Dan Larimer’s Departure Brings EOS Disappointments to the Fore

Dan Larimer’s Departure Brings EOS Disappointments to the Fore

On Jan. 10, leading pro-EOS YouTuber Colin Talks Crypto announced he had sold all his holdings following the revelation earlier that day that Dan Larimer had resigned his position as CTO of Block.one, the company that made the software powering the EOS blockchain.

In fact, Larimer has been gone since the end of the year.

EOS, as of this writing, is the 16th-largest blockchain by market capitalization, according to CoinGecko, right after the privacy coin Monero and right above decentralized finance (DeFi) protocol Aave. Its market capitalization took a major hit following the Larimer news, losing about a billion dollars in a day.

Hopes for EOS have in many ways hinged on the actions of Block.one, the company that successfully completed a yearlong initial coin offering (ICO) that raised a record-setting $4 billion. These days, however, Block.one is more explicitly about driving value to its stash of 140,000 BTC (and counting) than its considerable EOS position.

To be fair, Block.one never really promised to do more than provide the underlying software for EOS, and it has continued to do so. 

In fact, as EOS has become clogged in recent years, Block.one has released a new way for users to pay for transactions as they go (rather than the original approach of staking EOS for a percentage of network resources), which sounds a lot like Ethereum’s approach with gas.

Winding back the clock, Block.one launched EOS in a unique way, probably the most hands-off approach of any significant blockchain since Bitcoin. It wrote the code for the software that runs EOS and then it just published it, so that anyone who wanted to kick it off could do so. 

As it had given supporters considerable warning around doing this, though, by the time the code was released there was already a global coalition in place running hours-long calls over Google Hangouts to plot the launch of the chain so that one and only one would be viewed as the EOS blockchain.

After fits and starts, the global launch committee finally got the chain running in neutral and then, after another delay, a sufficient number of EOS bagholders cast on-chain votes so that EOS actually started producing blocks on June 14, 2018.

All of this happened at arm’s length from Block.one itself. In fact, Block.one did not start participating in EOS governance until last year, despite being the largest single holder of EOS tokens.

This separation between the software’s originator and its administration may help explain why Block.one got off with a light settlement from the U.S. Securities and Exchange Commission. Once through that regulatory gauntlet, Block.one has been free to pursue its own ideas about the best use of its considerable capital.

Early EOS backers have always believed that ICO funds entrusted to Block.one would be used to drive value back to the blockchain in order to make EOS tokens more valuable. That has never really happened, however, which has driven frustration by longtime EOS backers.

Many, like Colin Talks Crypto, have moved on.

“I just sold 100% of my EOS tokens as a result of this news. For me it was the last straw,” Colin Talks Crypto said in the Jan. 10 video. 

The YouTuber is one of the better-known EOS proponents on social media. Besides running multiple social media channels where he discussed cryptocurrency, he also ran an EOS proxy where holders could back his picks for the best block producers (more on these below). Colin Talks Crypto also shut down his proxy following Larimer’s departure.

Many stakeholders

Before we go any further, here are a few points of context, because the EOS ecosystem can get confusing.

Block.one is the company that ran the ICO that led to the launch of EOS. The ICO ran on Ethereum and then all of the tokens on Ethereum were ported over to EOS. In mid-2019, Bloomberg reported the company had more than $2 billion in cash and 140,000 BTC. Its backers include early Facebook investor and PayPal co-founder Peter Thiel.

Block.one uses its ICO funds by making investments directly and also indirectly, through other funds it has invested in, including Mike Novogratz’s Galaxy Digital. Novogratz sold off shares that Galaxy held in Block.one in 2019.

The most confusing point is probably this one: Block.one built EOSIO, the software that runs EOS. EOSIO is not EOS, and other public blockchains also run on EOSIO, such as Telos, Woldwide Asset Exchange (WAX) and others. 

Telos was launched as one of the earliest forks of EOS, and Suvi Rinkinen, CEO of the Telos Foundation, confirmed to CoinDesk that Block.one has never invested in her organization. 

“Telos is standing strong, no matter what happens at Block.one. Although we are grateful for the EOSIO codebase, it is the community that makes or breaks public blockchains,” she wrote over Telegram.

EOS was the first and best-known public blockchain launched using EOSIO software and the one that has by far the largest market capitalization. Block.one often speaks of advancing EOSIO but seldom of EOS. This distinction is not lost on EOS holders but it likely is lost on casual observers.

EOS is run using the delegated proof-of-stake consensus mechanism devised by Larimer and first used on STEEM, such that EOS token holders continuously participate in an election of the 21 entities that lead the chain – the parties that can resolve disputes, verify transactions and make upgrades to the network.

Those 21 entities are called “block producers,” and they earn new EOS as it is minted with each block for verifying transactions. They serve basically the same role as miners on the proof-of-work Bitcoin and Ethereum networks.

