What is EOS
Officially launched on June 1st, 2018 by block.one company, EOS (E-OS) is a new blockchain-based platform that aims to become a decentralized operating system capable of supporting commercial-scale decentralized apps. EOS founders claim to have solved the issue of scalability and promise a network able to process one million transactions per second at no cost.
Block.one is a Cayman Island-based company that offers high-performance blockchain solutions to businesses. The company is owned by two blockchain experts Brendon Blamer (CEO) and Daniel Larimer (CTO). Dan Larimer is the brain behind DPoS, the EOS unique system set to solve the scalability problem. Before building EOS, Larimer co-founded Steemit (decentralized social media platform) and Bitshares (decentralized exchange).
EOS ecosystem is made of two main parts: EOS.IO and EOS tokens. First, EOS.IO is the operating system that manages and controls the entire EOS blockchain system. Second, the EOS token, on the other hand, is the native cryptocurrency of the EOS network. Third, EOS was an ERC-20 token built upon the Ethereum blockchain before shifting to the network's mainnet in June 2018.
The company block. One first introduced the EOS blockchain's white paper in May 2017 and launched an ICO to raise funds for the project development. The members pre-mined 1 billion EOS tokens before the ICO to ensure the widespread distribution of the coins. EOS held a never seen before one-year-long ICO on the Ethereum network to give everybody a chance to buy EOS and get involved in the new project. The token distribution was carried out as follow:
1. From June 26th, 2016 to July 1st, 2017, 200 million tokens (20%) were distributed during the initial ICO.
2. Next, 700 million tokens (70%) were allocated for 350 days. In that time frame, the company offered 2 million tokens per day.
3. The rest, 100 million (10%), is being held in escrow by the parent company block.one for the platform development.
EOS had one of the most successful ICO of all time, where the parent company raised $ 4billion. EOS network will use that money to implement its vision of becoming a decentralizing operating system where businesses and individuals can build various apps, and at low prices.
A successful decentralized app should be scalable enough to support millions of users, and free to use, which is precisely what EOSIO offers. On the network, developers will also be able to upgrade their apps or fix bugs without affecting the platform. It's a ready-made platform that allows developers to tap into a complete operating system with built-in features like server hosting, authentication, and data storage.
EOS is a blockchain-based and decentralized network that will enable developers to create, host, and run decentralized apps on its platform. They will allow individuals and businesses to build applications that are independent of any third-party control and censorship-resistant. You can now bring your cool project to life and deploy it on the blockchain so that people can use it in their everyday lives.
Commonly referred to as the Ethereum's killer, EOS is one of the main competitors for Ethereum in the crypto market. EOSIO smart contract platform will be an easy-to-use, cheap, and scalable blockchain platform for developers and Dapp users. The founder, Dan Larimer, plans to create an environment where developers and users of Dapps can thrive.
Now, you must think that Ethereum is already offering a smart contract platform for programs to build and run Dapps and wonder what's new. Well, EOS aims to resolve the current problems faced by the giants of cryptocurrency like Bitcoin, Ethereum, plus other blockchain-based platforms:
Bitcoin and Ethereum use a proof-of-work system to verify and confirm transactions. The process requires total consensus across nodes. It means that all thousands of computers on the blockchain have to check each transaction they add it on a block. As a result, it will take much time for transactions to be added to the blockchain. For instance, it takes a few minutes for a transaction to pass through on the Ethereum network. Also, the Ethereum blockchain can only support 15 to 20 transactions per second.
However, financial industries or even social network apps like Facebook need to process hundreds of transactions every second, thus the need for building a system capable of solving the scalability issue. Since EOS aims to support industrial-scale Dapps, they had to come up with a solution capable of processing thousands of transactions per second.
To solve this problem, EOSIO promises a system that will be able to execute one million transactions per second called delegated proof-of-stake or DPOS.
Furthermore, for a user to send transactions on Bitcoin or Ethereum, they have to pay transaction fees. EOSIO aims to remove the costs, therefore allow developers and users to enjoy the Dapps for free.
As opposite to Ethereum, which requires developers to use their computer infrastructure to write and deploy smart contracts, EOS offers built-in features like cloud storage, off-chain data storage, authentication mechanism, usage management, plus communication between Dapps and the Internet. You don't have to procure your own infrastructure or do all the coding work manually. Although the features are not comprehensive or perfect, they are of great help to app developers. Besides, the flexible platform allows you to write your code for additional features on the Dapp.
