Few figures in crypto history have created more foundational innovations and then abandoned them than Dan Larimer. The inventor of Delegated Proof-of-Stake (DPoS) — the consensus mechanism used by dozens of blockchains globally — Larimer has a pattern of identifying important problems, building ambitious solutions, becoming disillusioned with the direction of his own projects, and walking away to start new ones. His journey through BitShares, Steem, and EOS reads as a three-act drama about the tension between idealistic crypto ideals and the realities of distributed governance, capital-driven incentives, and the limitations of “code is law” governance in human communities.
Background
Born: 1982 (approximate), Virginia, USA
Dan Larimer grew up in the United States with a computer science background and a strong libertarian political philosophy. His early work was in traditional software development, but around 2010 he became engaged with the nascent Bitcoin community and Satoshi’s vision of censorship-resistant money.
Foundational philosophy: Larimer’s work has consistently been driven by a mission he articulated in 2013: “Find a free market solution to secure life, liberty, and property.” This libertarian idealism shaped all three of his major projects — BitShares aimed to create free market banking, Steem aimed to monetize free speech without censorship, and EOS aimed to create a general-purpose platform for decentralized sovereignty.
BM (bytemaster): Larimer was known in early Bitcoin forums and the BitShare community as “bytemaster” — a handle he used for years before becoming more public-facing.
BitShares (2013–2018)
The following sections cover this in detail.
Invention
Founded: 2013 (as ProtoShares/AGS); launched as BitShares in 2014
Ticker: BTS
Thesis: Create a decentralized financial exchange capable of issuing and trading “bitassets” — synthetic tokens pegged to real-world prices (bitUSD, bitCNY, bitGold) using crypto collateral
Key innovations:
- First functioning DEX (Decentralized Exchange): BitShares implemented a working on-chain order book where users could trade without a centralized intermediary — predating Uniswap by 5+ years
- Smartcoins (bitUSD etc.): Collateralized debt-based stablecoins secured by BTS; the architectural precursor to MakerDAO’s DAI
- Delegated Proof of Stake (DPoS): Larimer invented DPoS to solve Bitcoin’s energy consumption and centralization concerns — instead of all miners competing, token holders vote to elect a small number of “witnesses” (block producers) who take turns producing blocks; requires much less energy, achieves higher TPS
DPoS architecture:
- Token holders vote with their stake weight to elect block producers (21 block producers in BitShares)
- Elected witnesses take turns producing blocks in a round-robin schedule
- Token holders can “unvote” and replace poorly-performing or malicious witnesses
- Block time: 3 seconds (vs. Bitcoin’s 10 minutes)
BitShares engine — Graphene: The C++ blockchain technology underlying BitShares (now called the “Graphene” toolkit) became the foundation for Steem and EOS as well — Larimer reused and improved the same base technology across all three projects.
Larimer’s BitShares departure: After several years of development and disputes within the BitShares community about direction and his management style, Larimer stepped back from active BitShares development in 2014 to pursue Steem, leaving the project to the community. BitShares continued under committee governance.
BitShares today: Still operating as of 2024, with active trading. The DEX remains functional but with significantly less liquidity than modern DeFi protocols.
Steem (2016–2020)
The following sections cover this in detail.
The Social Blockchain
Founded: 2016 by Dan Larimer and Ned Scott
Launch: July 2016
Thesis: Create a blockchain-based social media platform where content creators earn crypto rewards based on community upvotes, with no central company able to censor or monetize their content
How Steem worked:
- Users post content on Steemit.com (the flagship front-end for the Steem blockchain)
- Community members upvote content using “Steem Power” (staked STEEM)
- Upvoted posts earn STEEM and SBD (Steem Backed Dollars, a stablecoin)
- 75% of rewards to content creators; 25% to curators (upvoters)
- STEEM inflation funded the reward pool
Early success: Steem launched in 2016 and briefly became one of the most used blockchain applications in the world by daily active users. Content creators in developing countries were particularly early adopters — earning meaningful real money from content production for the first time.
Innovations:
- First successfully deployed “Proof of Brain” reward mechanism
- First blockchain social graph with financial incentives
- The 3-second confirmation time (Graphene) enabled the latency needed for a social app
The centralization problem: Steem had a significant genesis distribution problem — the founding team (including Larimer and Ned Scott) retained a massive “ninja mined” premine of STEEM from the first blocks. This created governance power imbalance from the start.
The Steemit/Justin Sun Hostile Takeover
In February 2020, Justin Sun (Tron founder) purchased Steemit Inc. (the private company that ran Steemit.com and held the premine) and used the Steemit premine stake to vote in new block producers (witnesses), effectively taking over the Steem blockchain governance.
