EOS in focus, better computation than Ethereum, but is it good enough?

By Austras | Crypto in focus | 18 Nov 2021


Bitcoin and Ethereum are almost always the targets for new blockchains. They aim to replace or improve upon what these two have done. Our latest look will be at EOS, a blockchain that has found large popularity for its comfortable, but how good it?

Background

Block.one created EOS back in 2018, it originally started out as a ERC-20 token on the Ethereum blockchain. They were aiming to create a blockchain that hosted smart contracts that were easier to and cheaper to run and create. Before their sale they held an ICO for the ERC-20 token. This was a troublesome ICO in two parts; they didn't register it with SEC and they didn't audit their returns properly. As it was initially an ERC-20 token it counted as a security and needed to be registered beforehand, failure in doing so resulted in Block.one having to pay a large fine. They were also accused of recycling funds back into the ICO and getting a stake in EOS, upon being requested an audit they refused to deliver. Today Block.one still holds the largest amount of EOS on the network. Eventually they have also started to participate in the blockchain's governance rounds to help push the correct technical changes forward.

Block.one's system was hacked during the ICO which resulted in millions of funds being stolen from investors through online phishing. When the ERC-20 migration took place several accounts were found to receive EOS through these phishing means, the top block producers decided to freeze these accounts, without a governance proposal round.

Network

EOS runs on a delegated proof of stake consensus method, where there's a select list of nodes that people can vote on to run the chain through staking their EOS with them. Anyone can run a node but they need to have a top 21 spots in votes to count as a block producer. These top block producers work in creating new blocks and participating in governance proposals. Token holders can propose and approve changes and a majority of the block producers need to approve any proposal before it takes place. These "BPs" can also change smart contracts and freeze accounts, which can be troubling, giving so much power to select few.

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The network doesn't charge any transaction fees what so ever, which many find beneficial. Instead, there's new coins minted and given to block producers and people who staked their token. This inflation was originally set to be 5%, but it was later changed to aim to be around 1%, currently it hovers between 1-3,8% depending on network activity. Performing actions on the chain, such as storage, computation or transactions requires you to hold a minimum amount of EOS, this is set at around 30 EOS. EOS is not the first blockchain to do this, Stellar and Algorand do the same but with with a lower of entry.

The blocks are threaded and allow several transactions on one account to be stored, as long as they don't interact with the same address. This means that Dapps can run parallel for users and gives great horizontal scalability. Smart contract developers need EOS to hold storage and computation for all their Dapps and users on them, this can get expensive. But the zero cost transactions makes running them very easy, after the initial set up..

Use case

Eos excels at running Dapps. They are very quick, and users aren't slowed down by connecting or using their wallet address thanks to the parallel processing. Users and developers also don't have to work around the transaction fees or gas costs as the blockchain doesn't require any. This has resulted in some great Dapps being built, mainly gambling, as for some reason this environment is perfect for gambling Dapps. Building smart contract apps is fairly easy, but getting them up and running can be very expensive.

Investors can make use of the very low barrier of entry Dapps and get passive income either from one of those or through staking to a block producer. They can also participate in governance proposal votes on the chain. 

EOS today

Eos has built very strong partnerships, some of them either supporting the chain indirectly or directly through the means of becoming a block producer. There is also actively changes being made thanks to the very active block producers (they do basically control the entire chain after all). But the company's past and the troublesome consensus method is weighing this chain down. Block producers can basically run a cartel as whales can easily split their funds amongst several blocks, each block doesn't need to be a unique person running them. That along with the power these block producers get and how hard it is to dethrone them makes this consensus troublesome. The chain can do some great things, providing better computation on paper over Ethereum. How its future changes and how well it will fare remains to be seen.

Pros:
  • Horizontal scaling
  • No transaction fees
  • Easy to develop on
Cons:
  • Highly centralized
  • Flawed consensus system
  • Is expensive to host Dapps on

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Austras
Austras

Product manager & tutor, love learning & teaching others. || https://cointr.ee/dorfel


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