In other words, on the Ethereum platform, you have to build things for yourself while EOS promises a hassle-free app development process. The difference between EOS and Ethereum is that EOS runs on an ownership model, meaning that you only need to hold EOS tokens to use the resources you need on the network. Ethereum, on the other hand, can be taught as renting your computation power in exchange for ether.
On EOSIO, you can build apps using the cloud storage, hosting services, and bandwidth that the system offers. Besides, EOSIO is a full-featured authentication network that provides user data security and the ability to set different permission levels. Further, EOSIO features include a stolen account recovery system for when you lose the private keys or want to access a compromised account.
Moreover, the EOS network has another core project, which is to facilitate communication between businesses and apps built on the blockchain, thus increasing trust and efficiency.
Even though the EOS project is still under development, it promises solutions to some of the significant issues of cryptocurrency or blockchain's users, including scalability and transaction fees. What more, EOS plans to use an operating system with built-in functions to help developers to do their best and faster.
EOS users are only required to hold EOS tokens to interact with the blockchain in any way; therefore, you will need them in your wallets if you are interested in the blockchain's project. For instance, with EOS tokens, you will have access to data storage and bandwidth on the platform.
Besides, EOS can act as a transfer of value when you use it to buy goods and services online or at any other store willing to accept the tokens.
You can hold, send, or receive EOS coins between wallets. You can trade EOS against major cryptocurrencies like BTC, ETH, BNB, BCH, etc. on Bitfinex, YoBit, Huobi, Binance, etc.
You can also store your EOS tokens on ERC-20 compatible wallets, including MyEther Wallet, Ethereum Wallet, Metamask, etc.
EOS does not have a limit supply of its tokens; instead, they will continue to produce coins as the network grows.
As of November 28th, 2019, EOS is the seventh-largest cryptocurrency by market capitalization with 2.5 billion. One EOS token is worth $ 2.69.
How Doe It Work
EOS wants to resolve different problems that developers encounter on other blockchain networks like Ethereum. Nowadays, there is an increasing number of Dapps being created on the Ethereum blockchain network. As a result, the platform may get constrained due to a large number of similar requests or false transactions. Also, spamming apps could slow the speed execution on the platforms.
As mentioned above, EOS is a network aiming to become a decentralized operating system that can support industrial-scale Dapps. The founders claim that EOS blockchain will have the ability to conduct millions of transactions for free using a new system called DPoS.
To fully understand Dan Larimer's proposition, we need to review the differences between the new system and the previous Proof of Work used by big names in the crypto game like Bitcoin and Ethereum:
Between Proof of Work (PoW) and Delegated Proof of Stake (DPoS)
In a proof-of-work process, miners will solve complex puzzles to verify transactions and create new blocks. When a miner solves the equation, he will present the solution to the whole network to check if the answer is correct. The system is often composed of thousands of computers, called nodes, spread across the world. Once all the computers on the network reach a consensus that the solution is correct, they will approve the block, and it will be added to the blockchain. The miner who solved the equation will also earn a pre-defined amount of coins depending on the blockchain platform (12.5 BTC for Bitcoin and 3ETH for Ethereum).
The PoW process itself requires a considerable amount of electricity and computational usage. It will obviously take time to wait for all the nodes on the network to verify a transaction, which is why Larimer proposed an alternative solution in a new consensus mechanism called Delegated Proof of Stake.Instead of reaching consensus across every node on the network, EOS uses a selected pool of 21 validators to achieve consensus much faster.
EOS doesn't have miners to create new blocks. Instead, it uses block producers or validators who compete to create new blocks and generate new tokens. Validators will receive a reward proportionate to their participation in the creation of a block.
EOS blockchain requires 21 people to help verify each transaction called “witnesses” or validators. Block Producers are chosen randomly through an approval voting system where 21 candidates are elected to produce blocks.
EOS token holders get to vote for who they think can take part in the verification process. However, the strength of your vote depends on how many EOS coins you own or are willing to stake. Instead of paying a transaction fee to execute an operation on a blockchain network, EOSIO users only have to stake a portion of their coins, depending on the action they need to achieve, whether you want to vote, to send EOS tokens, to buy bandwidth, etc. The more tokens you have, the higher your voting power.
