Cryptocurrency ICOs have been attracting many shrewd investors and dumb money over the past few months. Quite a few projects have raised significantly more money than anticipated, which shows there is a degree of desperation associated with these ICOs. EOS is one of the more ambitious projects we have seen to date. However, Vitalik Buterin feels there are some issues with the project which must be addressed first.
3. EOS FEE STRUCTURE
Similar to any other project using blockchain technology, EOS has an interesting mechanism when it comes to transaction fees. It seems the project will be using a technique to determine how many transactions people can send based on the amount of tokens they hold at the time. This means users will need to buy a certain amount of tokens in order to spend them. This is an unnecessary exposure to volatility, according to Buterin. His argument is pretty solid.
Not everyone wants to spend hard-earned money on an unknown asset in order to use a blockchain. Even the people who want to use EOS just a handful of times will be needing to buy a lot of coins and sell them all later on, assuming the price has not collapsed. It is a less-than-stellar business model which will hurt EOS’s chances of succeeding in the long run.
Early adopters will need to pay for everyone else to use the network in the future.
2. 100,000 TRANSACTIONS PER SECOND?
Scalability is an integral part of cryptocurrency and blockchain technology. Even the bigger currencies have been struggling with scaling, including Bitcoin and Ethereum. EOS may not fare much better, despite its bold claim of processing 100,000 transactions per second. Achieving such a degree of scalability would seem pretty much impossible right now. The project claims to be able to make it happen, although it will be incredibly difficult to do so.
EOS relies on a small number of master node-esque nodes belonging to what appears to be a consortium chain. There are no Merkle proofs or any other ways for users to audit any part of the system. Their only option would be to run a full undo and monitor everything very closely. It might work out in the end, but Vitalik Buterin feels that this is a rather undesirable outcome. Only time will tell if this system is the downfall of EOS or not.
1. DPOS IS A POTENTIAL ISSUE
The concept of Delegated Proof of Stake makes a lot of sense. It is a decentralized way to achieve consensus among token holders on the EOS network. Everyone can vote on who should be eligible to run a node on the consortium network which makes up this project. However, there is no real incentive for these nodes to behave correctly, which leaves the door wide open to malicious behavior. It highlights how this project over-relies on the voting system itself.
The issue with blockchain-based voting is multifaceted. Firstly, not every token holder will vote, as we have seen multiple times in the past. This was especially true in the case of BitShares, a project also developed by the EOS team. Secondly, every voter could influence the result, making “correct’ voting a less desirable outcome. Anyone keeping coins in an exchange wallet would give that exchange their vote. That is not the desired effect by any means, although most holders will not care as long as they make a profit.
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The only one of these that is a viable concern is voting, the first two of these concerns are laughable. If i have time i'll outline in more detail, but for potential EOS users who may find this post worrisome, here are some quick corrections.
saying of EOS that "There are no Merkle proofs or any other ways for users to audit any part of the system" is total nonsense, I have the feeling @demphil is regurgitating what Vitalk said in Q&A in China, he was wrong. There absolutely are merkle proofs in EOS and users can verify transactions with only a light client.
Also, your concern in 2 is basically, this scale is too good to be true, but load testing shows these projections to be totally plausible, in certain testing envs it has already gotten up to over 1 million trans per second. I warn people not to listen to heresay when it comes to actual specs, just do a little research. EOS recently reported 10,000 trans per second on a single machine, add parallelism (next year) and that only improves.
Also, regarding concern 3. EOS FEE STRUCTURE, you mentioned that "Even the people who want to use EOS just a handful of times will be needing to buy a lot of coins and sell them all later on". Again, not true. making an EOS account, similar to steem, will allocate you enough coins to functionally have free transactions up to a point, it is designed to enable free usage for someone who wants to use EOS apps. Costs begin to present themselves if you are at the usage scale of say app devs or youtubers who posts dozens of times per day, so you use a lot of bandwidth/storage. In this case you may need to buy some EOS to support your efforts, but at that point you will not be in the group of people who does not "want to spend hard-earned money on an unknown asset in order to use a blockchain", you are invested and it works such that you are willing to go beyond the free use cases to something more.
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Great response @cryptokens, appreciate the insight! Would like to hear your thoughts on voting with EOS if you have time.
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Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:
https://themerkle.com/top-3-eos-project-issues-according-to-vitalik-buterin/
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I have seen this a few times and noone seems to have pointed out that Vitalik didn't quite understand the fee structure - EOS Dapps will need tokens, not people using the EOS Dapps, most of the time they will just pay regular internet data costs. So 'poor people' won't even know they are on a Dapp and won't hold tokens.
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