A beginner's guide to EOS and EOSIO, the fast, scalable cryptocurrency and open-source blockchain protocol.
EOS is the native cryptocurrency of the EOS platform that supports the EOSIO blockchain platform.
EOSIO on the other hand, is a highly performant open-source blockchain platform, built to support and operate safe, compliant, and predictable digital infrastructures.
Introduction to EOS and EOSIO
We outline the difference between EOS the cryptocurrency and EOSIO the open-source operating system.
EOS and EOSIO, though somewhat confusing are entirely 2 distinct entities that can not work without each other.
A clear differentiation needs to be made from the outset, with the difference ultimately boiling down to their functionality.
EOS - The cryptocurrency
EOS is the main blockchain and cryptocurrency deployed using the EOSIO operating system.
While it might seem alone in its category, it is actually one of 12 other deployed public and private chains.
EOS utilises a DPOS consensus, with 21 major block producers in a group of 30 producers.
Using this consensus mechanism, the EOS community is able to run its activities solo.
Although Block.one controls EOSIO and has the majority of tokens on the EOS blockchain.
EOS has certain features as stated on their contract permitting the blockchain to create several accounts under one account.
Each user is also permitted under the contract to have 2 permissions:
- Active
- Owner
These are somewhat similar to the Active and Owner keys we have on the Hive Blockchain.
The Active permission controls transactions and the movement of tokens, while the Owner permission is used to change the Active permission in case of a security breach or compromise.
The 21 block producers are permitted to have all transaction fees waved and are paid yearly through a 1% inflation of the token that's shared among them.
The other blockchains built using EOSIO have similar but somewhat different features.
EOSIO - The open-source operating system
EOSIO is the operating system behind EOS and other associated blockchains.
It creates an avenue for blockchains to be created and easily customisable on the terms of the blockchain community and system contract.
The different blockchains may have their issues, however, these issues may not in hindsight be connected to EOSIO in any way.
There are major characteristics that all blockchains built on the EOSIO operating system possess.
Characteristics such as:
- Scalability
- 12 character human names
- Flexibility
- Contract upgradability
- Transparency
- HTTP support
- Keys
- Resource allocation
- Block consensus
- Block producer rewards.
All blockchains created on the EOSIO OS, including EOS itself, share the above characteristics.
Final comments on EOS and EOSIO
EOSIO is currently owned and maintained by Block.one.
It possesses system contracts that permit the creation of blockchains with different use cases and EOS is one of those blockchains created on the system.
EOS is also one of the first blockchains created from the first version of EOSIO which means it has some unique properties and at this point, is highly customised by its users.
Other public blockchains built on EOSIO are:
- WAX: Built for making easy and fast e-commerce transactions.
- Ultra: Built for blockchain gaming.
- Lynxxchain: A simplified user experience of the blockchain.
- BOSCore: Built for businesses and industry.
- Europchain: A blockchain designed for European regulations like GDPR.
- Voice: Built to power the Block.one social network.
- Telos: Built for decentralised applications.
- Wordli: Built for regulatory compliance like KYC.
- Liberland: Built for the citizens of the Liberal Republic.
- Eosfinix: A blockchain that powers the Eosfinix cryptocurrency exchange.
The other blockchains built on EOSIO are private, therefore their details are undisclosed.
Ultimately, anyone can deploy their blockchain community on the EOSIO operating system.
How does EOS and EOSIO work?
A look at how EOS works, as well as other tokens using the EOSIO operating system.
When a user attempts to open a dApp, instead of searching a local device, the appropriate device searches the blockchain stored files on a network.
It is EOS' desire to take full advantage of this burgeoning market.
Ultimately the goal of EOS is to make the development process more attractive and simpler for various programmers to work within the EOS framework than other available blockchain projects.
Most blockchain projects employ a transactional model of operation.
This entails the necessity of users to acquire a project's token and spend the token to gain access to that specific network.
On the other hand, the EOS token and EOSIO blockchain (remembering EOSIO is a blockchain protocol that is powered by its native utility token, EOS), employ a free access model.
In the EOS ecosystem, proportional access to the system is granted based on the number of EOS tokens owned.
As such, users need only to buy tokens upfront to access this protocol.