The task of the 21 Block Producers (BPs) is to keep the network moving and secure in exchange for a reward; 21 blocks are produced in each round of voting. There are a lot of other witnesses or BP waiting for their turn to create new blocks and make some money too. If a block producer is not doing his job correctly, he can be voted out of the pool. The voting system is an excellent way to ensure that the BPs are not the same people.
The EOS voting process happens on-chain for transparency, and the order of the 21 Top producers is defined by the number of votes received.Voters are requested to stake EOS tokens for three days to be able to vote for their favorite validator. Each EOS user has the right to vote for up to 30 candidates. However, the amount of votes you can cast for each producer depends on the tokens you have. For instance, if a user has 10 EOS tokens, he can only cast ten votes for each of his chosen candidates.
Block Producers are incentivized to cooperate for the benefit of the ecosystem while competing with each other to earn token holders' votes. It is called coopetition (cooperative competition). Besides, they are encouraged to work honestly because they can be voted out by the users anytime. Therefore, they compete with each other while working together to validate transactions as quickly and efficiently as possible.
They need to remain active to keep the chain moving. A producer who hasn’t made a block in the last 24 hours is removed from voting consideration. However, it is infrequent for a BP to miss blocks for an extended period of more than 24 hours. If he is experiencing some issues, he could remove himself from the pool of the 21 validators.; it is called unregproduce. When he fixes the problem, he can come back into the voting pool since no votes were lost from the process of unregproduce.
EOSIO requires 2/3+1 of the top 21 to verify transactions or upgrade the network. It means that it takes 15 validators out of 21 to vote "yes" to pass any change or proposal on the EOSIO network.
However, this comes with a big risk of centralization. For instance, a hacker would only need to gain control of 50% of producers, 11 nodes, to control the whole EOS consensus mechanism. Although it represents a risk of EOS getting hacked, the DPoS system enables block producers to freeze transactions or users' accounts when there is suspicion of a hack.
Anyone on the EOS network is entitled to an amount of resource proportioned to the number of tokens they hold. The amount of token you own corresponds to the portion of the system you own and can use. You can only use the part of tokens you own to process your transactions. If you have a few coins, you will have limited access to the network capabilities. For instance, if you owned a 10% stake of EOS tokens (10 tokens), you would only be able to use 10% of the network or 10% of the necessary computing power to process your transactions.
Sometimes, several tokens are required to interact with the chain. Thus, if you have more coins, you will use the system resources more efficiently. But, the problem with this method is that you would need to invest a lot of money and expose your investment to a volatile market.
How To Creat APPS on EOS
To be eligible to create and run Dapps, or use the network resources in general, all you need to do is hold EOS tokens.You can plan ahead the amount of storage and other computing resources you are going to need to build your app to determine how many coins to stake. EOSIO offers a cool feature where it allows users to rent their storage space of bandwidthto other participants if they are not using them.
EOS has a 5% yearly inflation rate (annual network costs). 1% is allocated to reward BPs for their work. A block producer's share of that 1% is based on their number of blocks produced. The rest, 4%, goes to Worker Proposals, where it remains unspent in a savings account named "eosio.saving.” The saved tokens only get spent on network growth. When there will be a proposal to improve the EOSIO platform, it will need to be voted out by the 15 required BPs through a Worker Proposal System (WPS). Only then will the money be used by the EOSIO network.
Ethereum is the current world-leading platform for smart contracts, but the low transaction speed and the gas price are significant issues. EOS is the new blockchain project on the cryptocurrency market that will offer blockchain-based businesses various benefits:
- Scalability and speediness: The reason why blockchain-based platforms like Ethereum and Bitcoin can't compute many transactions per second is that they wait for every single computer on the network to come to a collective agreement (consensus) for any transaction to go through following the PoW process. For example, the Ethereum network processes 15 transactions per second using the PoW technology against seven transactions per second for Bitcoin. PoW is rather slow and energy-consuming. (However, you should note that Ethereum is already using off-chain transactions to deal with the issue of scalability. The network is working on new improvements that will enable up to 3000 transactions per second.)To avoid those issues, EOSIO chose to use a different system, DPoS, to be able to process more transactions.
