What is EOS and how does it work?

Welcome to our “What is Crypto” series, where we aim to provide comprehensive insights into various cryptocurrencies and chop them down so they are easy to swallow.

In this article, we will take a look into EOS, a revolutionary blockchain technology, and explore its potential impact and if it find out is it a good investment.

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What is EOS?

EOS, standing for “Enterprise Operating System,” is a blockchain platform developed to address the scalability and usability challenges faced by earlier blockchain networks. Launched in 2018 by Block.one, EOS offers a robust infrastructure for building decentralized applications (DApps). What sets EOS apart are its unique features designed to enhance scalability, performance, and developer experience.

Core Components of EOS

At the heart of EOS ecosystem lies these three core components:

• EOSIO Software: The software powering the EOS blockchain, enabling developers to build and deploy DApps efficiently.
• EOS Token: EOS has its native cryptocurrency, which serves as a utility token for network usage and resource allocation.
• EOS Blockchain: The underlying blockchain network that enables secure and fast transactions, smart contracts, and decentralized governance.

Features and characteristics of EOS

The most unique feature of EOS technology is the DPoS, or ‘Delegated Proof of Stake’, developed in-house by Dan Larimer. The DPoS includes voters, witnesses and delegates. Holding a token is equivalent to casting a vote. Witnesses are elected by means of these votes, in which voting rights are not equal. The more tokens you hold, the greater the weight of your vote. Elected witnesses can then approve new blocks. EOS is not the only blockchain project dealing with distributed applications. One of the most widely used projects, Ethereum, probably created the idea by introducing ‘smart contracts’. Users of the Ethereum network can make transactions and, when the conditions of the transaction are met, the network automatically transfers their Ether tokens as payment. This is probably the first form of dApp (one could also summarise it this way: smart contracts create dApps by inventing the idea of blockchain-based software that validates transactions). However, EOS is introducing new features specifically designed to make it easier for developers to create applications on blockchain networks. The most important features are:

Scalability

Blockchain applications often face resource constraints. As already mentioned, the architecture has not yet reached the mass market. This is a problem for a technology whose efficiency depends on networks and network effects. EOS offers new solutions for scalability, such as asynchronous access to resources and parallel execution. This will allow multiple developers to use the network simultaneously, helping to overcome resource bottlenecks.

Token ownership model

In most blockchain projects, users have to consume tokens, like coins in an arcade. Someone buys a token and then spends it to access the project for a set period of time (this is known as the transactional model) EOS advertises itself as an open access model. This is not entirely true, but it is much closer than almost any other blockchain project. Instead of consuming tokens, the network only requires the possession of EOS tokens.

It then grants you access proportional to the number of tokens in your possession. This means that developers can pay once upfront (when they purchase tokens) in exchange for essentially permanent access to the EOS development network. – Block.one has released a development kit for EOS, which is generally considered to be more feature-rich than most competitors.

A development kit is a set of tools made available to developers to create applications and programmes, giving them access to what the platform was originally designed to do. The more advanced the development kit, the more likely a developer is to be able to solve problems and create equally advanced applications.

Authentication

Unlike many blockchain projects, even those focused on application development, EOS offers developers the ability to create new user accounts directly in the blockchain database. This can help develop new applications more quickly and easily. It also improves network performance by enabling an essential, often repetitive task (user authentication) and making it part of the system architecture.

Proof of Stake

The EOS system is based on the so-called proof-of-stake model. This means that the network of computers that make up the EOS blockchain is organised according to the number of tokens held by each participant. The more tokens a person holds, the greater their role in storing and resolving data on the EOS network. This is widely considered more efficient than the model originally developed for the blockchain, called ‘proof of work’.

Inflation

This is a simple idea, but perhaps the best idea of the entire EOS network. This project was developed with inflation in mind. The EOS project will continue to issue new tokens as the network and user base grows. If done correctly, this will avoid the problem of Bitcoin‘s overvaluation, instead allowing the price of the EOS token to be kept at a user-friendly price level.

Voters (EOS community)

The EOS community votes on both witnesses and delegates. It also votes on the delegates’ proposals, such as proposals to change the block size.

Witnesses

The number of witnesses is limited to 100 persons. Witnesses guarantee the security of the network and can only be elected in a single vote. As the platform develops and the number of potential witnesses grows, it becomes increasingly difficult to make new choices, which provides motivation for the witnesses needed to complete tasks.

Delegates

Delegates are responsible for, among other things, maintaining the EOS network, managing it and proposing technical changes.

