Last month, the news of TRON CEO Justin Sun acquiring Steemit Inc. raised many eyebrows in the crypto world. And after a series of unfortunate events in the last couple of weeks, the STEEM community successfully executed a Hard Fork to build a new decentralized identity, HIVE.
Wait, but what is Steemit?
Steemit is a crypto based decentralized blogging platform that pays its users for producing content that is appreciated by the community. Think of it as Facebook or Twitter, where you express yourself. But instead of the companies stealing your data, they pay you!
Anyway, Justin Sun acquiring Steemit Inc. recently posed the threat of potential centralization of the platform. To understand that, we must first understand how STEEM works.
How does STEEM work?
STEEM works in an interesting way. The consensus mechanism used by STEEM is called DPoS (Delegated Proof of Stake). The STEEM blockchain has witnesses (like miners in Bitcoin) that produce blocks and are the community’s representatives for governance of the STEEM Blockchain. The witnesses are elected based on a voting process, where all stakeholders(community) of STEEM vote.
So, if you’re a user of STEEM, you get to have a vote proportional to your stake. And you use this vote to elect witnesses that will produce blocks and govern the blockchain. If a witness acts in a malicious way, the community can vote for a new candidate in the next round. In case of STEEM, there exists a total of 21 witnesses. That’s how STEEM works, at a very high level.
Justin Sun’s actions
The Steemit Inc’s account on the STEEM blockchain holds about 20% of the total supply of STEEM (which was premined). In the past, the tokens on this account were never used to make decisions regarding the governance of STEEM blockchain, until Justin Sun’s acquisition.
TRON used Steemit Inc’s holdings to vote and reverse a soft fork that limited TRON’s influence on the STEEM blockchain. Sun convinced major exchanges like Binance, Huobi and Poloniex to use their stake to remove existing witnesses. He was able to get majority voting power on the STEEM blockchain, thereby removing 20 of Steemit’s existing 21 witnesses. They were replaced by witnesses that appeared to be controlled by TRON.
The result of all of this was a hard fork (see here what a hard fork is). The disappointed Steemit community planned to move to a new fork of the blockchain called Hive, where the core principles of decentralization would be respected. And so, the community started promoting this new platform on Steemit to raise awareness.
Steemit, over the years, has been popular for its freedom of expression and lack of censorship. But, the recent acquisition saw Steemit censoring posts promoting Hive on its platform, something that had never happened before.
Finally, on March 20th, the hard fork executed and HIVE was born. All Steemit users will get the HIVE tokens in a 1:1 ratio on the new network, while still holding their STEEM on the original STEEM blockchain. But not all, Hive is considering not giving out tokens to the people supporting Sun’s (malicious?) actions. But the community is now trying to build a new identity that values the core principle of decentralization. The current Hive team has 30 developers working to get things working smoothly as soon as possible.
HIVE has been listed on Binance, Probit, Ionomy and Bittrex exchanges as of now and is also listed on CoinMarketCap. The team is working on getting listed on a few more exchanges in the coming days. What the future holds for HIVE and STEEM, only time will tell.