Did Steem Lose Everything to Hive

Chinese crypto entrepreneur, Justin Sun seems to be hell-bent to bake fresh controversies every now and then. However, this time Justin went a little too far. You guessed it right, we are referring to the Steem/Hive split. And we do believe his attempts to centralize the Steem blockchain led to this unfortunate 15-day voting war and then the hard fork.

As reported by Altcoin Buzz on 5th March, tremendous unrest was sensed among Steem’s top 20 witnesses. And finally the Steem replica fork, Hive went live on March 20.

However, the way that Hive panned out urged us to dive deeper into the mess and dig out the possibly real story behind the Steem/Hive split.

 What happened on 27th March?

Just a day after the launch, Hive started trading on Bittrex and the day after that, ProBit also listed the coin. According to Dan Hensley, one of the largest stakeholders of Steem and now Hive, “The HIVE price began trading, and for the first time in blockchain history sustained a market cap that was higher than its original chain.”

Moreover, on March 27, Hive exhibited an exemplary price action. On the same day at 11:35 PM IST, Hive was trading at $0.326326 almost 2x of what Steem was trading at $0.167366. And the two splinters continued trading at marginal price difference until 6th April when magically Steem took over Hive.

Steem Price Chart – 27th March

Steem price

Hive Price Chart – 27th March

Hive price

Fabricated Steem pumps

As per Hensely, the TRON-controlled Steem witnesses tried to do some damage control. The “sock puppets” froze pro-Hive Whale accounts so that the Hivers would not dump more Steem. According to him, the frozen Steem is worth $4 million and is controlling the Steem/Hive price correlation.

However, there is no doubt the community is quickly pocketing Hives.

The war is on

One of the leading Steem DApp, 3Speak moved to Hive and its co-founder, Hensley shared some important insights. As per him, it will take 12 weeks (from the date of the press) for the pro-Hive community to power down on Steem.  According to the protocol, the community can unstake their Steem tokens gradually and that will take almost 84 days.

Does that mean we can see Hive pumping somewhere in June end?  

Well, we might not have to wait that long. Justin Sun did acquire Steemit, but with the kind of stunt he pulled out, it seems he has lost a lot of the Steem community support. Retaliating to the centralization and hostile takeover, the community seems to have rallied together behind Hive.

At the time of the press, almost 18 DApps have already transitioned from Steem to Hive. And this is 50% of the active Steem DApps. Moreover, the list includes top DApps like PeakD (#3), Actifit (#22) and 3Speak (#68).

HIVE Dapps

Source: stateofthedapps.com

For now, all are eyeing Splinterlands, the most popular Steem DApp. Moreover, @yabapMatt, co-founder of Splinterlands, openly agrees that they support Hive and its intent. Additionally, he also shared that Splinterlands would make a transition decision only once Hive became stable and had the right set of tools and services.

Sybil attack, money attack or a bribe attack?

Steem blockchain utilizes a unique consensus protocol known as “Proof-of Brain”. According to this protocol, the top block producers are known for their reputation, work added and stories they share. However, Hesley inculpates Justin Sun of conducting a Sybil attack on the Steem blockchain.

Series of events

One fine morning, Hesley witnessed the existing top 20 witnesses on Steem replaced by fresh new witnesses whom he had never heard of. Upon diving deep, he uncovered that 30 new witness accounts had been created along with fabricated rankings. Strangely enough, all these witness accounts were back-traced to the same server and person, Justin Sun. And this could have led to a chain halt.

However, we did not go for the hearsay and checked out the current Steem witness list. Here is what it looks like now.

Rank Witness Accounts Reputation Score Age
#4 @dev.supporters 47.9 25 days
#8 @jayplay.witness 6.51 17 days
#11 @steem-dragon -5.23 27 days
#12 @hinomaru-jp -4.17 24 days
#14 @hoasen -2.99 23 days
#16 @matreshka -5.88 27 days
#17 @parse -3.15 25 days
#18 @menacamel -2.89 20 days
#19 @cryptoking777 10.1 13 days
#20 @rlawlstn123 0.09 13 days

Source: steemd.com

Note: 10 out of 20 top witnesses are accounts with age< 30 days. And look at the Reputation score. Clearly, 6 out of these 10 witnesses have a negative reputation score, refer to the three screenshots below. It’s indeed a worrisome situation.

