Unpacking the Steem controversy: Sun Yuchen's "power grab" turns original community into "hackers"

Just announced the "marriage" on Valentine's Day, but began to "fight" during the honeymoon period. Today, Justin Sun once again dominated the headlines in the industry. The debate between centralization and decentralization in community governance has sparked controversy once more.

Just as they announced their "marriage" on Valentine's Day, they began to "fight" in their honeymoon period. Today, Sun Brother once again dominated the headlines in the circle.

On Valentine's Day, February 14th, while the EOS community was celebrating the official internal testing of the blockchain social software Voice, another bombshell was suddenly dropped. Tron founder Justin Sun announced on that day that a strategic partnership had been reached between the decentralized social platform Steemit and Tron, officially joining the Tron ecosystem. This means that Justin Sun has completed the acquisition of Steemit.

Justin Sun, who is known for being "young and wealthy," has been dedicated to building his own blockchain empire. In less than three years, he has completed six direct or indirect business acquisitions, including the download software BitTorrent, blockchain app store CoinPlay, digital currency exchange Poloniex, decentralized live streaming platform DLive, and Steemit, further strengthening Tron's position in the blockchain content sector.

However, this acquisition unexpectedly sparked controversy, leading to community soft forks, frozen assets, allegations of vote buying, control of nodes, and even criticism of the Delegated Proof of Stake (DPoS) mechanism by figures like Vitalik...

As the conflict between Justin Sun and the Steemit community intensified, the debate between centralization and decentralization of community governance was once again pushed to the forefront.

Original Community Soft Fork Freezes Justin Sun's Voting Power

Steemit is a blockchain application based on the Steem public chain. The Steem public chain adopts the Delegated Proof of Stake (DPoS) mechanism. In this model, nodes become "witnesses" by obtaining votes and can participate in block generation on the blockchain network, thereby earning related rewards.

In the early development of the Steem public chain, Steemit Inc., founded by Ned Scott, was responsible for the continuous development of the Steem public chain and the maintenance of the Steemit application. However, during the application maintenance period, Steemit Inc. pre-mined a large number of tokens, which is the root cause of the tense relationship between the Steemit community and the Steem public chain. According to sources, the amount of pre-mined tokens could reach up to 20% of the total supply, which is enough to have an absolute impact on the current Steem public chain witness structure.

During Ned Scott's leadership of Steemit, he stated that the pre-mined fund pool would not participate in on-chain governance, and the funds would only be used for developer expenses and market expansion. This view was accepted by the community, and the two sides had no conflicts. However, with Justin Sun's acquisition completed, the ownership of this "pre-mined token pool" also transferred to him, causing great concern within the community.

Nine days after Justin Sun completed the acquisition, the Steemit community jointly issued an announcement signed by witnesses, developers, and other stakeholders. The announcement emphasized that the pre-mined tokens of Steemit Inc. should not have voting rights and can only be used for ecosystem development. It announced the release of the 0.22.2 version soft fork upgrade for Steemit. Although this soft fork version is reversible and will not affect the operation of nodes, it will freeze all pre-mined tokens, completely restricting Justin Sun's control over the network.

Facing the strong backlash from the community, Justin Sun immediately responded by writing an open letter to the Steem community, stating, "There is still much work to be done to make steemit.com truly effective." He then invited the top 50 witnesses in the community to a meeting scheduled for March 6 to discuss the future development of Steemit.

Community Freeze Turns into "Hacker Attack"?

Conflicts are a collection of contradictions among stakeholders, and the intensity of the contradictions determines the boundaries of the conflict.

Although Justin Sun issued an open letter to appease the witnesses of the Steem network, he, with years of experience in the industry, clearly would not sit idly by. According to a statistics table from the Steemit community, Binance, Huobi, and Poloniex intervened in witness voting on March 2, amassing over 42 million Steem Power in total, with Binance holding 31.7 million, Huobi 8 million, and Poloniex 2.2 million.

