Tron CEO Justin Sun has allegedly carried out a hostile takeover of the Steem blockchain using STEEM token deposits held in major crypto exchanges like Binance and Huobi. The alleged takeover has seen a scheduled soft fork of the blockchain network reversed.
Sequence of Events
As previously reported by BTCManager, Tron and Steemit — a Steem-based decentralized social media platform, inked a partnership deal in mid-February 2019. The collaboration between both entities would see a future transition of the latter to the former’s blockchain network.
This purchase of Steemit by Tron meant Sun wielded considerable influence over the consensus protocols on the Steem blockchain. In response, some Steem stakeholders initiated a Steem protection hard fork targeted at limiting the influence of whales like Sun.
The proposed soft work appears to have not gone down well with Sun as the Tron CEO allegedly amassed 84 million Steem tokens from Poloniex, Huobi and Binance to vote in “loyal” Block Producers (BPs). Since Steem uses delegated proof of stake (DPoS) consensus, the takeover by Sun sees the blockchain’s top-20 witnesses filled with BPs chosen by Sun.
The apparent hostile takeover of the Steem blockchain could mean the network is now under centralized control. However, the Tron CEO has come out to say the initial soft fork was illegal, describing the move as a targeted attempt to disenfranchise certain community members.
In a tweet published on Tuesday (March 3, 2020), Sun declared that all Steem tokens are safe and that the blockchain had “successfully defeated the hackers.”
What Next for Steem?
In an open letter published by the Steemitblog, Steemit declared that there were no plans to abandon the Steem blockchain or force a merger with Tron unless agreed upon by a network consensus. The blog post also revealed that the current status quo of BP witnesses will be maintained, for the time being, stating:
“For the next 4-6 weeks, the Steemit team will be using the voting rights to resume the order of the community while having an open channel for meeting community members and Witnesses. The goal is to protect the Steem blockchain from bad actors, add transparency, and receive community suggestions and advice.
While the Sun faction says it will return the blockchain’s governance to the community after the 4-6 weeks period, Steem token holders are railing against the hostile takeover. Reports of users unable to withdraw their Steem tokens from the exchanges used in the takeover is causing discontent across the network.
Tuesday’s sequence of events illustrates another example of centralization and censorship within the Steem ecosystem. The takeover also signals another upheaval period for Steemit as the project attempts to rebuild after a difficult couple of years.