Steem witness 1Steem witness 2 Steem witness 3

Heavy manipulation of custodial funds

To execute a hardfork, the Steem Delegated Proof of Stake (DPoS) system required 17 of the top 20 witnesses to agree. TRON misled the three exchanges Binance, Huobi, and Poloneix to believe that the Steem blockchain was under attack. Additionally, he exploited the users’ Steem funds on these exchanges to overthrow the impact of the recent soft fork 22.2 that had frozen Steemit’s ninja-mined funds.

Steemit team starts quitting

The Steemit INC team started quitting as Justin Sun was fighting tooth and nail to centralize the ecosystem. Andrew Levine, Head of Communication and developers, Michael Vandeberg, Roadscape and Steve Gerbino have already resigned.

Sleeping voters woke up

As per the data shared by 3speak, at the time of the acquisition, the highest witness spot held 40 million STEEMPOWER. And this was only 11% of the total STEEMPOWER. But what was happening was so unethical that even the sleeper voters woke up. And at one point the pro-Hive community witness had 90 million STEEMPOWER backing it.

With this unusual community power, the pro-Hive community was able to reclaim 10 out of the top 20 witness positions.

Bribe being offered

As shared by 3Speak, Justin Sun offered bribes to win votes. Moreover, he requested people to run Steem witness nodes for him with an incentive of earning $2,500 per month. And more incentives were offered over Discord.

Money attack

3Speak reports that Justin Sun was artificially strengthening his voting bank by buying 300-500 thousand Steem per day. Moreover, 3Speak also reports that they were offered money, users, power, and liquidity by TRON. However, they refused the offers outright.

More accusations

Luke Stokes, co-founder FoxyCart and a prior high-ranking Steem witness quoted, “In my opinion, Steem no longer qualifies as a blockchain because the intent of the DPoS algorithm is no longer in place.”

He was enraged when Steemit started censoring his account lukestoke.mhth. However, initially, he and some other witnesses had agreed to support both Hive and Steem by running nodes until Steem powered down. But later, he decided to shut down his node as a movement against censorship.

Picking at soft fork 22.8888 deployed by the SteemTron, Luke pointed out that this fork temporarily locked 8 accounts from powering down, transferring tokens, voting, etc. And this list included an exchange too. We believe these are the same accounts that Hesley of 3Speak had pointed to.

Pouring scorn on the 21 sock puppet witnesses who supported soft fork 22.8888, Luke stated that 5 of them had never posted on the chain. This makes us ponder to what extent Steem has lost its decentralization.

Extreme centralization

The sock puppet witnesses and Justin Sun have claimed they were trying their best to win the community support back. But there seems to be a massive disparity between what they are saying and what they are doing.

Steemit contributor @felt.buzz also claims that his account had been censored by Steemit for just a single comment. And when he tweeted about the same, his entire Steemit history was deleted.

Witness credibility under the knife

Earlier in this blog post, we pointed out the negative reputation witnesses making it to the top 20 witness list. And then we came across a tweet by @MarkyHive. Marky shares a screenshot of his HUNT tokens being frozen by SteemHunt.

Steemhunt is the #2 witness on the Steem list with a reputation score of 74.7 and the age of 33 moons. And for him to divulge such acts make us question the credibility of seasoned witnesses on Steem too.

Another dirt cheap stunt

Another Steem witness pulled out a cheap stunt as ProBit, the second exchange to list Hive, conducted a community AMA on April 13 at 7:30 am KST. While we were attending the AMA, we could not help but notice a particular Telegram user @ayogom throwing Hive demeaning questions even before the actual AMA started.

