Eco: A Primer & Concerns Regarding Uber Co-Founder’s Cryptocurrency
The tech world was ablaze for the past couple of days with the news:
Garrett Camp, The co-founder of Uber, the disruptive behemoth is going after Bitcoin !!
An all star team of advisors including Naval Ravikant, Jonah Peretti and even Tim Ferriss !
While the hype is well deserved, it does not go deeper into the different approach taken by the team at Eco.
So what is Eco anyway ?
Eco is an open source and trustless currency whose USP is to become the “most usable currency” and a more viable alternative to bitcoin and gold.
Eco arrives to address some of the key issues faced by existing cryptocurrencies like Bitcoin and Ethereum.
The problems that they are looking to solve are as follows:
Cryptocurrencies like Bitcoin and Ethereum rely on a consensus algorithm called Proof of work which relies on advanced hardware to efficiently validate the large number of transactions relayed in the network (mining). This requires a lot of electricity to fuel this function. The result is the mining of these currencies that serve only a few crypto enthusiasts takes up electricity that can fuel 159 countries and is ecologically unsustainable.
They find the usability of cryptocurrencies complex to understand and use for the ordinary Joe. And the examples of its difficulty has been well documented.
The barriers to cryptocurrencies is also high for the masses because of the ludicrous transaction fees involved. Even though, a person can buy a part of bitcoin and transact with it, the psychological barrier of the high price of bitcoin and ethereum is a factor that prevents mass adoption.
Eco is a currency that prioritizes usability, simplicity and equitable distribution of coins to all.
For addressing scalability issues, it has the following features:
1) Higher Block Size
2) A limited number of trusted nodes will run on centralized and “fast network of servers”.
3) It plans to use the concept of Transaction Sharding.
“Eco aims to achieve capacity of 100,000+ transactions per second by using Transaction Sharding, where transactions are directed to specific shards for acceptance and validation instead of the whole network validating the same transaction.”
The nodes that will verify transactions will be a network of accredited universities and ‘reputable organizations’ who will be vetted by the Eco Foundation. They believe that this will keep the network safe and reliable for everyone.
By relying on the intellectual capital of these universities, they believe that they will be able to achieve the sort of work and research that was done on the Internet for the Eco Protocol.
Along with this network of reputable organizations as validators, the Eco Foundation will operate in a bureaucratic manner.
A board of directors will be set by the Eco Foundation comprising of experts from diverse fields
“The directors will set up special committees of expert contributors, with the most knowledgeable foundation director as committee chair. These committee chairs will coordinate collaboration in the Eco Forum, for design planning and policy discussions. Independent audit committees will be elected by the foundation directors, who will have full transparency into the systems of all network nodes, and report all findings to the public.”
In short, the governance structure of a publicly listed company.
Eco will start in a semi centralized manner iterating over time to become more decentralized and more secure as system adoption increases. The more popular Eco gets, governance protocols such as weighted reputation based voting systems will be integrated on chain accordingly.
“Progressive decentralization will allow new ideas to be tested and verified before being widely distributed, and will allow Eco to gradually achieve the topology of a global mesh network.”
1 trillion tokens will be issued initially by the Eco Foundation over the course of several years
50% — 1 billion verified users done equitably with respect to demographics and geography
20% — verified nodes (partner universities and reputable organizations)
10% — Eco Foundation for funding operations and economic grants
10% — Strategic Partners
10% — Active Contributors
The price supply is unlimited where new tokens beyond this initial figure of 1 trillion will be distributed. But the Eco Foundation will ensure (pinky promise !) that 50% of the newly generated coins will be shared in an equitable manner with respect to demographics and geography to the users who have given their KYC details.
From the picture of the wallet, I noticed that they have taken some of the best aspects of the Ethereum concepts such as addressing the nodes and users by name instead of public addresses (Ethereum Name Server).
And also the UI for the Android Wallet resembles that of the Consensys Project Metamask, an Ethereum wallet. It’s great that they are looking for ways to bring out the best user experience for the masses.
Voice command wallets seems like a nifty idea !
The fact that they are not taking advantage of all this hype to raise tremendous amounts of money is nice. Although, the euphoria at the time of listing in exchanges like Binance etc. will potentially take care of that.
As this is only a design proposal and not the real white paper, there are a lot of holes in it. I understand that a lot of changes will be made and feedback incorporated before they can roll it out.
1. Nothing innovative about it, yet !
Ripple — Trusted & Verified Nodes (Banks instead of universities), 100 billion aggregated token supply
Ease of Use — What’s stopping wallets like Jaxx and Exodus, already easy to use wallets, from integrating voice command for all of crypto ?
Sharding — Ethereum, Zilliqa
2. Token Distribution
In order to empower the masses and spread the benefit of the Eco token’s growth, their strategy is to distribute“50% of the token supply to the first 1 billion unique, verified human users on the platform (with equitable demographic and geographic representation) to allocate value created to a large community of users”. They have resorted to a sign up process where people will have to provide their KYC details.
But the question is how many people in this world understand crypto to take the bait ? The highest volumes for cryptocurrencies are centralized to a few countries like Japan, USA, South Korea & China.
Besides the people who have heard about Eco, how is the Eco Foundation going to ensure equitable demographic and geographic representation from an already concentrated pool of participants ?
3. A Cryptocurrency which is a walled garden without any privacy and alienates the crypto community
They seek to make a crypto-currency that is widely adopted and is decentralized. But throughout the whitepaper, I had a feeling that they didn’t like the fact that anybody could come into the system and benefit from the mining process without having to answer to anybody. That is why they are coming out with a system of qualified nodes and users.
But isn’t that one of the main reasons for the robustness and decentralized nature of currencies like Bitcoin & Ethereum ?
Also In the process, they are completely disregarding the privacy, anonymity and open ethos of cryptocurrencies. This will alienate the crypto community who have come together because of these principles and have put in the effort & community support that have made this whole thing a grand success.
Eco seeks to maintain governance over the network by providing the ability to create nodes to partner universities and “reputable” organizations only.
Who decides which organizations are reputed or not ? What is the criteria to judge their reputation ?
And if the whole selection process of those universities and organizations was centralized from the start, how does the Eco team plan to create an objective decision making process without any sort of influence from these reputable organizations ?
Eco says that they will progressively bring in decentralization in stages from the output of the committees and the forums.
No clear road-map has been outlined for that in the proposal.
There is always a trade-off between decentralization, governance and usability.
Can the token maintain that usability aspect while bringing out adequate governance and decentralization in stages ?
5. Monetary Policy
“Eco aims to become a medium-of-exchange as well as a store-of-value, with sufficient token supply to provide good system usability.”
How can the Eco token become a store of value by having 1 trillion tokens with unlimited token supply governed by the Eco Foundation and the university network ?
The user is vetted by the Eco team before he joins the system
The node is vetted by the Eco team before it joins the network.
The governance system is a bunch of experts vetted by the board comprising of the experts from the universities and ‘reputable’ organizations.
Fear not , all you anonymous, crypto mongering, earth killing, centralization hating bros !
For they will roll out progressive decentralization in stages !
Cryptocurrencies like Bitcoin and Ethereum have focused on the key principles of Decentralization, Anonymity and Open for All Ethos first while trying to iterate the system to bring about better user experience.
Eco seeks to turn the process on its head by making a coin that is extremely easy to use and with superior design before rolling out decentralization. It promises to bring about a society that will benefit from a more equitable distribution of resources. But there are a lot of questions left to be answered.
I am eager to know your thoughts. Please comment below.
Disclaimer: The puns and memes included in this article is not meant to hurt sentiments, all in jest !
Image Source: CCN
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