Advantages	Disadvantages
Increased efficiency	Limited decentralisation
Lower energy consumption compared to PoW	Possibility of creating/corrupting cartels in the electoral system
Electoral system with incentives
No need for mining equipment

Application possibilities of the EOS system

As mentioned at the beginning, the focus is on a variety of applications for a wide range of users. To date, there is a wide variety of applications and the EOS ecosystem is one of the most active along with Ethereum and Tron:

Currently, gambling applications are the most successful, led by EOSBet. Here, users can play various games in a decentralised casino (e.g. dice) and use BTC + EOS tokens. It features demo equity, low casino margins and no transaction fees. EOSBet was the first online casino to receive a gambling licence from Curaçao’s Ministry of Justice. The number of users of EOSBet and other blockchain-based gambling platforms shows that gambling has great potential. Below are the statistics of EOSBet

Other gambling applications that run on EOS are Hold’em Poker King, Big Game, Fast Win and Quick Win. The platform is exciting and we should expect more users to be interested in applications from other areas. In terms of diversity, the groundwork has already been done. In addition to decentralised apps, the EOS team wants to collaborate with existing companies.

Tapatalk, a mobile social platform with around 300 million users, announced at the end of February 2019 that it would use the EOS blockchain for its so-called ‘Gold Point Reward System’. Users of the platform can receive rewards for certain actions or as a result of page views and advertisements. This system has been in place since 2017 and users can exchange these rewards for various virtual widgets. However, thanks to a partnership with EOS, it will be possible to exchange these points for tokens on the EOS blockchain, which in turn can be exchanged for Bitcoin.

The EOS team

EOS.IO was founded by Cayman-based open source software company block.one. The company’s CEO and co-founder is Brendan Bloomer, who was previously active in the start-up sector, including the founding of Accounts.net. The platform generates profits of more than USD 1 million per month.

Dan Larimer is Chief Technology Officer (STO) and co-founder of the company. He can be described as the head of EOS, having previously created the decentralised exchange ‘Bitshares’ (2014) and the social networking platform steemit (2016). Block.one’s chief operating officer is Rob Jesudason, who previously worked at Commonwealth Bank of Australia as chief financial officer (CFO) and at Credit Suisse as head of global emerging markets. His responsibilities include the development of the EOS ecosystem. Block.one’s general counsel is Lee A. Schneider, who handles all legal and compliance matters. He previously worked at Mc Dermott Will & Emery.

Bottom line

EOS has emerged as a promising blockchain platform, offering scalability, performance, and developer-friendly features. With its ability to support a wide range of applications and its growing market presence, EOS has the potential to revolutionize various industries. However, it must address governance concerns, strengthen security measures, and stay competitive amid the rapidly evolving blockchain market. As the digital landscape evolves, EOS remains a significant player, propelling the growth and adoption of blockchain technology.

FAQ about EOS:

What is EOS?

EOS is a revolutionary blockchain platform designed for building decentralized applications (DApps) with scalability and usability in mind. It offers a developer-friendly environment and high-performance features.

How does EOS differ from other blockchain platforms?

EOS stands out for its unique features, including a Delegated Proof of Stake (DPoS) consensus mechanism that enables high throughput and fast transaction processing. It also provides a user-friendly experience for developers.

What are the advantages of EOS?

EOS offers scalability, allowing for the processing of a large number of transactions per second. It boasts low latency, ensuring fast confirmation times. EOS also provides developers with a flexible and easy-to-use environment for building DApps.

Can EOS be used for gaming applications?

Absolutely! EOS’s high performance and scalability make it an excellent choice for gaming applications. It provides the necessary infrastructure for creating immersive gaming experiences on the blockchain.

Is EOS suitable for enterprise solutions?

Yes, EOS can be utilized for enterprise solutions and supply chain management. Its secure and transparent nature makes it ideal for optimizing supply chain processes, ensuring traceability, and reducing fraud.

What challenges does EOS face?

EOS faces concerns related to governance and centralization, as its DPoS consensus mechanism has led to debates about power concentration. Additionally, like any blockchain platform, EOS has encountered security vulnerabilities in the past.

How does EOS fare in the cryptocurrency market?

EOS has gained significant traction in the cryptocurrency market. It has a substantial market capitalization, indicating investor confidence. EOS also has notable partnerships and collaborations, driving innovation and expanding its ecosystem.

What is the future outlook for EOS?

EOS continues to evolve, with the community actively working on scalability improvements and innovations. While it faces competition from other blockchain platforms, EOS remains a significant player, poised to shape the future of blockchain technology.

How can developers get started with EOS?

Developers interested in building on EOS can explore the EOSIO software, which serves as the foundation for creating DApps. They can also leverage the developer resources, libraries, and smart contract templates provided by EOS to streamline the development process.

Is EOS a good investment?

Investment decisions should be made based on careful consideration and research. While EOS has shown promise in terms of its features and market presence, it’s important to conduct thorough analysis and consult with financial advisors before making any investment decisions.