The Steem community is up in arms after three exchanges voted in 20 ‘delegates’, or ‘witnesses’ as they call them, who have decision making powers.

There are allegations Poloniex, Huobi and Binance, all three owned by Chinese citizens close to Justin Sun, were paid to engage in this takeover of Steem.

Damage is done, what is also proven by payments from Steemit Inc:https://t.co/NjyqHq1OEKhttps://t.co/hpyEeZ5cmNhttps://t.co/0MXIr9Mwdp — Krzysztof Szumny (@noisypl) March 3, 2020

Steemers made a controversial decision to freeze the account of Steemit Inc, the entity that kind of maintains Steem.

That was “to ensure that the security and decentralization of the Steem blockchain remains intact,” with Steemit holding some 25 million tokens out of a supply of 360 million.

Steem coup, March 2020, Image from Steemers.

You can see far more steem holders have voted for representatives who are not in decision making positions, but more steem tokens have voted for the exchanges representatives and so they get to be the ones that decide.

Justin Sun, who acquired Steemit, says the decision to freeze the account was a “hack” and so he justifies taking over the top 20 decision making positions by stating it was to prevent the hack.

Steemit itself says “Soft Fork 22.2 was maliciously structured, intending to freeze a handful of very targeted accounts and taking away their rights and possession to their owned asset, and may be deemed illegal and criminal.”

(5/9) We will commit to withdrawing the votes ASAP once we're sure malicious hackers can’t sabotage #STEEM anymore & will give the voting rights back to the community. All exchanges’ votes will be withdrawn soon. Shoutout to all the exchanges & parties who helped us save STEEM! — Justin Sun (@justinsuntron) March 3, 2020

Lol . Steem as you might know is kind of a decentralized social blogging network of sorts by Dan Larimer, the guy who then went off to create the same dPoS system in EOS.

In dPoS the three entities in this case, Poloniex, Binance and Huobi, can just change any rule, they can delete blog posts for example, or in this case the ownership of steem tokens itself.

In Proof of Stake (PoS), at least as designed in ethereum, the situation is very different with no one voted in and with stakers only validating transactions. They have no say over the code rules themself.

Coin voting != PoS. In PoS validator's just verify blocks, they are not voting on decisions. Using PoW to vote on decisions would be even more of a disaster than using coin voting. — vitalik.eth (@VitalikButerin) March 2, 2020

In bitcoin Proof of Work (PoW) miners decide only the order of transactions, as in when ownership moved. They can’t change the rules themself, like blacklisting some account.

That would be a fork requiring nodes to run new code and so devs, businesses, miners and hodlers would have to agree to it and if there is disagreement they can just create two parallel networks with people then deciding what version they prefer.

In eth it’s the same, but instead of ‘identity’ being established by hardware so that it can’t be faked to get the coins for validating, it is established by locking 32 eth.

Meaning this coup can’t easily happen in eth as people would have to actively opt into running new code rules, rather than 3 people deciding what the rules are.

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