What is EOS?
EOS is the native cryptocurrency token for the EOSIO network, a blockchain-based decentralized operating system. Among the different cryptocurrencies, it is most like Ethereum in terms of its goals. Like Ethereum, EOSIO is a platform where decentralized applications can be built on. This way, applications can take advantage of blockchain’s decentralization, immutability and transparency. EOSIO is a competitor to Ethereum. It sees Ethereuem’s scalability problems and wants to build a better and faster version of Ethereum, one that is capable of scaling up to meet enterprise requirements. EOSIO is targeting enterprise solutions for industries such as social media, finance, government and healthcare. Although it is focused on enterprise solutions, it also prides itself for being developer friendly meaning any developer can easily use EOSIO.
Introduced in May 2017, EOSIO was created by blockchain developer house Block.one. It comprises veterans from the technology and blockchain space the most popular of which is its CTO, Dan Larimer. Dan was the man behind early crypto projects Bitshares and Steemit which are both still highly used to this day. Building those two crypto projects had been a hard experience for Dan. This is why he created EOS so that it will be easier to use for new developers in the space. From a fundraising perspective, it has raised the biggest ICO. It’s ICO lasted for a year starting from June 26, 2017 and ending June 1, 2018 raising around $4.1 Billion. This sold 90% of all tokens with the remaining 10% held off on reserve for Block.one.
What sets EOSIO apart?
The four main things that sets it apart are its scalability, focus on developers, cost effectiveness and eco friendliness.
Right now, Ethereum can handle around 15-25 transactions per second. Imagine building a decentralized social media. Facebook currently handles more than 50,000 likes per second. This can be easily done right now through centralized servers. However, in a decentralized environment, each of those likes translates to a transaction on the network. This will mean it has to handle magnitudes higher than 50,000 transactions per second. In the financial realm, VISA handles around 1,700 transactions per second with a capacity to handle surges north of 20,000 transactions per second. Now you can see why it is important to find a solution that can scale to handle thousands, if not millions of transactions per second. The EOSIO main network currently handles around 40-50 transactions per second (not because of capability but because there aren’t many using it at the moment) with a capacity of handling 4,000 transactions per second. It aims to achieve millions of transactions per second in the future. This is why its supporters dub it as the “Ethereum killer”.
Aside from scalability, EOSIO has always had a developer focused strategy. This is thanks to its CTO Dan Larimer who was a pioneer blockchain engineer as mentioned above. EOSIO has made it easy for new developers to build on EOS with a wide range of tools and built in functionalities like account retrieval. Developers will not need to learn a new programming language like in Ethereum’s case which is mostly coded in its own programming language called Solidity. Building on EOSIO follows familiar development patterns and programming languages used by existing non-blockchain applications so developers can create a seamless user experience using development tools they already know and use. They offer developers an integrated front end EOS JS and back end C++ smart contract.
Cost Effectiveness – Zero Transaction Fees
EOSIO is also one of the few blockchains where users will not have to pay for transaction fees. This is more similar to how the current system works where going on the internet is free and it is the developers who are paying for hosting and storage. If the network is fee less, why would nodes host the network? Well they are actually getting paid through the network’s inflation rate. Currently these nodes / block producers get 1% out of the 5% in annual inflation. The remaining 4% goes to the worker proposal fund which helps develop the EOS ecosystem
Bitcoin uses a Proof of Work system where miners have to expend an enormous amount of energy to produce hashpower which secures the network. The energy used is comparable to the total energy expenditure of some countries already like Switzerland. EOSIO’s DPoS consensus mechanism uses much less energy and thus is friendlier to the environment.
Block.one is always actively developing the EOSIO platform. In October 2019, Block.one released EOSIO 2 with a focus on making the network faster, simpler, and more secure to build on. This solved the most common developer issues namely: the speed of smart contract creation and execution, the complexity of onboarding new developers, and the security of private and public keys. We can expect that they will continue to improve the platform since they are also financially incentivized to do so.
Block.one is the owner and creator of the EOSIO blockchain. They are a company that focuses on building highly scalable, high-performance, open-source software. The mission of this Cayman Island-based developer house is to build a more secure and connected world. They currently hold 9.5% of total EOS supply (Originally 10% but this has decreased due to network inflation)
EOS VC – EOS VC is a business unit of Block.one that is committed to deploying funds through venture capital partnerships invested in the future development of blockchain technologies in the EOSIO ecosystem. EOS VC provides advisory and mentorship to portfolio companies around the world.
