Understanding EOS: A Beginnerʼs Guide to the Next Big Blockchain
The epic crypto bear market of 2018 has had many losers, with Cointelegraph recently reporting that more than a thousand crypto projects were “dead” as of June. There have, however, been a few winners rising above the rubble. The biggest amongst them, and most notable due to the eternal cloud of controversy which surrounds it and its ICO, is EOS.
As South Korean regulation worries kicked off the largest crypto market downturn seen in years, EOS began an unlikely swim against the current. It seemed that for every leg down the market experienced, EOS responded with another leg up. The months-long rally didnʼt go unnoticed, though what EOS is may be less clear for observers who have decided to start paying attention.
Who is EOS
Standing just behind EOS (or above it, depending on your perspective), is Block.one, a Cayman Islands-registered company headed by Daniel Larimer. Some of Larimerʼs previous blockchain projects include the well known, ahead-of-its-time decentralized exchange Bitshares, as
well as Steemit, likely the most widely adopted blockchain application in use today.
Block.one, who refer to EOS as EOSIO, develop the open-source, public, and free to use software that is EOSIO for the propagation of, “free market systems to secure life, liberty, and property.”
After announcing the ICO for EOS in May 2017, Dan Larimer and Block.one launched the beginning of a mammoth, year-long round of crowdfunding that resulted in a record $4 billion raise for EOS. ICO buyers were given placeholder ERC20 tokens that, after the launch of the EOS genesis block in June, were swapped for EOS mainnet tokens.
What is EOS
Put succinctly, EOS aims to be, “smart business for the everyday person.” According to the EOS whitepaper:
Bitcoin is too unsafe, and its smart contracts opaque. Ethereum is too scary, too hard, too geeky. Corda is ‘big corporate.ʼ Other systems have their weaknesses, all of them are restricted to the elite coder, and everyone has a different view.
What becomes quickly apparent is that the EOS team see themselves as positioned somewhere between centralized but business-friendly outfits like Corda and decentralized platforms such as Ethereum that
require a steeper learning curve for developers and clients alike.
To that end, EOS has developed a high-performance blockchain that serves as an operating system for the handling of business contracts and features zero-cost transactions. The EOS vision is a context in which developers and entrepreneurs create distributed applications (dApps) on EOS which are then used by customers/consumers who need not even know that blockchain exists. The EOS blockchain will rely heavily on scalability to achieve their vision of thousands of concurrent applications running in tandem. In such a context (which may not be very far off at all), high transaction throughput will be necessary as thousands of transactions per second fire off and settle executed smart contracts.
How, exactly, does EOS plan to scale their blockchain to sufficiently handle the amount of throughput they can expect from becoming the default blockchain for businesses? The main difference between EOS and leading blockchains such as Ethereum, Bitcoin, Neo, and others can be found in the answer to this question.
EOS is only as decentralized as is necessary to maintain utility and security. Utility in the EOS system is defined as transaction speed/scalability, and the reason for this is simple: The faster the blockchain is, the more useful it will be for hosting commercial
applications. Decentralized blockchains must wait for consensus to occur over a distributed network of nodes - the more nodes there are, the more decentralized that blockchain is. But, the caveat is that with greater decentralization comes longer wait times for transaction confirmation. Bitcoin handles up to 4 transactions per second while Ethereum tops out around 15 tps. EOS, on the other hand, aims to scale up to millions of transactions per second through its novel architecture and delegated proof of stake (dPoS) consensus mechanism.
At the time of its testnet, EOS was achieving 600 tps on sub-optimal hardware. In a community announcement, Larimer stated that the EOS mainnet debut would include transaction speeds of between 1000– 6000 tps to start.
The EOS token differs greatly from existing token ownership models in competing blockchains. Rather than using the EOS token as a base currency to cover network costs and pay miners, the EOS token represents real estate in the network itself. The greater the number of EOS tokens owned by a user, the greater that userʼs stake in the EOS network and its resources are. Owing to this model, EOS is able to boast a zero-transaction fee arrangement whereby network expenses are paid by inflation rates.
By owning EOS tokens, users have access to creating and using apps
on the EOS blockchain, governance rights, airdrops, and are able to generate income from renting out network bandwidth that comes with token ownership. All in all, the EOS represents a departure from the usual token economics and proof of work blockchain models that have become the norm. Whether it continues to swim against the current, however, is anyoneʼs guess.