The period between 2017 and 2018 was an interesting time in the blockchain industry, with new concepts, such as decentralised finance (DeFi) and Initial Coin Offerings (ICOs), emerging on the horizon. Another common pursuit at the time was trying to come up with a blockchain network that would be faster and more scalable than the emerging giant, Ethereum.
Perhaps the most publicised of all attempts to find an alternative to Ethereum was EOS (EOS), a blockchain project that managed to raise a record-high amount in a crypto ICO.
What Is EOS (EOS)?
EOS (EOS) is a blockchain that features support for smart contracts and is capable of high transactional throughput. It was designed to help businesses launch applications with high levels of scalability.
EOS is capable of processing up to 4,000 transactions per second (TPS). Back in 2018, when the blockchain was launched, Ethereum was only capable of achieving speeds of around 15 TPS. EOS’ technical efficiencies were driven by the following key features:
· The Delegated Proof of Stake (DPoS) block validation method. This is a much faster and more energy-efficient block validation model compared to the Proof of Work (PoW) validation that was used by Ethereum before September 2022. DPoS is a modification of the standard Proof of Stake (PoS) validation.
While in PoS, a large number of network nodes stake their crypto funds on the platform and get randomly assigned blocks to validate, in DPoS, the majority of the nodes delegate their validation capacity to a smaller number of specialised validators, the nominee nodes.
· Fast block generation times. EOS’s algorithm is designed to validate a new block of transactions every 0.5 seconds. For comparison, Ethereum adds a new block to the chain every 12 seconds.
· Multi-threaded, parallel processing capacity. EOS is capable of processing a large number of transactions and blocks in separate “threads” simultaneously.
In 2018, EOS was considered the most immediate threat to Ethereum’s dominance. Optimism about the chain’s potential was running high, and it managed to secure the highest ever amount raised in a crypto ICO - $4.1 billion.
However, critics pointed out that EOS was too centralised with only 21 block validators, exposing it to the risks of a hostile network takeover. There were some reports of the validators taking a heavy-handed approach against some network addresses based merely on an unsubstantiated suspicion of fraud.
Amid declining enthusiasm about the new blockchain, EOS was also fined by the US Securities and Exchange Commission (SEC) for failing to register its multi-billion-dollar ICO with the financial watchdog. The platform settled with the SEC out-of-court by paying a $24 million fine.
Additionally, a number of new projects based around smart contracts and vying to compete with Ethereum have been launched in the last few years, crowding out the space and further weakening EOS’s market position.
By now, EOS is a relatively small platform in terms of its market footprint. It still features among chains considered for decentralised app (DApp) and decentralised finance (DeFi) development. However, its current market position is a far cry from the hopes that were pinned on it back in 2018. For instance, the total value locked (TVL) in the DeFi apps on the platform is just $94 million, a tiny amount compared to Ethereum’s TVL of 60.8 billion, and just the 30th largest TVL amount among all blockchains.
The platform’s native coin, EOS, is used to pay for transaction fees on the chain. It is also used by network nodes to vote for their nominated block validators.
The coin has a total and circulating supply of around 1.1 billion. EOS is an inflationary coin, i.e., it has no specified supply cap. As of the time of writing, the coin has a market cap of around $965 million, 49th result among all cryptocurrencies.
EOS’s History and the Team Behind the Project
EOS was developed by a blockchain technology company, Block.one. The company’s founders are Brendan Blumer and Dan Larimer. In March 2017, Blumer and Larimer registered Block.one in the Cayman Islands.
The project’s whitepaper was published by Larimer in 2017. EOS made headlines in the crypto world when it held a year-long ICO from mid-2017 to mid-2018, during which it raised $4.1 billion, a crypto ICO record that stands to date.
In June 2018, the platform’s mainnet was officially launched. For the reasons described above, EOS failed to live up to market and investor expectations.
The project was further weakened when Dan Larimer, who was instrumental in the platform’s technical vision, resigned in December 2020 from his CTO position and left the company. In August 2021, the EOS user community voted to completely decentralise the network’s control mechanism. The user community formed the EOS Network Foundation, which took control of the project away from Block.one.
On decentralised platforms like EOS, such user community takeovers aren’t uncommon. This is what makes decentralised blockchains, even those supported by corporate entities, different from corporations.
EOS made huge headlines after its record-setting ICO. However, the platform has largely failed to live up to the massive expectations around it. Yet, thanks to its technical efficiencies, it still remains a blockchain with a lot of unrealised potential. A sleeping giant perhaps?