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Steem Responds to TRON Merger With Power-Limiting Soft Fork

Steem blockchain will resist centralization during transition.

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Steem witnesses executed a soft fork today in order to ensure that TRON’s upcoming acquisition does not harm the integrity of the Steem blockchain. The Steem community explains:

“We have updated to a temporary protective protocol to maintain the status quo currently established in regards to Steemit Inc’s stake and it’s intended usage. This update is reversible [and ensures] that the security and decentralization of the Steem blockchain remains intact.”

Today’s soft fork essentially introduces a code change that limits powers held by certain accounts and stakeholders. It does not reduce any of TRON’s stake in Steem, nor does it resist the acquisition.

It merely prevents TRON from exercising power in ways that Steem technically permits.

The Problem of Ninja Mining

The motivating factor behind today’s soft fork was an event called “ninja mining.”

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Steem carried out ninja mining in 2016 in order to resolve certain launch issues. Because the process distributed a large amount of tokens to a number of important Steem accounts, it gave Steemit Inc. lasting potential to exercise its power over Steem. One witness, pfunk, explains:

“The large stake of the Steemit Inc. ninja-mine was never ideal for a decentralized blockchain, but it was tolerated [because] Steemit Inc. had all the incentives to not abuse it.

Furthermore, Steemit Inc. founders Dan Larimer and Ned Scott continually communicated that the stake was to be used as a faucet for new account creation, funding of the company’s operations, and would eventually be distributed enough not to matter.”

Today’s soft fork temporarily blocks ninja mining-related transactions and prevents any related abuse of power. It is possible, and even likely, that witnesses will reverse the soft fork in the future. However, that likely depends on whether TRON takes a hands-off approach toward Steem governance.

As pfunk notes, TRON arguably exercises significant influence over its own Super Representatives at the moment—and TRON could conceivably carry that approach over to Steem.

The First True Blockchain Merger?

Blockchain startups and companies are often bought out and merged.

JP Morgan, for example, recently announced plans to merge its Quorum division with Consensys. Similarly, Bakkt has acquired Bridge2 Solutions in order to offer a reward system. Meanwhile, Voyager Digital Canada has recently acquired Circle Invest as an addition to its brokerage services.

However, it is rare for a public blockchain to be bought out or integrated with another.

So rare, in fact, that it has seemingly never happened with any major project. It is arguably impossible to coordinate a merger on a blockchain like Bitcoin, which has a widely distributed power structure

By contrast, Steem and TRON are both delegated proof-of-stake (DPOS) blockchains, meaning that a relatively small number of nodes have collective say over operations. In addition to acquiring Steemit, Inc., the TRON Foundation seems to have earned the cooperation of Steem’s current witnesses as well.

As such, today’s developments could set a standard for how similar acquisitions are handled.

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