$EOS Block Producer Collusion: A Full Research Report (Part 1)

$EOS Block Producer Collusion: A Full Research Report (Part 1)

This research report was originally compiled on December 9th, 2018 in the MerkleTrader Telegram. This article serves as the canonization of the research compiled on this topic.

Discovery of the Issue

A few months ago, there was a Twitter post that revealed some troubling information about $EOS.

Of course, this isn’t all based on a Twitter post — but that’s what prompted me to look way deeper into what it is that this individual was talking about.

The Source Material

It led me to this article (in Chinese) that discusses a document that was apparently leaked from Huobi’s internals that discuss a plan & course of action for the BPs that Huobi has control over:

火币内部绝密资料外泄 内幕你绝对想象不到!EOSONE超级观察第15期

EOSONE早于2018年8月16日在《火币”1带7″月收入170万?》文中,分析得出火币利用扶持strongmonkey、greencapital、cochainworld、eoschaintech、eossixparkbp、eosorangeeos、voldemorteos7个备用节点,月入至少170万人民币。尽管这7个节点于2018年8月25日被shEOS节点以无公共节点、无网站、无所…

The article is entirely in Chinese, but it can be translated of course.

However, you should not go with Google Translate, because it is thrown off by the word “Huobi”.

Google translates ‘Huobi’ as ‘fire’. So, instead, I used a service called the ‘Yandex translator’, along with some consulting help from a friend that is fluent in both Chinese and English to parse out some of the nuances in the language.

However, before we dig into this article, we must first cover some fundamental precepts of the $EOS blockchain.

What are Block Producers?

Here’s a quick snippet from the $EOS Git:

In a nutshell, here’s how block producers work on the $EOS protocol:

  1. There are 21 unique block producers that are selected each ‘round’.
  2. The block producers are selected via ‘votes’.
  3. Each unit of $EOS counts as a vote (i.e., if you have 5 $EOS coins, you have 5 votes).
  4. Each ‘round’ has 126 blocks.
  5. A block is created about every 0.5 seconds.

All of this information is directly from the $EOS whitepaper.

Here’s a direct quotation:

“At the start of each round 21 unique block producers are chosen by preference of votes cast by token holders. The selected producers are scheduled in an order agreed upon by 15 or more producers.”

So, we should all be clear on what block producers are, what they do, and how someone can become a block producer.

Now, let’s look at where Huobi comes into this picture.

Huobi Exchange’s Ties to $EOS

Remember when I posted this link a little while ago in here?

https://news.8btc.com/mapping-of-chinas-crypto-and-blockchain-capitals

The article is titled, ’15 Super-nodes of Huobi And The Mapping of China’s Crypto and Blockchain Capitals’.

This is important for quite a few reasons that I’m going to get too in a moment. But let’s go ahead and decipher some of the information in that article.

As mentioned earlier, I was fortunate enough to have a really good friend of mine help with some of the Chinese translation too.

Check out these pictures:

The reason why I posted this is because you can see that Xiaolai Li has invested $100M to become a Huobi supernode.

Coincidentally, he is also a major investor in $EOS (this is something else that I have covered in great detail in this chat).

Thus, we should not be surprised that Huobi is deeply involved in running nodes on $EOS’ platform.

Huobi is also one of the leading contributors of $EOS volume (along with OKex; which is also a supernode).

Combined these two entities account for nearly 1/5th of all of $EOS [reported] trading volume, per CMC

Diving Back into the Source Material

In this portion, we’re going to dive back into that article that was written in Chinese that details this alleged leaked internal document from Huobi.

In the preface, the article states [Google Translation; Incorrect],

“ Recently, an Excel spreadsheet of “Fire Coin Pool Node Account Data 20180911” was circulated in the EOS circle. Because the data in the table is detailed, it is not like external action, and the author of the data remarks part is Shi Feifei, the fire money employee. Therefore, it can be inferred that this data sheet is the internal data of the accidental leakage of the fire currency.”

Again, remember Google Translate is off base with their translation here.

