EOS is an ambitious Blockchain project to build powerful decentralized cloud operating system which actually works - in many senses it is a direct competitor to ethereum. I was a part of its year-long ICO which ended recently and culminated in the release of its mainnet.
As such, I have been a firm believer in EOS’s vision and have done my best to keep abreast with all the latest news and events surrounding EOS.
EOS - A Brief Overview
EOS is run by an open source Blockchain product and service developing company based outside the US, known as block.one.
EOS has great aspirations and aims to be more powerful than Google and Facebook. It may sound like a lofty claim but this is possible because it is designed for commercial applications and will support thousands of transactions per second - we’ll get into how that works later in the article. Unlike most Blockchain networks which require that smart contracts are powered by tokens, EOS will support a freemium model which allows for DApps to run without tokens or coins, saving users and developers who use the network from the hustle of having to deal with tokens. In addition to that, the EOS platform will provide web developers with access to design Blockchain based applications for the web, powering web apps which are decentralized, autonomous, transparent and secure. Truly a great vision indeed.
Huobi Talk had recently held a panel discussion on their YouTube channel where they discussed the current state of EOS and a host of other issues, most importantly the skyrocketing prices of RAM and the frenzy surrounding its prices which I will cover later in this article. You can watch the entire video here:
Recently, EOS had its mainnet launch which was supported by exchanges like Huobi Pro. EOS has performed well since its ICO ended and is currently, at the time of this writing, trading at 8.60 USD with a 24-hour volume of 1508933 EOS. EOS is ranked no. 5 on coinmarketcap with a total market cap is $7,770,297,171 USD and a circulating supply of 896,149,492 EOS. You can track and trade EOS by signing up on Huobi Pro here
PoS vs PoW vs DPoS
EOS aims to allow for thousands-times more transactions per second enabling large-scale applications to be brought to the blockchain. This is possible because EOS functions on the DPoS or Delegated Proof of Stake consensus mechanism to process transactions which they claim will be millions of transactions per second. EOS is different from other cryptocurrencies such as bitcoin that uses Proof of Work (PoW) as its consensus mechanism. Let’s take a look at how PoW, PoS and DPoS work.
Proof of Work - PoW
The main goal of PoW is to deter denial-of-service attacks (DDOS) by requiring (computational) work to be done before block submission. This means that, in order to mine a Bitcoin block, you have to spend/have computational power/energy. When Bitcoin miners mine blocks, they pick a number of transactions in the "mempool" (a list of the transaction requests they received from Bitcoin users, and put them together in a block. After setting the block up, they add a number to the end of the block, called a nonce.
The first miner to get the nonce right "wins," and can mine the block, giving them the block reward and all of the transaction fees users paid in the block. This process takes a lot of processing power, computational energy, and more.
Another important goal of PoW is to protect against double spending. PoW protects the Bitcoin network from DDOS attacks, because in order to mine a block you need a sufficient amount of processing power, and in order to monopolize Bitcoin mining, you need control of a majority of the computational power of all Bitcoin miners, which is infeasible and generally impossible and ensures that the network is well protected.
Proof of Stake - PoS
Proof of Stake (PoS) is another consensus structure, like PoW, but instead of requiring work or computational power, it requires the miner to hold a large amount of the cryptocurrency. Proof of Stake aims to prevent attacks by having high requirements for such an attack (like PoW) and by lowering incentives dramatically.
Some people, like Ethereum supporters, think Proof of Stake is more efficient and fair compared to Proof of Work. Additionally, anyone could become a PoS miner technically given they had some amount of the coin, however getting into Bitcoin mining generally requires expensive hardware and commitment.
Delegated Proof of Stake - DPoS. And why it’s better.
EOS works on DPoS which is a newer method of consensus and alternative to Proof of Work. In DPoS there is no mining and there are no miners; instead in EOS’ version of DPoS, there are 21 delegates. These delegates are continuously updated as they are voted on by all EOS stakeholders. Blocks are produced in rounds of 21 where the 21 delegates voted on for that round will each produce a block and if a delegate is out of line or acts in a malicious fashion they’ll simply be voted out in the next round. Because of its DPoS consensus mechanism EOS aims to allow for thousands-times more transactions making it far superior in terms of processing transactions as compared to Bitcoin and even Ethereum. It also enables EOS tackle scalability issues and evolve as a more comprehensive and versatile blockchain.
The Hottest Issue Yet - RAM Trading!
During Huobi Talk, the RAM trading issue was touched upon as RAM prices have skyrocketed by as much as 1400% over the last few days and has become a white hot issue within the community with speculation running wild.
But first, let’s take a look at what RAM is used for in EOS:
What I understood from the interview is that RAM is mostly used by developers for launching and producing DApps, launching airdrops on EOS, as well as a method of storage. As you can tell, these factors make RAM very valuable as it is a prime necessity and also of limited supply based on server limit. This has led to many people buying up RAM and pushing up its price.
Since EOS is offering buying and selling of RAM this has led to wild speculation and a rapid increase in price of RAM, while the EOS token price itself isn’t affected.
When traders “buy” RAM, the trader stakes for it, using EOS, which locks it up while the trader has the RAM. The trader pays a price determined by the system based on the current percentage of RAM in use which is staked for by traders.
When a trader buys RAM, it creates demand in the market and in turn leads to other traders also buying RAM. Once a sale takes place, the EOS balance of the trader increases considering the price has been increased.
RAM Is Expensive! But How Does It Affect DApp Development?
Since RAM is a finite and necessary for developers to launch their DApps and other smart contracts on EOS, having sky-high RAM prices will impede the developer’s ability to do so. This will not only slow down development process but also act as a deterrent to the progress of EOS as a whole. High RAM prices act as a barrier of entry for many developers and organisation looking to come on board EOS. It also comes in the way of the decentralisation process and adoption. Currently, there are steps being taken by EOS’s block producers to tackle the issue, but I believe a lot more can be done.
So How Can The Issue Be Tackled:
In the interview, it was mentions that changes have been made to reduce the price of RAM but in RAM prices will continue to go up with demand and since it is a finite resource. However, a long-term solution would be for DApp developers to reengineer their DApps to be more processing-efficient and use as little RAM as possible to function. Another way for EOS to tackle the issue of storage would be to create secondary layer chains instead of using the mainchain to store data reducing the dependency on RAM. Through creating more side chains the supply of RAM will also go up and in turn will help bring prices under control.
My Thoughts On The RAM issue:
Although RAM prices are a bit of a problem currently, EOS can solve the problem over time by getting DApp developers to rework the architecture of how they design apps to use as little memory as possible. Secondly, I firmly believe that EOS can alleviate the issue of high prices through encouraging the use of sidechains. Only time will tell if they are successful but by focusing on sidechains, they can increase supply and bring RAM prices down over time. This will work as a long-term solution, in my opinion.
I will be closely tracking EOS on Huobi Pro as well as all the developments on the RAM issue closely. You can sign up on Huobi Pro here. It will surely to interesting to see how the RAM issue plays out and also to track its price in the process. Watch this space for more and thanks for reading the article. Do upvote and resteem if you found it helpful.
Cheers!
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