The participants were quick enough to place him as a Steem witness #21 Ayogom. Here are some of the questions that this 30 moons aged witness posed.

ProBit Hive AMA 1

Source: ProBit Hive AMA

When asked whether he is planning to join Hive, @ayogom replied that Steem.DAO took his Hive.

ProBit Hive AMA 2

Source: ProBit Hive AMA

From the horses’ mouth: All you need to know about Hive

Four Hive AMA representatives and more knowledgeable people joined the AMA. Here are some of the questions they answered for the curious community.

Here PQ stands for Participant Question and CA stands for Community Answer

PQ: What is Hive?

CA: Hive is a blockchain that emerges from the Steem community with the principle of moving towards true decentralization. This blockchain is DPoS governance and is a fork of the exact Steem blockchain code.

A curious fact of the Hive blockchain is that it does not have a CEO and no centralized private company that controls the code or governance. It is simply a decentralized autonomous community, where users volunteer to create teams (R&D), business, marketing, and advertising. Currently, there is a large group of talented people contributing their knowledge to support the development of this blockchain.

PQ: If the user does not have HIVE tokens, will the user not be able to benefit from the platform? 

CA: Users need a very small amount of staked (powered up) HIVE to interact. Normally, this is delegated from another user.

PQ: In your opinion, should traditional companies apply blockchain? How can traditional companies be integrated into the blockchain? So what are your plans for traditional companies that continue to exist with their own systems?

CA: Yes, all companies can find some value in blockchain, by cheaper/faster transactions, decentralization, and censorship resistance of value.

PQ: Has HIVE come up with solutions to problems that arise today, next week, next month or in the next few years?

CA: Yes. It’s anti-censorship and ownership of the content creators account, assets, and communities by and for the content creator themselves, not by a third party like Facebook or YouTube who can censor you.

PQ: What is the goal of Hive?

CA: The goal of Hive is to offer a censorship-free, gamified experience with 3 second, free transfers. It makes building social/gaming apps very efficient.

PQ: Can you elaborate on the experience of the development team who developed Hive?

CA: Yes. There are about 35 developers who volunteer to carry out the fork and the old Steemit INC team designed and built most of the code of the chain.  The apps and developers are all active on Hive and you can contact them via their blogs/vlogs on the various Hive platforms.

PQ: How do you plan to spread cryptocurrency in the community? Do you plan to develop a project in this direction?

CA: Hive has a curation feature called Proof of Brain. Where curators with powered-up Hive can reward content creators via upvotes, and those upvotes give users Hive. So you can earn Hive today by making an account and creating content and getting involved in the Hive community.

PQ: What problems do you see occurring in the blockchain industry nowadays and how does your project aims to solve these problems?

CA: Censorship and centralization. This has happened via several exchanges and large whales/buyers trying to gain influence to control and centralize chains. This happened to us on Steem but mitigations have been put in place to prevent this on Hive. For example one of the mitigations is that you can only vote after one month of staking (powers up). So if an exchange powers up, the community has one month to put mitigations in place to stop them from taking over the chain (as Binance, Poloniex and Huobi did on Steem).

PQ: What are the differences and uses cases of HIVE, HIVE Power, and HIVE Dollars?

CA: HBD is a dollar equivalent within the blockchain. HIVE is the main token of the blockchain. Hive Power is a token that symbolizes your influence within the blockchain.

PQ: What is the protection of HIVE against the possible Sybil attacks? Considering that like other projects you want to take adoption fast?

CA: The protection is mainly given by the correct use of your private keys and that it is a decentralized blockchain.

PQ: How many partners are there in Hive? And the benefits that these partners bring to Hive and vice versa?

CA: There are only token stakeholders in Hive. No partners. Governance is driven based on the amount of stake being held. 3speak.online is a platform that runs on Hive and we have partners who helped build and contribute to the app.

As the Steem/Hive battle continues to grow interesting, we will keep a close eye on the progress of Hive. And we will make sure you stay updated with the unbiased and the real story as the saga unfolds.


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