The existing community of independent Steem witnesses orchestrated a hard fork in protest — launching Hive blockchain (March 2020) as a community-controlled fork of Steem, excluding the premine stake. Much of the Steem developer community migrated to Hive.
Larimer had already left Steem by this point (he departed Steem in 2017 to found Block.one and build EOS), but the Steem/Hive split illustrated the governance vulnerabilities in token-based democratic governance systems that he had been trying to solve.
EOS / Block.one (2017–2021)
The following sections cover this in detail.
The Billion-Dollar ICO
Founded: Block.one incorporated in the Cayman Islands, 2017
EOS token launch: The EOS.IO software was made open source in 2017; the EOS token ICO ran for one full year (June 2017–June 2018)
ICO amount raised: $4.1 billion in ETH — the largest ICO in history
Who was involved:
- Dan Larimer: CTO; architectural lead for EOS.IO software
- Brendan Blumer: CEO; business/commercial lead
- Block.one: The private company that developed EOS.IO software and conducted the ICO
The EOS vision: A general-purpose blockchain platform for “blockchain operating system” — providing accounts, authentication, databases, asynchronous communication, and scheduling applications as foundational primitives. Designed for:
- High throughput (1,000+ TPS target; vs. Ethereum’s ~15 TPS in 2017)
- Free transactions (resources acquired by staking EOS, not per-transaction fee)
- Human-readable account names (user@name, not 0x… addresses)
- Governance via elected Block Producers (21 BPs using DPoS)
EOS mainnet launch: June 2018 — after months of testing and multiple BP election rounds, the EOS community launched the mainnet
Controversies and Failures
The 21 BP centralization problem: EOS’s 21 elected block producers were primarily exchanges and Chinese entities — a very small, identifiable, potentially colludable set. The decentralization promises rang hollow compared to Bitcoin’s thousands of miners.
Block.one and the SEC: Block.one settled with the SEC in September 2019 for $24 million for an unregistered securities offering (the year-long $4.1B ICO). The fine was widely criticized as disproportionately small relative to the ICO proceeds.
The $150M EOS VC fund / “failed apps” problem: Block.one committed $150M to fund EOS ecosystem dApps that never achieved significant adoption. The EOS dApp ecosystem underperformed Ethereum despite vastly greater capital raised.
Voice: Block.one launched Voice.com as a social media platform on EOS in 2020 — intending to revive the Steem model with better economics. Voice failed to gain meaningful adoption and was essentially shut down in 2022.
Larimer’s EOS Departure
In January 2021, Larimer announced his resignation from Block.one. He was characteristically blunt in his departure post, expressing frustration that EOS.IO was not living up to its decentralization promises and that Block.one’s direction had diverged from his vision.
Post-EOS: Larimer spent 2021 developing Eden on EOS — a novel democratic governance experiment based on fractal democracy principles (small groups elect representatives, representatives of representatives elect leaders, creating a legitimacy stack). Eden represented his purest ideological experiment in on-chain governance.
Later Work and Legacy
The following sections cover this in detail.
DPOS’s Enduring Legacy
Despite all of Larimer’s project departures, Delegated Proof of Stake (DPoS) became one of the most widely deployed consensus mechanisms in crypto:
- EOS (21 BPs)
- Tron (27 Super Representatives) — Justin Sun essentially copied DPoS for Tron
- Steem / Hive
- EOSIO forks (Wax, Telos, UX Network)
- BNB Smart Chain (21 validators — effectively DPoS-inspired)
BitShares DEX mechanics also influenced every subsequent DEX design, and smartcoins directly influenced MakerDAO’s CDP/DAI system.
Character and Reception
Dan Larimer is a polarizing figure in crypto. His supporters regard him as a visionary who was years ahead of the industry on DEX design, social blockchains, and high-performance consensus. His critics point to the pattern of serial project abandonment, the $4.1B EOS ICO that resulted in an underperforming ecosystem, and the governance failures of each successive project.
Larimer has been blunt about his own motivations throughout — he is explicitly building toward a decentralized sovereignty vision that may not be compatible with the commercial demands of venture-backed crypto projects.
Related Terms
Sources
Larimer, D. (2013). DPOS Consensus Algorithm — The Missing White Paper. Steemit.com/bytemaster blog, originally published 2013, formalized 2014.
Block.one. (2017). EOS.IO Technical White Paper. Github.com/EOSIO/Documentation, 2017.
Schroeder, S. (2022). What Happened to EOS? The Rise and Fall of a $4 Billion Crypto Dream. CoinDesk Long Read, 2022.
Buterin, V. (2014). On Stake Pooling, Sharding, and Alternatives. Ethereum Blog, October 2014.
Chohan, U.W. (2017). The Cryptocurrency Trifecta: Stablecoins, Decentralized Exchanges, and Smart Contracts. University of New South Wales CAMA Working Paper, 2017.