About the Author:

Dr.-Ing. Fabian Schuh is an entrepreneur and fervent blockchain advocate who came in contact with crypto currencies in early 2011 and was fascinated by their autonomous nature and social and political implications. As an alumni of FAU Erlangen (Germany), where he earned his Doctorate in engineering, he decided to focus on blockchain technologies and Distributed Autonomous Companies, a concept first introduced by Daniel Larimer. He founded ChainSquad GmbH and has been technical consultant and developer for numerous projects throughout the blockchain space. Recently, he joined forces with European entrepreneurs and started Blockchain Projects BV (Netherlands) to focus on development and advocating for the advancement of blockchain technologies in Europe on a larger scale.

Disclaimer: The following article constitutes my personal opinion about the technology developed by Daniel Larimer and shall under no circumstances be interpreted as investment advice

Historical Facts about Daniel Larimer and his Contributions to the Blockchain Industry

Given that Daniel and I have been working together for over 4 years (sometimes more closely, sometimes less) I feel it is time to publish how I personally saw the last couple years in the Blockchain industry. In particular, I would like to present Dan's history and how he greatly impacted the blockchain space from my perspective.

BitShares

In 2014, Dan Larimer built and deployed his first blockchain platform, BitShares 1.0, a decentralized exchange. He hired a team, invented Delegated Proof of Stake (DPOS), and delivered the fastest and most decentralized blockchain at the time (10 second blocks) with 101 elected block producers based solely on the receipt of donations to his company Invictus Innovations Inc. Like many organizations at the time, including Ethereum, the proceeds of Invictus' donations were held in bitcoin which lost over half of its value in 2014.

This was when Dan first discovered the need for sustainable funding. He tried to solve the funding issue by proposing a hardfork to increase the block rewards and letting the community pick block producers who would fund development. Many of the developers left Invictus to work directly for the blockchain in what was then the first truly decentralized developer funding system. Unfortunately, the crypto-bear market made the block rewards insufficient to sustain and retain full-time developers including Dan himself.

In 2015, Dan along with some of the BitShares developers formed a company called Cryptonomex which received a couple of hundred thousand in private investment. This company set out to solve some of the biggest problems with BitShares 1.0 and blockchains in general, namely scalability and performance. After 6 months of development, Cryptonomex announced BitShares 2.0 based upon their new blockchain software called Graphene. Graphene boasted 100,000 transactions per second and the most advanced governance model yet. Everything about the blockchain was configurable by voting including fees, block intervals, and the number of elected block producers. On November 5th, 2015, Cryptonomex licensed Graphene to the BitShares community and the blockchain was upgraded to BitShares 2.0. Later, in 2016, Graphene was released under MIT license to the public.

Unfortunately, the greatly improved technology was not marketed enough to boost BitShares' price to support full-time developers and the BitShares voters were not interested in supporting any worker proposals instead preferring to let the technology stabilize. Dan has said of that time,

> I put my heart and soul into BitShares but at that time we really didn't
> have the income to continue so I needed to look at other projects.

Today BitShares is self-funded, self-sustaining, self-regulated and continues to be developed by a decentralized group of developers directly hired by the blockchain through stakeholder election. Today, the BitShares shareholders collectively control a funding pool of $290M worth of BTS.

STEEM

In early 2016, Dan Larimer and Ned Scott teamed up to create STEEM, a social media platform on a blockchain based upon the Graphene technology. They agreed that Ned would be appointed CEO and Dan would focus on his strength, the technology. Steemit, Inc. ("Steemit") took an initial investment of $220K and then built and delivered a functioning blockchain in just a few months. It created a working website and began mining a cryptographic token called STEEM using a new CPU-only proof-of-work mining algorithm.

Mining for STEEM was made available to everyone at the same time with several days' notice via a post on bitcointalk.org. As the concept was new and there were less people interested in mining STEEM at the time, Steemit mined 80% of all STEEM the first week; however, this percentage decreased materially as new miners began mining STEEM. The initial mining distribution made it possible to pay voters, posters and other users thereby bootstrapping the STEEM community during its infancy. STEEM also tackled the issue of transaction costs for new users by giving them $5 in STEEM so they could read, vote and post immediately; thus providing a means by which users could interact with the application without incurring any startup fees. As of today, except for a single transaction type, no transactions on STEEM costs any network fee. This is due to the innovative introduction of rate-limited transactions that prevents spam by limiting bandwidth instead of asking for a fee.