What it actually says is [Yandex Translator; Correct]:

“Recently, a “Huobi pool node account data 20180911” Excel Data Sheet spread in the EOS circle.Due to the detailed data in the table, unlike the external, and the data notes part of the author is Huobi employees Shi Feifei, it can be concluded that this data table is internal information Huobi inadvertently leaked.”

According to the article, this alleged leaked document contains:

  1. A node mutual voting table.
  2. Control node voting situation.
  3. Node income statement.
  4. Ticket position and account situation.

The article then goes on to state:

‘The four data categories [#1–4 posted above] on the Excel document show that Huobi uses its nodes on the $EOS network to organize votes, collude with other nodes, and fix the revenue that the involved parties will receive. Despite the fact that EOSONE had drawn attention to the unusually high amount of revenues that these nodes have received through the protocol, it is still surprising to learn this new information that has been released via the leaked spreadsheet.’

The above excerpt was provided by native-speaking Chinese individual (verified independently with another) for the sake of clarity since translators are often way too literal in their interpretation to give intelligible readings.

Enter EOSONE’s Research

Who is EOSONE?

If you’re wondering who this EOSONE character is that they’re referring to in the above excerpt, they are an entity that essentially ‘polices’ the $EOS ecosystem.

Here’s their Twitter profile:

EOSONE_io (@eosonebp) | Twitter

The latest Tweets from EOSONE_io (@eosonebp). EOSONE is a non-profit international organization that provides services of proxy, DAPP research and development to the EOS ecosystem. People’s Republic of China

More important, however, is their Steemit — which provides significant research on the BPs on the $EOS platform:

Steemit

The latest posts from eosone. Follow me at @eosone. Join thousands on steemit who share, post and earn rewards.

Previously, they exposed nefarious activity by Bitfinex on the $EOS protocol:

Bitfinex Triggering Big Fluctuation in BPs Ranking by Changing Votes – Steemit

Something you need to know before reading: Our declaration is: not for the capital, but for the facts! Please indicate the source when you reprinting. The data in this article is as of September 6, 2018, 11:00. Who is Bitfinex? People who focus on the EOS must be familiar with it.

This was also uncovered in a pretty thorough investigative Reddit post about 5 months ago:

Bitfinex got 50% of the votes to become a block producer from 4 whales

I was curious about how different block producers ended up winning the vote. Particularly if some depended on whales to vote for them more heavily…

Analyzing the Reddit Post in Greater Depth

The most important part of the research contained in that Reddit post is the breakdown of the visualization that they provided.

You can find this in the first comment where they state:

“That top voter (gyzdcmjwgmge) also gave the same amount of votes (8,75M) to: argentinaeos atticlabeosb aus1genereos bitfinexeos1 cryptolions1 cypherglasss eos42freedom eosafricaone eosamsterdam eosauthority eoscafeblock eoscanadacom eosdacserver eosliquideos eosriobrazil eosunion1111”

Now let’s compare that to the list of nodes that are allegedly colluding with one another to ensure that they will always remain block producers:

Atticlabeos and bitfinexeos1 are also listed on the alleged internal spreadsheet from Huobi.

Back to the Chinese Article (Again)

According to the author of the article (in Chinese), here is the scheme that they were attempting to run (taken verbatim from the alleged leaked internal document):

“The above table shows the mutual voting data for Huobi from September 4, 2018 to September 10, 2018.

As you can see:

  1. in addition to Huobi’s own control of the 5 nodes of eoshuobipool, cryptokylini, eosiosg11111, cochainworld, eospaceioeos (detailed analysis below), Huobi will vote for the remaining 20 nodes.These 20 nodes, 16 nodes and Huobi mutual vote, leaving eosgenblockp, eosbeijingbp, eoseouldotio, eospacificbp, eoslaomaocom these four nodes did not return to vote.
  2. Huobi new starteosiobp, eosflytomars, eoscannonchn and other nodes of the vote, these nodes also increased the number of votes on Huobi, Huobi can be said to pay a “return”.
  3. atticlabeosb is the only one to vote for Huobi, but did not get Huobi back node.”

Here is even more coverage on this document to provide a bit more veracity on it (again, more firsthand sources):

Constantant
_Update: Denny Wu from Huobi said it’s a fake document from an exemployee ( happened at 13th Sept) But before he lied…_www.reddit.com

Coincidentally (not really), even if you look at the $EOS block producer rankings at this very second (edit: December 9th, 2018) — ‘EOSHuobiPool’ is still standing at #1 (and its in the lead by a mile).

