Where EOS tokens get their value from?

in eos •  7 years ago 

eos value.jpg

The launch of the EOS blockchain, a new smart contract platform for decentralized applications, marks the end of slow and costly transactions. Thanks to instantaneous transactions at no cost, a governance with a constitution capable of preventing the split of the community and the economic model of the token, EOS is projected into the future as a blockchain capable of supporting the largest DApps ever seen on a blockchain.

There are many who do not see the direct use of EOS tokens, but a simple list of the advantages of EOS blockchain and an explanation of what creates an entire economy of its ecosystem could clarify things

The main features

  • scalability
  • instantaneous transactions
  • transactions with zero commissions
  • it does not require a waste of electricity to produce blocks or send / receive transactions
  • possibility of stolen funds recovery
  • ability to send / receive funds to a personal account name which will make sending funds as simple as using PayPal or Skrill
  • inter blockchain communication
  • But while these are the advantages of using the EOS blockchain, what are the characteristics on which the value of the EOS token depends and why is it assumed that it will gain value in the future?

    1) Resources
    One could start from the fact that by buying EOS tokens users purchase the resources of the EOS network like bandwidth, memory and computational power.
    When a user buys the tokens it means that he becomes the owner of these resources and therefore the actual owner of a part of EOS with the power to vote and decide on the future of the network.
    It must be emphasized that going forward, the biggest demand for tokens will not come from individual users, but from companies that will build applications on the EOS blockchain.

    2) More DApps more value
    EOS will be the platform populated by decentralized applications (DApp) in order to create a kind of real estate market on the blockchain. And, while Ethereum's blockchain could be considered the fuel for smart contracts, EOS is a structure that does not require users to use any type of gasoline to use it. In short, EOS for the end user is free.

    The DApps that will populate this blockchain will give the value to the EOS token. At the beginning this value will be conferred by the airdrops created by the DApps manufacturers themselves.

    Everyone likes to receive free tokens and even more so when these tokens have potential non-indifferent value.
    The upcoming airdrop of Everipedia will be one of these, after there will follow ONO, the first social platform on EOS and who knows, maybe even Eosfinex - the decentralized Bitfinex exchange built on EOS will airdrop to all EOS hodlers.
    Daniel Larimer, the creator of EOS, said that he will make a social network DApp and maybe even other DApps.
    Airdrops will probably be the main and largest source of profit from holding EOS tokens.

    3) RAM market
    When Larimer announced the possibility of buying / selling RAM, to his surprise, the news did not have the desired effect. Only after a while that the news began to turn and some started talking about it, some people understood the importance of this innovation. With EOS you can buy RAM and then sell it at a higher price (hopefully). There will be a commission to pay both when you buy and when you sell and the sale will take place at the market price so Larimer sees the creation of the RAM market.

    But when is RAM cheap and why does its price grow?
    A DApp will need the resources of the network to work and with the population of the blockchain, even resources will be in short supply registering higher price of RAM. This does not mean, however, that the price of RAM will rise indefinitely. When the RAM becomes poor, the Block Producers (BPs) will have to upgrade their hardware to pump more RAM into the system and to lower its price. The price will also drop every time a saidchain is created. In this way, EOS will see the creation of a dynamic market that will guarantee the recycling of RAM that otherwise would be in short supply making operations impossible.

    4) Registration of names
    With EOS you can create premium names, ie those with the suffix type .com, .edu, .net, .io, .eos, .mydapp etc. and that can be 12 characters long or less. These names can not be deleted, but can be sold or donated. The auction mechanism is about to be developed, but we know that the auction will not start before the 15th day after the mainnet is unlocked.
    The auction conditions are as follows: each name can receive offers, each subsequent offer must be 10% higher than the previous one, every day will be assigned only one name; the assigned name is the one with the highest bid of all names since that day.
    It is expected that the first days after the name auctions become active, the premium names will be auctioned off immediately and those who have arrived before will benefit the most.

    5) Loaned tokens
    With EOS it is not possible to earn passively by staking your tokens and receiving a percentage on this deposit. It is not possible at this time and probably would not make much sense as the return would be tiny. However, there is the possibility of exploiting the secondary market that will be created in response to a real need at a later. There will be DApps which, for various reasons, will need a lot of EOS tokens and will then borrow them from users. And if anyone wonders why a DApp should ever lend tokens instead of buying them, the answer might be as follows.

    DApps need EOS tokens to work on the EOS blockchain. The larger a DApp, the more token it needs. So if we assume that a small DApp suddenly becomes very popular and meanwhile the price of EOS has risen for example to $ 400, this DApp may not be able to buy resources needed to meet a greater demand. In this case, it will be cheaper to borrow tokens for a commission than to buy them. Nowadays, the company that wants to create the possibility of leasing tokens is Chintai, but others will follow.

    It is obvious that EOS will acquire value over time with the growth of the EOS network. The more DApps and the more sidechains will be created, the stronger the blockchain becomes in terms of scalability, resource and value.

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