Within 6 months, Steemit held less than 50% of STEEM due to inflation paid to miners, block producers, voters and posters but has maintained a large minority stake in the cryptocurrency which has given it the ability to pay for development. Some argue that STEEM is unsustainable but today, says Dan, "Steemit is well funded and can sell its STEEM to fund development of the platform."

Dan Larimer has long wanted to create a general purpose smart contract blockchain with parallel processing that supports applications and provide users with no-fee services and introduces ideas like Plasma to the general public as they mature. In pursuit of this vision, Dan parted amicably with Scott and Steemit and he is no longer a Steemit shareholder.

To quell false rumours including those that Dan had abandoned STEEM and left Steemit on bad terms, on April 13, 2017, Steemit and Dan made the following joint statement:

> On March 14, 2017, Daniel Larimer resigned as Chief Technology Officer
> of Steemit, Inc. Steemit, Inc. and Dan wish to confirm to the Steemit
> community and the public generally that they have parted on amicable
> terms without dispute. Steemit, Inc. and Dan each look forward to
> continuing to make valuable contributions to the blockchain and
> cryptocurrency communities. Steemit, Inc. wishes to thank Dan for his
> service, and Dan wishes the Steemit officers, employees, and community
> members continued success in the development of the STEEM blockchain and
> the Steemit social media platform.

EOS

There have been a lot of statements made recently about EOS. Some talk about the technology, some talk about the company block.one that builds the software, some discuss the investment/trading opportunity. Since I am an engineer and mostly interested in technology, I can only go into details about the software and some of the architectural details. However, keep in mind that the software is not in a ready-to-use state, yet.

Block.one

To date, block.one, the developer of the software that runs the EOS blockchain (short EOS), a new blockchain operating system designed to support commercial-scale decentralized applications, has successfully received multiple hundred millions worth of ETH in connection with its ongoing distribution of EOS ERC-20 compatible tokens on the Ethereum blockchain which began on June 26, 2017.

What's behind their success?

For one, the block.one team seems to have a highly experienced management team and is supported by some high profile investors and advisors from both the blockchain and financial industries. One of its more notable members is blockchain veteran Daniel Larimer, CTO, and the founder of BitShares and Steem.

Software

EOS will be Larimer's 4th public blockchain platform in 4 years and I personally have no doubt that Dan will deliver. Those that want to find out more about the software itself, can find all the current code on github.

Is there a sound technical approach to EOS.IO?

Larimer and block.one are now developing new blockchain software they call EOS.IO. In a presentation at Consensus 2017, block.one made several bold claims about the projected capabilities of their software, among these claims are:

1. Horizontal scalability through parallel processing
2. No Transaction Fees
3. Decentralized Governance

Some are questioning whether the proposed software can actually work but Dan has already created blockchains establishing, to a large extent, these goals.

Ian Grigg, a well-respected financial cryptographer and the inventor of Ricardian contracts and co-inventor of triple entry accounting who is an advisor and partner of block.one says,

> At the moment, there are not many real use cases on the blockchain. BitShares
> is a successful business on a blockchain. Steem is the first successful
> distributed application for end-users – it's on the blockchain but it does not
> feel like you are on the blockchain. The users just don't need to know or care.
> Steem opens up the entire field of social media as potential DApps. What Steem
> says is that you can do anything like a social media network on a blockchain -
> you can do Facebook, you can do Twitter. What Steem says is that we now have
> validated use cases in crypto – that's extraordinary.

block.one promised to be fully transparent about EOS it is developing. Since June 1, 2017 (well before the beginning of the EOS token distribution), the code has been available on Github for public audit and review. Dan also continues to publish regular updates on the development of the software which are posted on STEEM (cite: https://steemit.com/trending/eos), as well as through other social media channels. block.one also promised to release EOS under open source license at the end of its development stage.

Public review of and comment on the EOS.IO Technical White Paper has also been available on github since June 7, 2017 (cite: https://github.com/EOSIO/Documentation/blob/master/TechnicalWhitePaper.md).

