There are many different blockchain platforms in the market, one of them is EOS. In this article, we will be explaining what is EOS and how this project is trying to revolutionize the concept of how blockchain networks are governed in blockchain space.
EOS is a platform that employs the distributed ledger technology to host decentralized applications (Dapps)
EOS is the brainchild of Dan Larimer who is also the co-founder of Steemit and Bitshares. Dan sought the help of block.one, a private firm located in the Cayman Islands to develop the blockchain platform.
Both BitShares and Steemit became popular blockchain networks in the market, but EOS was able to reach and remain among the top 10 largest cryptocurrencies for a long period of time. The network was able to reach that position by offering companies, investors and individuals the possibility to deploy dApps on top of the EOS blockchain.
The Beginning Of EOS
EOS was first launched on the Ethereum platform as an ERC-20 token. However, the platform was not ideal due to its speed constraints. EOS then conducted a one-year ICO, from June 2017 to June 2018, and raised more than $4 billion.
The team behind the EOS blockchain claim that the platform can comfortably handle a million transactions per second. This speed is supersonic compared to Ethereum’s 25 transactions per second.
EOS aims to compete with other blockchain projects specifically, Raiden and Lightning Network among others. Both platforms that have been developed as side chains.
The goal is to be able to scale, remain decentralized and have a different approach to governing a blockchain network. Compared to Bitcoin (BTC) and Ethereum, EOS is much more efficient in the way it processes transactions despite being more centralized than these two networks.
The Difference Between EOS and EOS.IO
The overall EOS ecosystem has two intertwined components, EOS, and EOS.IO, which work together to set it apart from other blockchain projects.
For example, think of the EOS.IO as a computer’s operating system and the EOS as an application running on it. The EOS.IO defines how everything built on it will interact with each other and the outside world.
This approach allows the EOS dApps to be scaled whether horizontally or vertically. EOS’s native coin is called the EOS coin.
EOS.IO is capable of operating at its maximum without an adverse effect on its performance. This is possible by employing asynchronous communications and parallel execution criteria. Additionally, individual processes are run separately.
Consensus Algorithm and Its Functionality
The EOS platform makes use of a Proof-of-Stake consensus algorithm and adds role-focused permissions. This approach enables roll-back, bug fixing, and other decisions to be made in the fastest time possible. Adding and confirming new blocks is done by block producers. These individuals earn EOS tokens for every block added.
The EOS.IO has already defined database schemas, web toolkit, among other tools that aim at making developing dApps on the EOS platform easy.
The EOS platform functions as a one-stop shop for decentralized applications providing server hosting, authentication, and cloud services. These features allow data to be stored off the main chain into a local machine.
Unlike other blockchain platforms, the EOS platform does not have fixed transaction fees. Instead, an app created on the platform defines how its users cater for the transaction fees.
Already, the EOS platform has over 100 decentralized applications with the leading application interacting with six thousand users daily.
The Proof-of-Work (PoW) algorithm that Bitcoin and other cryptocurrencies such as Litecoin (LTC) use is much more inefficient than the Proof-of-Stake (PoS) consensus algorithms. Through PoW, miners have to confirm transactions using computing power. Many blockchain networks such as Bitcoin or Litecoin require specialized miners to perform these activities.
EOS uses a Delegated Proof-of-Stake (DPoS) algorithm, a different version of PoS that aims at solving some of the problems that Ethereum is currently facing. The DPoS is an implementation of technology that allows for voting and election processes in a specific decentralized blockchain network.
The DPoS was developed by Dan Larimer in order to offer a better efficiency to his blockchain project BitShares, which is now being applied on EOS and Steem. Active users in the DPoS network vote for “witnesses” and “delegates” by placing their tokens on the name of their candidate.
EOS works with block producers and users can vote for these block producers that will be working on this network. These block producers have the responsibility to create and validate blocks in the network, earning rewards for their effort.
In this way, these delegates can govern the system. Although they do not have to validate transactions, they oversee transaction fees, block sizes, witness pay and more. Moreover, the election of block producers is a continuous process that individuals undertake in the network.
The DPoS system allows a large number of individuals – indeed all EOS holders can vote – to select the candidates that will be the next block producers. This DPoS system is very positive for smaller users that are not able to participate in other PoS or PoW blockchains due to the fact they do not own the necessary funding to participate.
