Kevin spent a gorgeous afternoon in the Presidio. You can see Alcatraz in the background over there. This is the final episode of Season 1 of Real Talk on crypto coins and in this final episode, we are covering EOS.
You may have heard of this project before because of its year-long ICO or because its founder Dan Larimer is famous for other projects in this space like Steem or Bitshares. Kevin is excited to dive into the research for you, to cover the good and the bad -- with no shilling and no FUD.
Many of you already recognize Dan Larimar since he's pretty famous and well-known in this crypto space. And since this project is nearing its initial launch, there's a lot of talk about it around the crypto world. The price has risen quite a bit in recent weeks so let's take a look at what this project is.
What is EOS?
EOS is an industrial scale DaPPs platform -- like an Ethereum competitor. It claims to have horizontal scalability so it can process things in parallel like smart contracts and transactions, which makes it way faster than current approaches.
The company behind EOS is called Block.One and it’s run by Dan Larimer. They will develop and maintain the EOS software which is going to be open source. They are not actually going to be launching a public blockchain which is a really interesting of choice of theirs. They are going to leave this to the community so we may see multiple blockchains sprout from their open-source software. From there the community will probably decide on a few of them or maybe just one. They also have some notable tech design choices. For example, they're delegated proof of stake consensus protocol can process over a hundred thousand transactions per second. It is also a zero transaction fees model with the ability to alter smart contracts code after the fact by block producer voting and much more.
The ICO is one year long and there will be 1 billion total tokens which will be ERC-20 initially. These ERC-20 tokens will have no use but they can be mapped to EOS public keys later so when the public blockchains are launched by the community, they can take a snapshot of current ERC-20 token holders who will be able to claim their EOS coins on those platforms.
So the EOS platform tokens can be thought of as “real estate” or “bandwidth.” They are not used for transaction fees but if you hold them you can get a proportional amount of access to network resources, to bandwidth, and to use the blockchain in general. So people who want to build DaPPS on top of a EOS will need to have tokens to hold or they can rent them from other people.
Of course, there are many other layers to this really ambitious and complex project but I'm keeping it short and sweet here. I encourage you to go take a deeper look.
So what are some of the good things about EOS?
Well, it's likely the first Generation 3 blockchain to reach the market. We’re really excited to see how it works and how if it can complete with Ethereum, a dominant player in the space.
What are some of its unique features? First, parallel processing which is great for scalability. Second, no transaction fees. How will block producers be incentivized to create new blocks and maintain the blockchain? They will be paid out by inflation which is anything between 1% and 5%. There is inflation built into the token model. That is how block producers will earn incentives to do their work.
EOS will also have a process for recovering accounts if you lose your private keys and they will make human readable account names similar to what is used in Steemit.
Dan Larimer, the founder, is not new to the blockchain nor cryptocurrency. He has built Bitshares and Steem -- both really well-known and widely used projects in the space.
EOS has a massive reserve so far because of their ICO. They raised billions of dollars so far depending on when they cashed out the Ethereum they raised. With this they have created many ecosystem funds and partnered with big name VC funds as well to incentivize people to build DaPPs, ecosystem products and tools on top of the EOS platform.
Their distribution model, which is a year-long daily Dutch auction prevents whales from scooping up all the coins. I'm not going go too deep into how this works but you can go take a look for yourself online.
Finally, their announcement of EOSfinex, a high-performance, decentralized exchange built with EOS software by Bitfinex is also very promising and will become an early test of usage and adoption for this platform and how this technology can handle it.
So what the bad part?
A lot of people are unsure about how some of these features, many of which are experimental, will actually turn out. This includes the delegated proof of stake feature. There is a back and forth between Vitalik Buterin and Dan about the merits, usability, security, and scalability of delegated proof of stake. I will not go into the details about this because it’s quite a long conversation but I encourage you to research it. I tend to side more with Vitalik’s concerns and I don't think Dan really answered them fully. But an argument can be made that EOS is trying to focus on different parts of what blockchain platforms should be used for and not be totally focused on decentralization, for example. They’re trying to target different audiences and different users.
Also, EOS’ on-chain governance may lead to more politics because you need to gain a lot of votes to become one of the block producers. There has been talk about paying for votes and whether or not that can be stopped. EOS will have 21 block producers so this is definitely less decentralization than ETH.
EOS will also have multiple chains upon launch; we will see how this plays out. Will the community gravitate towards just one chain.
There is also negative public sentiment or just general confusion towards a few themes surrounding this project. Their year-long ICO is the longest ICO to date and a lot of people don't like that. Whether or not it's a good token model is up for debate.
Also, Dan's prior early exits from Steem and Bitshares lead people to believe Dan is going to leave EOS once he is done and move on to another project. While the development team has said that they will continue to support the ecosystem, it is a fair question to ask.
Finally, many people don't understand the utility of the EOS ERC-20 token. It is written on their website in big, bold letters that it will not have any use whatsoever so many people are turned off or scared. Actually, more likely than not, it will give token holders a right to the EOS platform tokens once public blockchains are launched by the community. But once again, many people don't know that and they're turned off by the website statement.
Why do I bring these issues up even though they may not be fair criticisms? Because this will require a lot of PR and explanation in order to get the public to understand that the tokens may not be as bad as they think and make them more willing to invest in this project and use the coins as well.
They also have an uphill battle against the first-mover Ethereum. I’ve spoken before about network effect -- the cost of switching over and just using something people are familiar with.
Finally, you have to register your ERC 20 tokens for snapshot. While this may be somewhat easy, it is still a hassle and perhaps not the most intuitive process to figure out especially if you're just a HODLer or newbie investor who buy EOS on an exchange and leaves it there with all your other coins. It's actually not okay because you need to be sure to register for the snapshot and get it off of the exchange. That's a heads up for some of y'all who haven't done that yet. Be sure to do so before their snapshot, which I believe is in early June.
Would I personally invest in EOS?
This is not financial advice -- just my personal opinion. Yes, I would invest a little bit of my portfolio as a hedge against Ethereum and also as a bet on the eventual third-generation platform winner or winners, if there is more than one. They will be competing against Cardano, ICON, VeChain and a lot more.
So I'm eagerly anticipating the full platform launch in mid-2018. I’m curious to see how these things all shake out, what works and what does not have, what lessons have been learned and iterations will we see come out of it.
Some things I really like about this project:
- Interesting and promising design choices. If they work they will world changing.
- They’re an experienced and well-connected team.
- Their massive war chest will allow them to do a lot of development and ecosystem support.
On the flip side, what are some of the things I'd like to see?
- How things shake out after launch
- Block.one continued support and dedication to the EOS ecosystem as long. As long as this talented team is behind it
I think they have promised to improve and make this platform great.
I hope you found this article and video to be valuable. Of course, I'm only human so if you thought I made a mistake or was biased definitely leave me a comment below and I'll be sure to take a look and potentially rethink my position.
Thank you!
Disclaimer:
This article was written to the best of our knowledge with the information available to us. We do not guarantee that every bit of information is completely accurate or up-to-date. Please use this information as a complement to your own research. Nothing we write in any of our articles is intended as investment advice nor as an endorsement to buy/sell/hold anything. Cryptocurrency investments are inherently risky so you should never invest more than you can afford to lose.