Dan told me,

> EOS.IO plans to scale by running every contract (application) in its own thread
> with private data. Applications will communicate with each other via
> asynchronous communication. This is a well-known design pattern that shares
> certain philosophies with the sharding approach proposed for Ethereum. EOS.IO
> simply places every application within its own shard.

To me, as an engineer, this is a sound approach.

EOS utilize WebAssembly which will enable developers to use a number of different languages to write their applications, including C, C, and Rust. Dan says early benchmarks show simple currency contracts written in C and run on WebAssembly are achieving 80,000 transfers per second in comparison to similar tests run on Solidity which achieve around 5,000 transfers per second.

The Enterprise Ethereum Alliance (EEA) also recently published a vision paper (citation: https://www.infoq.com/news/2017/03/Enterprise-Ethereum-Vision). It is currently looking for alternatives to proof of work to improve scalability and reduce computational costs. There are many approaches being evaluated by the EEA which may form the future of Ethereum block consensus protocols, including Dan's Delegated Proof of Stake.

Dan states EOS being developed is simply building on an existing platform and patterns that he has already created and made his previous blockchains a success.

What about Decentralization?

An unproven critique of Dan's projects is that they are not decentralized; however, both BitShares and Steem are entirely operated without any central authority or servers. Every transaction on Steem is confirmed by 15 of 21 unique individuals within 45 seconds (on BitShares: ⅔ of N individuals) which Dan says is more than the 4 of 6 unique mining pools with confirmation within 6 hours that other platforms use. Dan claims that Bitcoin and Ethereum operate under a system of Delegated Proof of Work whereby miners elect a small number of mining pools to produce blocks. Arguable, the mining pools of Bitcoin look much better today, but a few years ago, we could see one or two pools owning a significant majority of the hashing power. Still, DPOS, to me is the superior technology. Also, because it removes the burden of randomness and variance that so many block producers are fighting with.

Pursuant to EOS, block producers are elected by token holders but unlike other platforms, the EOS' governance model enables users to hold block producers in check if they produce empty blocks or otherwise act in ways that harm the network. The incentives of the block producers are aligned with the incentives of the users, unlike other proof of work platforms where those in control of the network are different than those who hold the tokens.

According to Dan, EOS is designed to be run in dozens of datacenters around the globe which opens up far more opportunities for decentralization at scale. This may place a barrier to entry to those who want to be paid as block producers, but ultimately there are far more viable datacenters than there are viable mining data centers. Mining profitability is very sensitive to electricity rates and ultimately also requires large data centers to scale transaction volume.

Well-known technologist, Craig Sellars, co-founder of both the Omni Foundation and Tether, says that

> Dan has always been ahead of his time in terms of blockchain innovation. Only a
> handful of individuals can create a blockchain from scratch, and Dan is one of
> those few. The man has a track record of delivering ground-breaking blockchain
> platforms and decentralized applications, time and time again. I am very
> interested in the new types of applications that can be built on a blockchain
> based on what Dan and the team will do with the EOS.IO-based platform.

But, the progress ..?!

Arguable, to develop a blockchain with the goals as big as EOS', you'd probably need a couple hundred senior developers and at least 3 months of architectural planning and another 12 months for developing and testing. However, Dan Larimer is already working on the architecture for many years and has developed all the libraries and coding patterns needed for him to deliver a minimum viable product much earlier. From his latest Steem post, we can find that the high-performance network code is almost done and that there will be a public testing network available in just a few weeks.

The Takeaway

EOS is being developed by a team with a proven track record of delivering industry leading blockchain software.

In a recent report, Dima Starodubcev, Fund Manager at Satoshi Fund said:

> Personally, I am glad that Dan Larimer, one of the brightest brains in the
> blockchain industry, after several quite successful experiments, moved forward
> to develop a full-fledged platform for smart contracts. We shall not only
> follow this project with great interest, but also do our best to facilitate its
> adaptation by DApp developers. Especially since it will be absolutely feasible
> because EOS, instead of using a specific virtual machine and programming
> language, is using a much more universal technology called WebAssembly that
> will probably lay the foundation for the entire web.

I personally believe that Dan has finally found another challenge that he can put his passion into and give birth to yet another amazing and ground breaking piece of technology.
For that, I would like to thank him sincerely.

-- Fabian (a.k.a. xeroc) Schuh