Thus, there are many advantages of DPoS systems. As they do not require large amounts of computing power to run the network, they are much more scalable than other blockchains. Moreover, these DPoS systems tend to be faster than traditional PoS and PoW consensus algorithms.
Moreover, DPoS systems allow smaller users to be able to participate in the decisions of the whole network through representatives.
Although EOS users have the possibility to participate in the network, this does not mean that they would do it. If there are several users that do not participate in the network, its benefits get diluted, allowing small factions with specific interest to take over the network with their active participation.
Finally, there are several experts that consider that DPoS systems are more centralized because the power is finally represented in just a few witnesses. Finally, users with a small number of coins would not be incentivized to participate if they consider their vote is not important.
The EOS network uses the EOS digital asset that allows individuals and companies to leverage the different functionalities of the blockchain. EOS holders are also owners of parts of the network. That means that if there is a user that holds 1% of the EOS supply, they would also own 1% of the required computing power to process transactions.
At the same time, EOS coins can be used in different dApps that were deployed on top of the EOS network.
EOS had a very bumpy road in the cryptocurrency market as a digital asset. The virtual currency reached an all-time high on April 29, 2018. The digital asset surpassed $22 at that time and then it fell down to $1.57 at the end of 2018. The April 29 price increase was related to the official launch of the EOS mainnet. Meanwhile, the bottom experienced by the digital asset was due to the bear market that affected most of the digital currencies in the space.
In terms of BTC. the digital currency has also reached its highest price in April 29, when it was traded close to 0.0023 BTC per coin. After the bar market in 2018 and a good starting for Bitcoin in 2019, the lowest point in terms of BTC was on August 9, when the price of the digital currency fell down to 0.003311 BTC per coin.
Competitors – A Comparison Between Ethereum, EOS and Tron
EOS is currently a close competitor to Ethereum (ETH) and also Tron (TRX). These two networks offer similar characteristics to EOS, for example, the possibility to host decentralized applications.
In terms of dApp activity, Everstake released a report in which they informed the daily usage of dApss for each of these networks.
According to that report, EOS registered 65,000 daily active users (DAU), followed by Ethereum with 19,000 DAU and Tron with 15,000 DAU. This shows that dApp developers embraced the attempts to build on top of a network capable of building fast and secure decentralized applications.
The report released at the end of June shows that EOS has around 500 different dApps of which 200 are active. Ethereum has 2,500 dApps with 300 active decentralized applications. Finally, Tron has 450 dApps with 170 active.
Clearly, the Ethereum community has a large number of collaborators and developers that are working in order to expand the networks’ usabilities and features. Meanwhile, EOS and Tron have been released after Ethereum and are trying to build their communities. Nonetheless, it is worth mentioning that both of these networks have already gathered the attention of many individuals and developers from different countries.
The report reads as follows:
“The industry’s need to have an ultra-fast, very powerful and capable blockchain urged the development of new platforms, that improve over each other with a staggering pace”
Finally, these three networks have consensus algorithms to run their blockchains. While Ethereum works with the slow Proof-of-Work, Tron also uses a DPoS very similar to EOS that has 27 Super Representatives (SRs).
While Ethereum is the second-largest digital asset in the market with a market capitalization of $22.77 billion, Tron is currently the 13th largest blockchain network with $1.37 billion, according to data provided by CoinMarketCap.
The EOS Community
EOS has a very active community behind it which at one time drove its price to $21. That was the highest price seen since the launch of the project. Currently, EOS is trading at $4.45 which is reflective of the current bearish market status.
EOS coins can be stored in mobile-based, computer-based, and web-based wallets. EOS can be purchased on leading cryptocurrency exchanges like Huobi, Bitfinex, Binance, among others. In most of these exchanges, EOS is paired against USDT, ETH, or BTC.
In conclusion, given its ability to scale and accommodate the diverse needs of decentralized applications without compromising on speed, the EOS platform is bound to become a force to associate within the near future. Also, Its unique approach to solving disputes on the platform is another plus for the EOS blockchain.
As the cryptocurrency market continues to grow and evolve, there are different projects that are offering new solutions to users and that is trying to deal with challenges faced by older networks. Although some time must pass before EOS is adopted by companies, users and firms, the network has already proved to have the potential to revolutionize many industries.
If you want to learn more about EOS, read our latest news report on its transactions-per-second headline. The best place to buy EOS is through Binance, the steps to do so are found in our complete guide. Lastly, if you’re curious about EOS price, check out this EOS Price Prediction article.
Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology.