What is EOS?

EOS was an Ethereum killer on its release in 2017, but does the reality meet the hype?

EOS logo surrounded by futuristic lighting                                 
EOS promised improved transaction security and energy efficiency, but it hasn’t been smooth sailing – Photo: Shutterstock
                                

Contents

EOS: What is it all about?

The EOS.IO blockchain is posited as a developer-friendly alternative to Ethereum, which produces the ether token (ETH), thus allowing for the creation of decentralised apps (or DApps) using the native EOS crypto token. Popular DApps on the EOS.IO ecosystem include gaming, social media and decentralised finance (DeFi) platforms.

If Shiba Inu is the class clown of the crypto world, EOS is the smart businessperson. It offers real-world uses and a sophisticated developer platform. The Delegated Proof-of-Stake (DPoS) consensus algorithm touts better transaction security than protocols used by Ethereum.

However, the EOS crypto hasn’t avoided controversy since its record-breaking $4bn (€3.5bn, £2.97bn) initial coin offering (ICO) in 2017. Its underlying developer and parent company Block.one first copped a $24m fine from the US Securities Exchange Commission (SEC) over its lack of transparency during the ICO process. 

EOS bears and bulls

Questions have also been raised about how legitimately decentralised the blockchain is due to biases in the DPoS technology.

Now, under the guidance of community-elected leader Yves La Rose – co-founder and CEO of Eos Nation – the novel EOS Foundation hopes to divest the token from its parent company.

As EOS’s new figurehead explained: “If EOS is to clean up its image, breaking away from the shadow of Block.one is crucial,” said Rose, who went so far as to call EOS a “failure”. 

Despite such a negative, bearish outlook, one individual who is decidedly “bullish” on the future of EOS is philanthropist, venture fund manager and former child star of The Mighty Ducks Brock Pierce – who is also chairman of the Bitcoin Foundation and co-founder of the EOS Alliance, Block.one, Blockchain Capital, Tether and Mastercoin (the first ICO).

Pierce recently announced the transfer of EOS45m to his own coffers, adding a value of $209m. 

EOS is named after the personification of the dawn in Greek mythology, while Helios was the Greeks’ chariot-helming Sun god.

So are there bright days for EOS? What is EOS doing on the market? Let’s check out some more facts.

Who started EOS?

Under the stewardship of former chief technology officer (CTO) Daniel Larimer, the Caymans-registered Block.one published the EOS.IO white paper in 2017, promising support for millions of active daily users, free usage for developers, easy upgrades and – crucially – low transaction latency. 

Prior to Block.one, Larimer acted as CTO for blockchain-based social media platform Steemit; before that, co-founded BitShares with Charles Hoskinson (a co-founder of Ethereum) in 2013.

Larimer announced his departure from Block.one in early January 2021 (despite his LinkedIn page stating otherwise), which caused a huge drop (30%) in the EOS share price at the time.

Larimer’s reasons for leaving appear multitudinous – ranging from frustration with the developer community to concerns over censorship – but perhaps he’s merely looking to focus on his political ambitions, having recently released his manifesto, More Equal Animals: The Subtle Art of True Democracy.

How does the EOS network work? A closer look at DPoS

So how does the EOS network work? Like any operating blockchain, the EOS.IO infrastructure uses a consensus algorithm – Delegated Proof-of-Stake (DPoS) to determine the order and validity of transactions. However, where DPoS diverges from the more widely used Proof of Work (PoW) method is in the mining aspect – or lack thereof. 

Rather than the PoW free-for-all that occurs as block verifiers competitively mine for verification rewards by committing massive amounts of processing power to the task, a DPoS system deploys 21 elected block producers who are chosen by the EOS community. Rather than every four years, the EOS community reviews these votes on a minute-by-minute basis.

But who can become a block producer? Theoretically, anyone can – but just as in real-world politics, money and power help. Something of a cottage industry has sprung up as candidates have begun to vie more intensively for production rights. Top international EOS producers go by names such as ‘eosnationftw’ (Canada), ‘eosflytomars’ (China) and ’whaleex.com’ (Singapore).

The rewards distributed to these 21 producers are paid out from a quarter of the 5% constant inflation rate (see the FAQs section). This incentive to behave – for fear of getting booted out – is seen as a major positive, as is the comparative speed and energy efficiency of the DPoS algorithm compared to other algorithms.

But this voting mechanism is not free from controversy. Allegations of collusion, mutual voting and other manipulations have dogged the DPoS method. The centralised aspect of having 21 block producers at one time is criticised as running counter to the blockchain philosophy.

So will we encounter blockchain cartels at some point? We’ll have to wait and see.

So is EOS a good investment?

It might be. Despite the ongoing drama, EOS has essentially doubled in value over the past 12 months, and has since been fluctuating around the $5 mark. There is a dip at time of writing down to $4.37.

The most recent 24-hour trading volume was just over $1.4bn, according to CoinMarketCap. Is this comparable to ETH’s $15bn? Not quite, but it still shows an active community of EOS users.

What is EOS worth right now? At the present time, EOS’s current performance is underwhelming when looking at the wider picture. Trading volumes were hitting $4bn highs back in 2018, with recorded price highs exceeding the $20 mark.

However, currently, the supposed “ETH killer” only ranks at #46 on the market-cap charts against ETH’s comfortable #2 spot. In short, EOS hasn’t managed to meet the big promises made since its first record-breaking ICO.

There is a lot of good will among certain EOS stakeholders to get it back on track, and the token’s value is rising, but you do need to be cautious. Cryptocurrencies can be highly volatile, and prices can definitely go down as well as up. You will need to do your own research and remember never to invest more than you can afford to lose.

FAQs

The EOS coin is more accurately an EOS token, since as a cryptocurrency, the EOS coin – sorry token – is exchanged on the existing Block.one chain as opposed to its own native network. 

The current circulating supply of EOS tokens is 971.3 million. Note that EOS does not have a maximum supply – rather, its total supply grows at a constant inflation rate of 5% per annum, making maximum supply theoretically infinite.

EOS is a token used on the EOS.IO blockchain, an ecosystem similar to Ethereum in that it provides developers with the tools to create DApps using the EOS token as currency.

You can buy EOS at a range of crypto exchanges. We don’t have it yet at currency.com, but we will let you know if and when we do. Just remember to do your research and never invest more than you can afford to lose.

Further reading

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