000,000. These funds should have been used in projects focused on the development of the network, but they had not yet been used due to a lack of consensus.
It was established that the funds generated by inflation will only be distributed among network validators. In that sense, there are no changes as these network participants will continue receiving 1%.
EOS Price Reactions and Behavior
Among the reactions aroused by this decision, it is observed that the reduction in inflation was a general expectation within the EOS environment. In that regard, various users expressed on Twitter their satisfaction as the reduction was “finally” implemented.
Also, Brendan Blumer, creator of Block.one, an EOS-based development platform, expressed his surprise at the vote, which took place at night. Blumer believes that what happened shows “the power of decentralized governance,” as he wrote on his Twitter account.
Despite this assessment, it is worth remembering that complaints of centralization, as well as criticisms of the voting system, weigh on EOS governance. For instance, EOS New York, one of the block producers of the network, reported last November that the same China-based entity controls at least 6 of the BPs registered in the network.
While the news around EOS is the reduction of its annual inflation, the price of cryptocurrency in the market has not reacted as expected. Faced with an event like this, an increase in the price of EOS was expected, but the cryptocurrency has lost about 14% of its value at the time of writing this article, according to data from CoinMarketCap.
After examining the behavior of the first 20 cryptocurrencies in the market, it can be seen that EOS is among those that have suffered the greatest losses during this period. At that same time, the entire market has been in the red, with Bitcoin losing more than 6% and falling below USD 9,000.
By Willmen Blanco