In the last 5 years, many platforms for dApps have emerged, and some of them are dubbed as strong Ethereum competitors. However, very few projects have reached anything close to the popularity of Vitalik Buterin’s brainchild.

EOS is a highly scalable blockchain that offers zero fees for users and handy building tools for developers. Many dApps have been established in the network. Is EOS to displace Ethereum or take a share of its popularity? Let’s try to find this out.

What is EOS?

EOS is a smart contract platform with dApp functionality and one of Ethereum’s competitors. EOS boasts some improvements compared to its bigger counterpart and sometimes is even called “Ethereum on steroids” — the EOS blockchain processes up to 10,000 transactions per second compared to Ethereum’s 15. Its block time is just 500 ms (compared to 5 seconds in ETH). In the meantime, the platform doesn’t have issues with scaling, network congestion, and high fees that are inherent to the second most popular blockchain.

EOS is compatible with EVM — Ethereum Virtual Machine, the tool that allows developers to build on the blockchain. This compatibility means that every dApp created on Ethereum can be easily transferred to EOS (and vice versa).

EOS is also the platform’s native coin. It’s a utility asset that devs pay to the network to operate; it distributes functional roles between holders and allows them to participate in network governance through voting.

How Was EOS Created?

EOS was developed by the members of Block.one, a company based on the Cayman Islands. The idea of the platform belongs to Daniel Larimer — a developer who has co-founded BitShares decentralized exchange and the blockchain-based social network Steemit.

The largest-ever ICO held in 2017–2018 helped the platform collect $4.4 billion of the initial investment. Firstly, EOS went live on Ethereum, but the team has promptly started to build their own blockchain. The EOS Dawn 1.0 testnet went live in September 2017 and was then updated three times during the year. In June 2018, the EOS mainnet was launched, and the platform migrated to its own blockchain.

5 Perks of EOS

EOS outperforms Ethereum by speed, scalability, fees, and other parameters. Here are some of the platform’s main advantages:

1. High scalability. EOS leverages the Delegated Proof of Stake mechanism, where only 21 nodes have to reach consensus before a block is mined. This allows the network to process up to 10,000 transactions per second — and theoretically, even 1 million if the platform integrates the inter-blockchain communication (IBC) protocol.
2. No transaction fees. There are no gas fees for end-users in EOS. They are all paid by developers who take the network operation costs and monetize their dApps to cover them. The more blockchain resources an application consumes (RAM, NET, and CPU — we will review them further below), the more the dApp pays.
3. Low inflation. EOS supply is unlimited and is used to pay out rewards to block producers, but the community can participate in defining the preferred inflation rate. It was reduced from 5% to 1% by public voting in 2020.
4. Accessible building tools. EOS provides developers with handy templates to create dApps, interfaces, and databases on the platform. You can work with several coding languages on EOS, and a compiler converts the code to web assembly.
5. Basic developer features are free. If you are a smart contract developer and want to test some simple functionality on EOS, you can do this for free — the platform offers basic tools without any charge.

EOS Consensus Algorithm

As already mentioned, EOS runs on the DPoS consensus algorithm. 21 block producers run the network by validating transactions. They are selected by voters — regular network users. In each voting session, 21 validators are chosen to confirm the next 252 blocks. Block producers are voted for based on their reputation.

Anyone who wants to become a validator has to meet two criteria:

• Technical requirements. The node needs to run 24/7 to produce blocks, and there should be no downtime. This demands an appropriate set of hardware and software.
• Good reputation. It has to be gained and maintained to achieve high rankings — this is a way to receive enough user votes to become a validator.

Voters, or regular users, have to stake some EOS to be able to vote for a validator. The more EOS you stake, the bigger is your voting power.

What Are NET, CPU, and RAM in EOS?

EOS works as an operating system, and it disposes of three types of resources — RAM, NET, and CPU. The two latter ones are used to work with EOS dApps.

CPU is used to send every transaction from your EOS account. It is measured in microseconds that the system takes to process your payment. NET, measured in kilobytes, is a resource that increases the network traffic so that a user can send more transactions. In most cases, much NET is not required. To use CPU and NET, a user should stake 1–2 EOS coins.

RAM is a resource used by developers. It processes data used in dApps, and if you’re an EOS application dev, you need to purchase some RAM. By paying for it, a developer spares users from the necessity to pay gas fees.

Why Is EOS Criticized?

The Delegated Proof of Stake model sounds simple in theory, but its implementation comes with many difficulties. But even more importantly, EOS is frequently criticized for high centralization — only 21 nodes are needed to achieve consensus in the process of block production. Although these 21 validators rotate many times every day, the risk of a 51% attack in EOS is much higher than in Ethereum, where 10,000 nodes validate blocks altogether. There have already been cases of confirmed transactions reversal, which justifies the concerns regarding EOS.

Another evidence of the platform’s centralization is that 75% of all EOS coins are stored only on 100 top addresses. Overconcentration of funds reveals that only a few network participants have a great voting power in EOS.

Bottom Line

Although there are centralization risks and difficulties with the governance mechanic, EOS is moving forward. The number of dApps based on the platform grows, and the community actively promotes EOS.

The network’s architecture allows users to enjoy zero fees, while the developers take advantage of numerous handy tools to build on the blockchain. If EOS keeps evolving and takes action against centralization, it may become one of the most sought-after dApp platforms in the near future.