EOS holders often contend that theirs is the most active blockchain, but subsequent research has cast significant doubt on such claims.

BTC pivot

While Larimer has been plotting his move away from Block.one, its CEO, Brendan Blumer, has been talking more and more about bitcoin alongside a pro-regulatory vision for blockchain technology.

In October, Blumer gave an interview to a Forbes contributor, in which he said, “Block.one is a holding company, and see different business emerging but technology projects take a long time.”

In that interview, he said Block.one has three components: building out EOSIO as something that can be used by businesses, investing in other companies and building its own businesses (giving the social network Voice.com as his example).

What he didn’t include seems more salient to EOS token holders: making investments that will drive value to EOS in particular, rather than EOSIO.

In October, at the end of the boom on Ethereum that came to be known as DeFi Summer, EOS holders questioned Blumer on Twitter about why the DeFi boom hadn’t reached EOS. 

Block.one, some felt, could have funded versions of Ethereum’s successful use cases on EOS, where presumably they could run with lower transaction fees.

In his response, Blumer wrote, “We are very interested in investing in #EOS DeFi that can meet the compliance requirements of B1, and are actively on the lookout.”

The same complaint resurfaced again in January.

In November, Blumer would use the #ProFi hashtag in another tweet about the inaccessibility of DeFi for institutional investors. 

“The innovation in the #DeFi space is revolutionary, but the recent guidance of global regulators regarding its lack of compliance controls makes it difficult for mainstream capital to access the opportunity,” he wrote.

The same day he posted about how regulators are starting to see advantages in BTC, as a form of money that’s easy to supervise, seemingly echoing a point made by former U.S. Treasury Secretary Larry Summers in 2020, that money as we know it has “too much privacy.”

The next day Blumer would take this further, with a Twitter thread in which he describes a compliance-first approach as playing the long game. 

He wrote, “At B1, we’re firm believers that the regulatory maturity of the ecosystem is advancing at an exponential rate, and the harmonious integration of both traditional and crypto ecosystems that is facilitated by compliance will continue to pave the path of mainstream adoption.”

In late November and December, his attention on Twitter would turn more and more to Bitcoin, as it did for most people in this industry. He would post about BTC replacing gold and an inadequate supply of BTC for institutional demand.

And then one of Block.one’s investors, Christian Angermayer, would weigh in, calling Block.one’s BTC holdings “the most strategic #Bitcoin position in the world,” adding the hashtag #ProFi.

What good would any of this Bitcoin talk do for EOS holders, though?

Its hard to imagine EOS superseding, for example, Lightning, from within the Bitcoin community as we now know it. EOS today runs on the basis of payoffs to governance participants and there’s no way to know how many of the existing block producers aren’t one or just a few entities or a few entities in collusion.

This is a longstanding tension in crypto, between the pioneers of the space who wanted to build a separate economy and the newcomers looking to maximize profits by plugging it into the traditional economy.

Larimer, as we’ll see, leans toward the former, but Blumer’s allegiance seems to be the latter. He may look forward to a future in which it is not Bitcoin’s existing users relying on EOS so much as institutional adopters that want a solution that’s fast, cheap and easy to track.

“As Brendan has said in recent tweets, Block.one is working on products designed to leverage our Bitcoin position, built with the EOSIO software,” Christina Pantin, a spokesperson for Block.one, told CoinDesk in an email. “We believe that a network like EOS, built on EOSIO, has the capacity and scalability to bridge a highly valuable token like BTC, which is unfortunately slow and expensive to transfer.”

Aaron Cox, of the block producer candidate Greymass, told CoinDesk over Telegram that the EOS community would likely support more BTC integrations. 

“With as much tribalism as exists in this space, I don’t think there’s a lot of outward aggression from within the EOSIO community towards other chains – even despite all the hatred EOS/EOSIO gets,” he wrote. “It’s not like EOS or any other EOSIO token (that I’m aware of) is out to replace projects like BTC – so it only makes sense to find ways they can support each other.”

One longtime member of the EOS community is less excited about the prospects for BTC on EOS. A pseudonymous user going by @blockchainkid on Telegram and Twitter posted:

“Let’s call a spade a spade: the $EOS token sale was just a massive wealth transfer from retail crypto buyers to ⁦@block_one_⁩ founders and early investors.”

A series of disappointments

Colin Talks Crypto and @blockchainkid aren’t the only ones who took to social media to express disappointment.

Larimer also does not seem happy with how this endeavor has turned out.

There’s a meme around Larimer that he always abandons projects, but he’s been working on EOS for at least three years now. And it’s important to also note the major contributions he has made in the industry. They include laying the foundation for DeFi, building software to run a new consensus model and articulating the concept of decentralized autonomous organizations (DAOs).

