LEO UNUS LED is an Exchange backed cryptocurrency piloted by Bitfinex. Recently, Callisto Network audited the crypto-token. Several doubts were raised on the centralization of the network because “the contract has an update function that can allow owners to destroy investors’ funds.”
EOS is a newer and improved smart-contracting system. Its approach is more advanced and it takes into account the experience of previous platforms, including Ethereum.
EOS provides added mutability to the contract. The auditor mentioned that out of more than 200 smart contracts audited by them; the up-gradation feature is added to correct unforeseen circumstances. Dexaran, the pen-name of the auditor and Co-founder of Callisto Network noted,
Writing the error-free code is impossible. The only viable way to make code safer is to make it fault-tolerant instead of trying to make it bug-free
Moreover, even if the contracts are mutated, i.e., terms are changed, it would we transparent centralization. Furthermore, if the smart contracts are mutated for fraud and theft, people would lose trust in the network, rendering it worthless. He mentioned,
If a company will manipulate the contract to harm an investor then this precedent will be transparently available for everyone to verify or prove.
The arguments mentioned above are realistic in their approach to real-world contracts and programs. Glitches, bug-fixes, hacks are parts parcel of the game. Hence, providing a remedy only increasing its security.
Are all Crypto-Tokens Cryptocurrencies?
While the design provides insurance to the developer for any contingency, it raises doubts on the economics of the token.
It questions the viability of the “cryptocurrency” as a medium of exchange. A currency should be free from control and must be immutable. The fact that an “owner” and a “manager” of the currency is recognized makes it prone to security laws. We noted that even Dexaran avoided the term cryptocurrency to describe the token. He said,
I would call LEO token one of the most secure smart-contracts in the whole Ethereum ecosystem. It is one of the few ERC20 tokens that is not prone to the common critical problems of the ERC20 standard.
Moreover, even the authorities drafting laws on crypto-assets will be inclined to hold the developer/owner accountable for any issue related to the asset. It also increases the likelihood of them being classified as financial security.
How do you think the Token Taxonomy Act will view Exchange backed currencies? Please share your views with.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com