EOS Investors – EOS has also garnered support from some of the top investors in the space with notable names such as Peter Thiel and Mike Novogratz from Galaxy Digital.
EOS.IO Ecosystem Fund – This is a $325 million fund which was a joint venture between Galaxy Digital and Block.one. The EOS.IO VC program offers developers and entrepreneurs the funding they need to create community driven businesses leveraging EOS.IO software.
How does EOS Work?
Unlike most blockchain’s that follow the pay as you go model, EOS does not charge users a transaction fee. Instead, nodes / block producers are paid from the network’s annual inflation. For developers, they simply need to hold EOS coins, to be eligible to use network resources and to build and run dApps. The amount of tokens developers hold is proportional to the amount of network bandwidth and storage they can use. A token holder who is not running any apps can also allocate or rent his bandwidth to other participants who may need it. This also makes it easier for app developers to predict hosting costs, and allows them to create effective monetization strategies.
Delegated Proof of Stake
EOSIO uses delegated proof-of-stake as their consensus algorithm. This is a novel system developed by Dan Larimer, their CTO. It is already being used in Steemit and Bitshares, the previous crypto projects of Dan Larimer. It can provide higher performance while also being more energy efficient compared to Proof of Work. In proof of work, miners contribute hashpower to solve cryptographic puzzles through a trial and error process. In normal proof of stake, the amount of tokens you have relative to the total tokens in the network represent your stake as well as voting power. What makes DPoS different from Proof of Stake is that the validators or in this case, block producers are only limited to only 21. Token holders use the amount of tokens they have to vote for these validators. They take turns producing and validating the blocks. If they perform any malicious act, they can be quickly voted out by token holders.
In this system, Block producers make governance decisions and also earn the rewards. Block producers can decide how much they want to get paid. The median rate decided by the 21 block producers will be the actual reward given to them. However, the system puts a 5% cap to annual inflation to make sure this does not get abused. It’s hard to argue that block producers aren’t given too much power. As for decentralization, it only has 21 block producers. It’s better than a centralized system but far from what full decentralization can be since there can be collusions between the top block producers. When looking at the block producers, 8 out of the 21 are from China. As for why EOSIO only has 21 block producers, this is done to optimize the network’s performance. If it does plan to increase this pool of block producers, it be harder to scale.
|Price of EOS||$2.41|
|Avg. Block time||500 milliseconds|
|Circulating supply||935,228,670 EOS|
|Total Wallets||1,856,110 wallets|
2017 – EOSIO white paper published.
June 2017 – start of EOS Initial Coin Offering
April 2018 – EOS hits all time high at $22.71
June 2018 – end of EOS Initial Coin offering and launch of main network
Jan 2020 – EOSIO2 was launched
Where can I buy EOS?
How to properly store EOS?
Creating EOS wallets can be more complex compared to other blockchains. Since you will have to own EOS to use the network to create the wallet, this means that you will have to pay to create a wallet. Unlike the wallet addresses of other blockchains, you can choose the name of your wallet here. This makes it more readable compared to the random numbers and characters used in other blockchain networks.
Hardware Wallets – auto generated
Online Wallets – auto generated
Real world use cases (Who’s using it?)
There are currently more than 500 dapps built on the EOSIO network. So far, most of these dapps fall in the gaming, gambling and exchanges category. A good sign is that there are already thousands of users for these dapps. The most famous one is probably Everipedia which is a decentralized version of Wikipedia. This is useful especially when there are countries that suppress information and ban websites like Wikipedia.
Pros and Cons
- Can handle thousands of transactions per second
- Well funded project with a very experienced team behind it
- It has billions in its war chest
- Zero transaction fees for users
- Convenient and easy to use for developers
- Centralization concerns
- Ecosystem is still nascent
Blocks are mined every 500 milliseconds
Users do not pay transaction fees for using dapps. The fees are taken from the yearly inflation.
EOS does not have Halving dates. However, the governance council can choose to increase or decrease the reward rate with a cap that annual inflation does not increase beyond 5%.