Larimer first announced he was leaving Block.one on the blockchain blogging site Hive, which is a hard fork of the last protocol he built, Steem. Then he substantiated the announcement on Voice, the Block.one-backed social network. 

“I do not know exactly what is next, but I am leaning toward building more censorship resistant technologies. I have come to believe that you cannot provide ‘liberty as a service’ and therefore I will focus my attention on creating tools that people can use to secure their own freedom.”

In a subsequent update that followed on Hive, Larimer wrote, with seeming frustration:

“What can we do to make EOS ‘successful’? There is no single answer to that question because we all have different definitions of ‘success’ and the paths to ‘success’ can head in opposite directions. The most common definition of ‘success’ that I see is a high token price. EOS is ‘successful’ if everyone who buys it makes money. What if EOS achieved this ‘success’ by becoming a completely regulated, centralized, walled garden of KYC’d users?”

These comments seem to come somewhat in response to those above from his co-founder, emphasizing an investor- and regulator-friendly future for the protocol Larimer created. For his part, Larimer only had frustration for an era in which every interaction with cryptocurrency incurs a taxable event.

Larimer also seemed disappointed in the EOS community’s failure to function as the sort of DAO he had envisioned. After all, it wasn’t essential for them to rely on Block.one to build on EOS. The blockchain was built to fund development itself.

The EOS design assumed that token holders would support block producer candidates who did the most to drive value to the blockchain by reinvesting the tokens they earned in funding EOS applications. EOS was also designed with a fund in place that EOS holders could use collectively to pay for development as a collective.

After failing to create a governance system for EOS, the block producers burned the “savings account” meant to fund such development in May 2019, causing a short-term bump in price but long-term doubts about the community’s commitment to a useful blockchain.

And block producers that built didn’t earn community backing, by and large. Instead, the ones that primarily used their earnings to pay voters to back them came to dominate the leadership roles.

However, the CEO has defended the practice of buying votes on Twitter. “When BP’s offer token holders revenue for their vote, it lowers the cost of network operation by passing value back to holders,” Blumer wrote.

For his part, though, Larimer seemed to share the concerns about bribery that CoinDesk had reported on. He wrote in his Jan. 10 Hive post, “In theory, token holders are supposed to vote in producers that provide the most value to the network. In practice, token holders vote in people who pay them kickbacks. It would be like Apple shareholders electing a board that issued new shares and distributed them as kickbacks to a subset of the shareholders.”

After burning the savings account and devoting the block rewards to payoffs, it’s no wonder the community expected Block.one to build for it. Who else could afford to?

But Block.one has shown little tangible evidence of interest in doing so. After all, the returns on Bitcoin have been so much better.


When Colin Talks Crypto described Larimer’s departure as the “last straw,” he went on to produce another 18 minutes of frustration.

First, the fact that Voice is not running on EOS. When first announced in June 2019, Block.one had said every Voice user would get an EOS account automatically. By January 2020, it had walked that back, indicating that it wouldn’t launch on EOS but that Block.one would “like” it to leverage the EOS public blockchain and “potentially others.”

Last January, CEO Brendan Blumer took to Twitter to describe CoinDesk’s reporting as misleading, but even then he didn’t reiterate the commitment from June, instead writing only that “publishing to public chains will diversify moderation and strengthen censorship resistance.” 

Similarly, on Jan. 8, Voice.com CEO Salah Zalatimo wrote in a blog comment that can be seen republished here that the team remains committed to “linking up with the EOS mainnet,” language that falls short of the originally promised plan to run Voice on EOS.

In fact, CoinDesk has been only able to identify one project backed by Block.one that’s running on EOS, and that’s Everipedia. Another company backed by Block.one, Mythical Games, has announced its intention to run on EOS, but CoinDesk has not been able to verify that it has done so. In December, a lead developer tweeted that the game intended to “connect” with the mainnet. A request for comment to the company has not been returned by press time.

When asked to confirm whether or not these were the company’s only investments that run atop EOS, Block.one responded but didn’t answer the question. 

“Block.one and its partner funds have made more than 70+ investments into companies already using EOSIO, intending to move to EOSIO, or looking to use EOSIO,” Pantin wrote.

As previously noted, EOSIO is not EOS.

Many EOS holders also found encouragement in the October announcement that Google Cloud would deploy a block producer candidate. There have been no updates on this initiative three months later. 

Google confirmed the original report to CoinDesk, but, upon follow-up, Google spokesperson Jane Khodos told CoinDesk in an email, “Unfortunately we can’t comment about our customers.” 

One longtime EOS backer emailed CoinDesk last week to say that it might soon be time to write a post-mortem for the blockchain. Of course, the death of EOS is unlikely. Blockchains hardly ever truly die.

But, for many early proponents, including – in particular – the man who created it, it seems the hopes that brought them to EOS have already been laid to rest.

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