On March 2, 2020, Steemit, a decentralized blogging network that recently partnered with TRON, apparently exploited the resources of top exchanges such as Huobi, Binance, and Poloniex to reverse a recent community proposed hard fork, provoking a vicious community outcry.
By purchasing Steemit, Justin Sun, CEO of TRON, gained control of a substantial share of Steem’s consensus voting weight. This is due to the platform’s delegated proof-of-stake (DPoS) architecture, and Steemit being by-far the most active element of the network.
Fearing Sun’s potential to cause chaos, last week, the Steem witness team initiated soft fork 22.2, with the sole intent to freeze the original stakes owned by Steemit, Inc.
Then the plot thickened yesterday in a move that has both stunned and infuriated the Steem community. Several centralized exchanges used their own voting influence to promote Steemit-affiliated witnesses to the coveted top twenty spots.
Consequently, in the current list of Steem witnesses, Steemit and TRON’s witnesses hold the first 20 slots. Thus, in what can only be a retaliatory act, Justin Sun has established centralized control over Steem.
Tron Folks and Steemit, Inc. Condemn Soft Fork 22.2
According to the blog post on Steemit’s official site that addresses the new hard fork, the Steemit witness team, consisting of Tron folks and Steemit Inc, defended its action by calling soft fork 22.2 unlawful.
As expected, the community reacted furiously to the blog post, calling the move a hostile takeover of the blockchain. Steem Community member @jeffjagoe was among the first to highlight the move to reject a hard fork as a hostile takeover and accuse the complicit exchanges such as Binance of using customer deposits to facilitate the move.
Binance CEO Changpeng Zhao acknowledged the event in a tweet and went on to suggest that Binance will withdraw its voting stake, given the negative community response.
Steem Takeover Highlights Threat Of Centralized Exchanges
In the past few hours, the Steem ecosystem has stopped working, raising many questions as to what the real agenda behind this hostile takeover may be.
This network failure represents a significant blow to Steem’s credibility as a trustworthy blockchain platform. In fact, it damages the very concept of DPoS as a reliable architecture for decentralized consensus.
Because DPoS architecture gives voting weight to token holders, centralized exchanges generally hold a tremendous amount of influence over these platforms.
Blockchain experts have warned that this arrangement opens the door for collusion and centralization, which may be the present case with Steem.