In the past few days, the former blockchain community of Steem has taken over Justin Sun and its recently acquired startup Steemit. After accusing Sun of trying to centralize their network, a substantial part of the original Steem community successfully launched a hard fork called Hive.
Steem stakeholders are now actively migrating to the new chain. Its internal HIVE token, which was distributed to STEEM holders via a drop, is traded for a premium of 20% compared to STEEM on certain exchanges. However, the network outage was not without incident, as some complaints regarding the distribution of the drop were reported.
What is the conflict?
The dispute dates back to February 2020. At the time, Justin Sun, a prominent Chinese tech entrepreneur with an estimated net worth of $ 200 million, bought Steemit, Inc. – a startup founded by Ned Scott and Dan Larimer, the same people who launched the Steem blockchain. The company is mainly known for publishing Steem-based alternatives for major social media such as Reddit, YouTube and Instagram.
It is still unknown if Sun bought all of Steemit’s stock, since Scott’s original tweet that he sold Steemit to Sun was deleted. Official press kits describe the merger as a “strategic partnership” between Steemit and Tron, a major cryptocurrency company launched by the Chinese entrepreneur.
As Steemit chief executive Elizabeth Powell told Cointelegraph shortly after the acquisition, the partnership with Tron was vital to the financial health of her business. According to reports from November 2018, Steemit had to lay off more than 70% of its staff due to market conditions.
The community seemed less optimistic about the merger. On February 24, a group of Steem stakeholders executed a soft fork and deactivated the so-called “ninja stake”, a supply of approximately 74 million STEEM tokens historically owned by Steemit. As a witness Steem previously explained to Cointelegraph, the issue is a long-standing concern for the Steem community, and stakeholders became even more worried about its future after Justin Sun became CEO of Steemit.
In response, Tron organized what has since been described as a “hostile takeover.” On March 2, three main cryptocurrency exchanges that have STEEM tokens listed on their platforms, namely Binance, Huobi and Poloniex, unwittingly used customer deposits to bet large amounts of STEEM tokens to vote in favor the deletion of the original witnesses.
As a result, all of the first 20 cookies were eventually replaced by accounts powered by Steemit, Binance, Huobi and Poloniex. Sun then describes the takeover as a successful attempt to defeat the “pirates” who froze the assets legally held by Steemit.
Shortly after Sun’s announcement, Binance and Huobi said they were withdrawing their votes to cancel the takeover because they were initially not fully aware of the situation to which they contributed. In addition, Binance CEO Changpeng Zhao appeared to distance himself from Sun in an interview with Cointelegraph.
Meanwhile, the Steem community was actively trying to reclaim their space by mobilizing tokens. As of March 6, 10 of the top 20 witnesses had been “approved,” while the other 10 witnesses appeared to be Steemit affiliated players. A discussion between a group of Steem community members and Justin Sun also took place around the same time. According to a recording of the conversation, Sun said they wanted to “withdraw our votes as soon as possible to restore rights to the community”.
Some Investors Claim To Be Mistakenly Excluded From The Drop
Despite ostensible promises to “restore rights to the community,” the CEO of the Tron Foundation has reportedly continued to use “puppet witnesses” to consolidate power over the blockchain Steem, as previously reported to Cointelegraph by a number of alumni. Steem stakeholders. In light of this, the stakeholders decided to proceed with a hard fork called Hive, initially a fork of exact code from the Steem blockchain which was modified based on comments from the community.
The hard fork took place successfully on March 20 around 9:30 am. UTC. The network division was accompanied by a 1: 1 drop, which notably blacklisted the alleged owners of Steemit’s “mined by ninjas” stake, with a current value of around 9.25 million. dollars, and the so-called “Tron puppets” who cast their votes to witnesses affiliated with Steemit during the infamous takeover.
Not all Steem stakeholders are satisfied with the exclusion algorithm, as some would have been excluded. Scott Cunningham, one of the STEEM owners, told Cointelegraph that he “and a few others” were mistakenly added to the blacklist via an algorithm to detect specific behavior:
“The main behavior was whether or not you had voted for the TRON witnesses, which I did not do. I gave my vote to the creator of 3Speak @TheyCallMeDan who actively supported and helped the original witnesses of Steem who now make up Hive. “
Cunningham then contacted the Hive team, who allegedly delegated his original authority to him. In addition, they promised him that over the next week, they will “correct the mistakes made by the algorithmic blacklist of air drops”. Cunningham added that although he doesn’t entirely agree with the way the algorithm works, he still believes that Hive will prove to be a more decentralized platform than Steem:
“I think it is fair to hold back Steemit’s parachuting to prevent them from having participation undermined by ninjas, but I do not think it is fair to penalize people based on their vote. This is not is not completely decentralized if you are penalized for the way you vote, even if you vote for centralization or naively. Having said that, I still understand the precautions they took and given that there is no d ‘Other means used to penalize people, I think their network will prove to be much more decentralized.’