Source: https://eosauthority.com/producers_rank

Comparing Node Lists With Active BP Nodes

These are the nodes that were listed to be in collusion with Huobi:

  1. eoshuobipool
    2. starteosiobp
    3. zbeosbp11111
    4. eosflytomars
    5. eostitanprod
    6. bitfinexeos1
    7. eosgenblockp
    8. eoscannonchn
    9. eosfishrocks
    10. eosstorebest
    11. eosbeijingbp
    12. eosbixinboot
    13. jedaaaaaaaaa
    14. eoshenzhenio
    15. eoseouldotio
    16. atticlabeosb
    17. sheleaders21
    18. eospacificbp
    19. eoslaomaocom
    20. qxeosqxeosbp
    21. eoscybexiobp
    22. geosoneforbp
    23. cryptokylin1
    24. eosiosg11111
    25. cochainworld
    26. eospaceioeos

Now, here are the list of the current (edit: as of December 9th, 2018) T25 block producers for $EOS, in order [I will put the word “check” next to all those that are also on that Huobi spreadsheet]:

  1. EOSHuobipool (check)
  2. zb eos (check)
  3. EOSLaoMao (check)
  4. Starteos (check)
  5. Bitfinex (check)
  6. JEDA (check)
  7. EOSCannon (check)
  8. EOS New York
  9. EOSflytoMARS (check)
  10. AtticLab (check)
  11. LiquidEOS
  12. EOSBixin (check)
  13. EOSIO.SG
  14. Sw/eden
  15. EOS42
  16. EOS Beijing (check)
  17. EOS Cochain (check)
  18. EOS Authority
  19. Greymass
  20. EOS Rio
  21. eosDAC
  22. EOS Canada (check)
  23. LibertyBlock
  24. EOSpace (check)
  25. EOSGen (check)

Source for live data = https://eosauthority.com/producers_rank

9/10 of the T10 BPs (by rank) on the $EOS protocol are listed in that leaked internal document by Huobi.

15/25 of the T25 BPs (by rank) on the $EOS protocol are listed in that leaked internal document from Huobi.

Remember, this information came out several months ago (at least 3). I’m just revisiting it today, sort of randomly (December 9th, 2018).

What makes this even worse is if you combine this list with the colluding nodes that are attributable to Bitfinex, per the research here:

https://www.reddit.com/r/eos/comments/8r6brl/bitfinex_got_50_of_the_votes_to_become_a_block/?st=JO16ILHE&sh=280a6048

Here’s what a modified list of the T25 BPs would look like if you also counted the colluding nodes identified in that piece ^

  1. EOSHuobipool (check)
  2. zb eos (check)
  3. EOSLaoMao (check)
  4. Starteos (check)
  5. Bitfinex (check)
  6. JEDA (check)
  7. EOSCannon (check)
  8. EOS New York (check)
  9. EOSflytoMARS (check)
  10. AtticLab (check)
  11. LiquidEOS (check)
  12. EOSBixin (check)
  13. EOSIO.SG
  14. Sw/eden
  15. EOS42 (check)
  16. EOS Beijing (check)
  17. EOS Cochain (check)
  18. EOS Authority (check)
  19. Greymass
  20. EOS Rio (check)
  21. eosDAC (check)
  22. EOS Canada (check)
  23. LibertyBlock
  24. EOSpace (check)
  25. EOSGen (check)

Evaluating the BP Collusion Comparison List

Between Bitfinex & Huobi, 21/25 of the T25 nodes on $EOS’ protocol appear to be in collusion.

The vast majority of them can be attributed to the spreadsheet by Huobi.

However, one must take into consideration that Bitfinex’s node was also listed as being a colluding node with Huobi, so it isn’t unreasonable to consider Bitfinex as an extension of this collusion.

Again, the collusion by Bitfinex has been covered by the $EOS community themselves and called out several times.

In the next part, we’re going to dig into why this is all a major deal and why these facts command greater attentiveness by the community at large.

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