The massive intervention of exchanges in voting power caused a dramatic change in the rankings of Steem witnesses. Blockchain browser data shows that Justin Sun instantly took control of the top 20 witnesses. Subsequently, the Steemit 0.22.5 soft fork version upgrade was immediately carried out, releasing all frozen tokens from version 0.22.2, allowing normal voting to resume.

Justin Sun gains control of a large amount of voting power, replacing the top 20 witnesses

After completely taking control of the Steem network, Justin Sun immediately issued a series of statements. He stated that the Steem blockchain order had been restored, and this action was only to recover the STEEM held by the foundation legally, correct the "wrong decision" in the 0.22.2 soft fork version, defend the decentralization of the Steem blockchain, and uphold the sacred principle of private property rights.

However, Justin Sun also believed that the 0.22.2 soft fork was malicious. He confirmed with lawyers twice and was told that this was a form of "hacker criminal act." These hackers froze STEEM worth over $10 million and threatened to destroy assets through a hard fork. Such actions put the interests of every STEEM holder at risk.

Justin Sun stated that taking control of the network in the short term was a "necessary choice." He had no intention to control or influence the entire Steem blockchain and would not merge the Steem blockchain with the Tron blockchain without community discussion and consensus. He would withdraw all witness votes as soon as it was confirmed that the malicious hackers were no longer disrupting the Steem network and returned voting power to the community.

A series of changes in the Steem network have caused unease among witnesses, developers, and token holders. Some users have begun unlocking and preparing to sell, while witnesses and developers have started to close DApps in protest. Services such as Steemwallet, Steemapps, smartSteem, Steemauto, Steemsql, and Steemengine are known to have stopped operating.

Furthermore, members of the Steemit team have also resigned:

Original Steemit Head of Communications Andrarchy announced his resignation...
Original Steemit Blockchain Engineer Gerbino announced his resignation...
Original Steemit Blockchain Engineer Vandeberg announced his resignation...

Following the upheaval, Steem seems to be heading towards fragmentation, and Justin Sun and the exchanges supporting him have found themselves in a public relations crisis.

Community Questions and DPoS Dilemma

"Obviously, the Delegated Proof of Stake (DPoS) voting model of the Steem network has been taken over by funds held in custody by large exchanges. This appears to be a typical case of token voting 'bribery attack,'" said Ethereum founder Vitalik on Twitter.

Facing Vitalik's questioning, Binance founder Zhao Changpeng and Binance, which held the largest voting power in Justin Sun's "vote seizure" process, were thrust into the spotlight of public opinion. In response to user questions, Zhao Changpeng provided an explanation of the event, admitting to being aware of it but explaining that they thought it was a routine soft fork upgrade, hence their support. He also stated that Binance was not interested in on-chain governance and would remain neutral.

When asked if they profited from this vote, Zhao Changpeng denied it, emphasizing that they thought it was only a routine upgrade. In response to community feedback, Binance began to withdraw its voting power.

Although the voting power was withdrawn, the drawbacks of large exchanges controlling the entire blockchain system have become apparent. The EOS network, which also uses the DPoS mechanism like Steem, has once again sparked community discussions. Compared to Justin Sun holding 20% of Steemit tokens and corresponding voting rights, Block.one also holds nearly 1 billion EOS tokens, which will have a significant impact on the selection of super nodes.

In response, Block.one CEO Brendan Blumer explained on Twitter: Block.one does not have potential control over EOS tokens. Block.one currently owns less than 9.7% of the total EOS tokens in circulation, while the top 21 super nodes collectively hold over 30% of the voting power, meaning Block.one cannot influence individual BPs.

It is worth noting that PANews previously conducted a survey, showing that among the top 21 super nodes with the highest votes in the EOS network, exchanges occupy seven seats, with a total voting rate of 20.57%.

A storm has exposed the risks of public chain governance, ultimately resulting from conflicts of interest.

This article is from our partner PANews

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