According to MyCrypto, an open-source, client-side tool for generating ether wallets and handling ERC-20 tokens, FCoin is responsible for Ethereum’s network congestion. Over the past few days, Ethereum has been showing an abnormal increase in the cost of transactions and a China-based cryptocurrency exchange Fcoin has clogged up the entire Ethereum network over the course of the last week.
MyCrypto further said that, FCoin exchange apparently has come up with a mind-numbingly despicable voting mechanism that, quite literally, incentivizes Sybil attacks. Basically, they want their users to “vote” for tokens to be listed. Instead of a traditional voting mechanism they have decided to vote via “cumulative deposit number ranking”
As reported by NEWSBTC, miners are collecting an average of ten times more fees over the past 5 days in comparison with days of ‘normal’ network activity. The following chart from Etherscan is showing us the transaction activity.
MyCrypto, via its Twitter account, has indirectly blamed the model that is being used by the Fcoin and called it reckless and foolish. According to the company’s series of tweets, FCoin could use a voting mechanism but it uses an improper system that congestions the network and make the transaction fees higher.
4/ Yup….you heard that right. 🤦♀️
Not one vote via poll = one vote.
Not one person = one vote.
Not one token = one vote.
One deposit = one vote.
You'll never believe what happens next!!!1!
— MyCrypto.com (@MyCrypto) July 3, 2018
On July 2, the transaction fee of the Ethereum network was 5862 ether. This transaction fee was greater than its all-time high gas cost of ethereum 3696 ether on Jan 10.
According to BTCManager,
“The strange spike in ether transactions on July 2, 2018, was in result of the controversial business model of FCoin, which encourages users to vote for soon-to-be listed digital assets by the form of airdrops”
An airdrop to a hundred thousand users requires a hundred thousand transactions. Because each user of FCoin is issued with one token to vote, if five projects are competing against each other and FCoin has 100,000 users, 500,000 transactions need to be made on-chain, on the Ethereum protocol, on a single day. Currently, the Ethereum blockchain protocol can hardly handle 1 million transactions per day. Few days ago, ETH creator Vitalik Buterin had said that ethereum will soon reach 1 million transactions per second with scaling solutions like Sharding and Plasma, the Ethereum network will be able to process 1 million transactions per second.