The $4 Billion Dollar Blockchain
Ethereum may be the king of the hill, but that hasn’t stopped new smart contract platforms from challenging its right to the throne.
They offer better scaling solutions, more efficient mining algorithms, and a more accessible development platform. User adoption, however, is another story.
More platforms mean more options, so what’s not to love? Lower transaction fees and better code compatibility aren’t typical hallmarks of an underutilized network.
Though most ‘Ethereum killer’ platforms eventually fade into the background due to a lack of adoption, EOS.IO – a smart contract platform focused on businesses – might actually be able to usurp the reigning king.
Worth less, but not worthless
As of October 2020, EOS has lost 90% of its value since its all-time high. Though this is nothing new in the cryptocurrency space, it certainly wasn’t the expected outcome.
Block.one, the company behind the network’s development, raised a staggering $4 billion through its ICO in 2017. EOS.IO’s market capitalization grew to around $17.5 billion by mid-2018 before plummeting to about $2 billion by the end of the year.
EOS rose to be among the top 5 cryptocurrencies within two years of launch. The EOS token is currently valued at under $3, but hope remains as Block.one continues to issue updates, incentivize developers, and on-board more businesses.
The blockchain industry is already quite competitive, and finding a way to stand out amongst the crowd is crucial for any project in the space.
Here’s the pitch for EOS.IO: zero transaction fees, developer-friendly, industrial-scale smart contracts, and scalable to millions of transactions per second. As revolutionary as Ethereum is, the network simply isn’t capable of handling its activity.
Inflated transaction fees and slow validation times are frequent occurrences, and though Ethereum 2.0 may solve these issues, its launch is still a while away.
As one of the only legitimate existing competitors to Ethereum, this could be an excellent opportunity for EOS.IO to capitalize.
The EOS.IO ICO was conducted, offering an ERC-20 token on the Ethereum blockchain. These tokens were later swapped over to the EOS mainnet, and like ETH, they can be used for various purposes on the network.
Block producers are rewarded tokens for creating new blocks, and users can vote for individual block producers using their stake in the platform.
Through its DPoS (Delegated Proof-of-Stake) consensus mechanism, users can allocate authority to block producers and receive tokens in proportion to their stake.
The system also automatically scales the EOS token’s inflation rate to cover its transaction costs, allowing for rapid, secure, and free transactions to anywhere in the world.
Behind the Blockchain
As mentioned above, EOS.IO was developed by Block.one, a private company that released the platform as open-source software.
Daniel Larimer, a prominent member of the cryptocurrency community responsible for outfits like Steemit and Bitshares, is the CTO of Block.one and pioneered the DPoS system used by EOS.IO
In September last year, the United States Securities and Exchange Commission filed charges against Block.one for the $4 billion unregistered ICO it had conducted. The company was fined a $24 million penalty and was not required to return funds or formally register its tokens.
Renowned hedge-fund manager and CEO of Galaxy Investments LP, Mike Novogratz, also funds the EOSIO Ecosystem in a joint-venture with Block.one worth $325 million.
Cloudy with a Chance of Adoption
Despite the EOS token’s poor performance over the last couple of years, its prospects aren’t entirely hopeless.
On October 6, Block.one announced that Google Cloud would be joining the EOS community and becoming a network block producer for the EOS.IO blockchain.
A week later, they introduced ‘EOSIO for Business,’ a suite of enterprise offerings that cater to organizations looking to integrate blockchain-based solutions.
The suite consists of its high-performance EOSIO software, including BaaS (Blockchain-as-a-Service), technical support, developer training and certification, and consulting solutions.
Earlier in May, Block.one shared their initial voting plan for the network and stated that their PBE division was researching models relevant to a potential EOS Foundation in the future.
As more businesses start to integrate blockchain into their operations, EOS.IO could see substantial growth in the future.
EOS has been subject to much praise in the time since its launch. Ethereum creator Vitalik Buterin proclaimed his respect for the EOS project in a series of tweets published earlier this year.
“This is why I actually have some respect for EOS and co. I *disagree* with DPoS but at least they’re *trying* to develop a cohesive and principled alternative niche,” he said. Despite the acclaim, however, it hasn’t rendered itself immune to criticism.
In response to a bug bounty offered days before EOS.IO’s mainnet launch, Litecoin founder Charlie Lee tweeted that it was “strange” that EOS had raised $4 billion from investors, yet only offered $10,000 to people identifying catastrophic issues.
Subsequently, Lee pointed to an observation by CoinMetrics co-founder Jacob Franek, which detailed his observations surrounding flaws in EOS.IO’s governance model. However, he did note that these observations were outdated as of June 2019.
Racetracks and Roadblocks
The most obvious direct competitor to EOS.IO is Ethereum. Though they aren’t used in the exact same way, they do share some core functionalities. With ETH’s market capitalization touching $45 billion, EOS has a lot of catching up to do.
Ethereum isn’t the only platform eating into its market share. NEM is another enterprise-focused blockchain platform with smart-contract functionality that has seen decent adoption amongst smaller businesses.
Other projects like Cardano, Stellar, and Hyperledger also threaten EOS with similar feature implementations, better communication channels with their communities, and greater adoption from developers.
EOS.IO is a fantastic concept that could use some pointers on execution. The team recently on-boarded Goldman Sachs veteran R. Martin Chavez into its advisory board.
With an observant eye from Block.one, and steady adoption from prominent corporations like the recent Google Cloud addition, EOS might just be able to give Ethereum a run for its money.