Dan Notestein, CEO and founder of BlockTrades, one of the first three Hive validators who worked on the hard fork, confirmed to Cointelegraph that the drop drop list is based on a principle: “The Hive community would not drop the Steemians who actively supported the centralization of blockchain by Justin Sun by voting for the puppet witnesses led by Justin Sun. “
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The list was created by running a script that analyzed blockchain data for witness voting, added Notestein, explaining how the mechanism was designed: “To avoid as many false positives as possible, we demanded at less votes for two sockpuppets, and we also excluded small accounts, as they were considered more likely to be users who may not have known what they were doing by voting for the puppet witnesses . “
Notestein also admitted that the Hive team was “extremely busy” and is aware that there could be errors in the script, which is why it plans to re-evaluate the distribution scheme in the near future:
“We decided that we would have stake-based votes after the launch of the Hive channel to determine if certain accounts were unreasonably excluded from the release of Hive tokens. These accounts will receive a drop in the next scheduled hardfork. I know of at least one real coding error in the initial script which I think will likely cause some accounts to receive tokens in the second drop. “
Hive has more plans for post-hard forks
In its post-fork announcement, Hive said an unspecified number of exchanges are working to list HIVE tokens, in addition to six trading platforms that are still working on the distribution of parachuted assets.
Since then, Binance has announced that it has completed the distribution of HIVE tokens to STEEM holders. In addition, the exchange clarified that to be listed on the platform, HIVE “will go through the same strict list review process as Binance for any other coin / token”. An exchange representative told Cointelegraph:
“Binance will not take a position on the dispute itself, but we will continue to keep an eye on the situation and keep users informed of any changes that may affect them,” a Binance spokesperson told Cointelegraph.
Meanwhile, Steem stakeholders seem to be actively migrating to the Hive network. For example, PeakD – the Hive version of Steempeaked and the second largest front-end interface on the Steem platform – has already been launched. In addition, Steem’s long-time witnesses are reorganizing their operation in favor of Hive by deactivating their accounts on the old channel.
“I don’t plan to post more content on Steem,” Luke Stokes, one of Steem’s first witnesses, told Cointelegraph, noting that he could update his content to point to PeakD at the place. He also pointed out that many Witnesses kept their knots running but did not sign a block voluntarily, which is why the level of participation sometimes falls below 100%.
“There is a general consensus among the former main block producers Steem and DApp to move to Hive,” said Notestein in a conversation with Cointelegraph:
“Many have already closed their nodes on Steem, and I expect most if not all of them to stop soon, as they find the time to do so. […] For my part, I stopped interacting on Steem and only interact on Hive now, and that includes deactivation of my Steem witness node. ”
Additionally, the post-fork statement mentions that the Hive.blog wallets will soon be launched, prompting people to consider using the PeakD.com wallet in the meantime. The Hive team also mentioned that there will be a second hard fork in the near future to upgrade the blockchain and bring additional functionality online, though little details are available in this regard.
Fallout from the hive
The hard fork has not gone unnoticed by third parties: the Canadian mining company Hive Blockchain recently announced a request to cease and desist from the Hive community. The company argues that the new use of the term “beehive” is “intentionally or unintentionally, causing confusion with the brand of the company”, citing “the requests for information from several shareholders combined, rightly confused with the announcement of this Blockchain ”.
David Jefferys, a former director of business development at Steemit who was involved in the Hive hard fork, had previously told Cointelegraph that Hive “is not even yet an official company or organization”, because apparently “it doesn’t there was no time “to deal with the registration process. According to Jefferys, currently Hive is “a purely community-oriented and truly decentralized social blockchain project”. As for the most recent developments, he said:
“Steem and Hive can turn into aviersals of the same blood, which will be a fun movie to watch for the crypto industry and will likely raise the two chains higher together.”
During this time, the market reacted positively to the new network, since HIVE was even exchanged for a premium of 20 to 40% compared to STEEM on certain platforms. For example, on Bittrex, HIVE is currently trading at $ 0.26, while STEEM is sold there for around $ 0.17. However, the premium does not appear to extend to other platforms – another exchange that has the two listed assets, the South Korean-based Probit, trades HIVE and STEEM for $ 0.23 and $ 0.17 respectively.
Cointelegraph has contacted the Steemit and Tron Foundation for a comment and will update this story if more details appear.
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