- Cost-effective: Instead of paying gas to miners to add your smart contract code to a block or any other transaction, with EOS, you only have to hold EOS tokens. They propose a flexible cost model with zero transactions. All you have to do is stake your tokens according to how many resources you want to use. For example, if you're going to give one vote to a block producer, you may only need to stake 1 EOS.
- Eco-friendly: Networks that use the Proof-of-work system to check transactions require tremendous computation energy, which can be harmful to the environment. However, EOS only uses 21 nodes to verify the transactions on its blockchain.
- Flexibility: To avoid an incident like the DAO hack, EOS blockchain offers its elected block producers flexibility to freeze a faulty Dapp until the system is taken care of. What more, if you lose a private key, EOS will allow a process for account recovery.
- Usability: EOS offers well-defined levels of permission by implementing features such as web toolkit for interface development, self-describing database, self-describing interfaces, and declarative permission scheme. EOS platform provides parallel processing of smart contracts to distribute the workload evenly among multiple processors and save up some time.What more, EOSIO follows programming languages and development patterns familiar to what developers use to build web-based applications to create a user-friendly experience when using tools they already know.
- EOSIO is tailored to fit various types of business needs. Some of the industries that could primarily benefit from the blockchain technology solutions offered by EOSIO are:
- Social media: EOSIO aims to support apps that show transparency in content to create a more reliable internet. Also, the blockchain will help to attribute ownership and value to content creators and to set up a transparent rewarding system for their discovery within networks.
- Marketplaces: EOS blockchain aims to help markets achieve trackable and seamless value transfer within products.
- Finance: The EOS blockchain platform will improve the transparency and of transactions and settlements between existing banking systems across the world.
- Government: EOSIO plans to create flexible governance models that would revolutionize voting, company registry, government expenditures, and more. EOSIO will help bring openness and transparency to existing processes.
- Supply Chain: EOSIO aims to make supply chain management more straightforward and traceable.
- Healthcare: EOSIO plans to improve transparent access to health data and the way we interact with data providers.
What Does the Future Hold
Briefly, EOS is a blockchain platform that will be capable of processing fast and free transactions. Further, it will allow developers to build smart contracts on top of the blockchain and create Dapps easily and quickly.You can make your own secure decentralized app, resistant to censorship on the EOSIO core platform using the blockchain’s built-in tools.
EOS boasts of experienced team members. Moreover, it has a large and active community of Dapp users.EOS is building a unique consensus mechanism capable of supporting the creation and functionality of thousands of Dapps without blockage. EOS’s DPoS system proves to be more performant than PoW. However, it might violate the decentralization rule of having as many participants as possible on a blockchain.
EOS is still an under-development project, and fans are hoping to see its vision come to a realization very soon after its hugely successful ICO.EOS promise to conduct millions of transactions per second and remove transaction fees is what has been driving the coin's adoption.Currently, there is over 900 million tokens in circulation, meaning that people have faith in the coin’s future and are starting to adopt it. Furthermore, EOS is expected to upgrade its technology in the next two years, which will drive more adoption, thus raising its price. There are currently more than 100 decentralized apps on the EOS network; Telos, WoodProfit, and PRA CandyBox are some of the projects built on the EOSIO platform.
Since its launch in 2018, EOS open-source software has known a speedy development. But, the EOS token price has been on a roller-coaster. The token was traded for the first time on July 1st, 2017, at the value of $1.06. One week after, the token was already worth more than $3. However, the coin experienced a dramatic drop-off from $4 to 0.50 between July 4th and October 26th, 2017. The cryptocurrency picked up from November and closed the year 2017 at $8.50. EOS reached the value of $16 on January 16th, 2018, but it dropped again to $4 by March 2018. From mid-march, EOS price started an uptrend that led to its highest point of $21.50. Since then, the price went through ups and downs. The price is now following a steep downtrend with a value of $2.69 per EOS token.
The EOS price is highly volatile; therefore, you need to make sure you understand the risks involved before investing your money in the cryptocurrency. The token’s value depends on numerous factors like demand & supply, crypto news, policy updates, etc.
EOS price will likely rise to its all-time high value of $21 in five years. Also, investors predict the price to rise to $10 as of 2021, which makes EOS tokens an ideal long-term investment asset to have.