They then have permanent proportional access for as long as they own the tokens and that user’s tokens are not consumed by the system.
In this subsection of our EOS guide, we investigate just how EOS and EOSIO are able to employ this free access model in a sustainable fashion.
How does EOS work?
In essence, the EOS ecosystem utilises two key elements:
- The EOSIO software: Which is analogous to a computer's operating system. EOSIO operates as the manager of the EOS network and utilises blockchain architecture to achieve both vertical and horizontal scaling of decentralised applications on the network.
- The EOS token: Which is the native utility token used in the network.
Any user holding tokens of an EOS integrated blockchain may participate in choosing block producers by virtue of a continuous approval voting apparatus.
Anyone may participate in this block producer election procedure and will be granted the opportunity for block production in proportion to the votes they received relative to the other producers in the system.
So, how specifically does this work?
- In each round of block production, 21 producers participate.
- At the beginning of each and every round, 20 block producers are chosen automatically. The 21st producer is picked by reviewing the number of votes they received in proportion to the votes cast for other producers.
- These producers are then shuffled using random numbers derived by their respective block times. The purpose behind this is to ensure a balanced connectivity is maintained with the other producers.
- To maintain regular block production as well as the 3 second block times, producers are punished by being removed from consideration for participation for their failure to comply.
A blockchain relying on a Delegated Proof of Stake mechanism normally has 100% block producer participation.
The time for a usual confirmation of a transaction with a 99.9% certainty is 1.5 seconds from network broadcast.
A node is only required to wait until a 2/3rds majority of producers arrive at a consensus to have absolute certainty.
Regardless of chain length, every block is required to gain 15/21 approval for inclusion in the chain.
The EOS software adds the feature of Transaction As Proof of Stake (TAPoS) to its system.
This feature requires the inclusion of the hash of the recent block header in every transaction.
TAPoS operates to prevent a transaction 'replay' on differing chains and also alerts both the network and the user which fork the stake has been system assigned.
Parenthetically, this TAPoS system likewise provides protection from malicious acts of validators on other chains.
In this system, it is the block producers that create the necessary number of blocks.
And for each new block they produce, they are rewarded with newly minted EOS tokens, making the system inflationary.
This hike in supply is set so as to not exceed 5% and functions in a fashion that complements EOS network file storage.
EOS eliminates transaction fees
Instead of paying for each transaction, EOS uses an ownership model whereby users own and own resources proportionate to their stake.
Therefore, if you hold N tokens of EOS, you are entitled to N*k transactions.
The benefits of this model are readily apparent.
By implementing EOS's ownership model, DAPP developers will be able to create freemium apps while maintaining only a small percentage of staked EOS and perhaps most importantly, predictable hosting cost.
In addition, since EOS token holders can delegate (rent) their share of resources to other developers, the ownership model ties the value of EOS tokens to the supply and demand of bandwidth and storage.
We are all very aware of the huge transaction fees associated with the Ethereum blockchain and see developers face high costs for running or hosting applications on Ethereum.
Therein lies the fundamental difference between EOS and Ethereum with respect to fees.
On the Ethereum blockchain, chain resources are in essence rented to each user for fees.
However, in the EOS ecosystem, application developers are given ownership of the chain's computational power and resources.
To clarify, if a developer has staked 1/10,000th of the total EOS stake, that developer would be the owner of 1/10,000th of EOS resources for so long as the individual stake is maintained.
Final thoughts on how EOS works
From the above, it is clear that EOS is setting itself up to be a competitor with Ethereum.
Time will be the determinative factor in deciding the ultimate fate of EOS and EOSIO.
What is EOS and EOSIO used for?
A look at what the ecosystem is used for, with some real use case examples thrown in.
EOS, built on the EOSIO operating system, is currently ranked as one of the most popular blockchain platforms on the planet.
EOS-based decentralised apps offer a wide range of real-world benefits and services.
As a teaser, a wide range of other applications such as ride-hailing, music sharing, fitness tracking, digital payments, and more currently run on EOS.
In this section of our LeoFinance EOS Guide, we delve into fully answering the question: What is EOS and EOSIO used for?
What purpose does EOS and EOSIO serve?
The EOS ecosystem provides the necessary support which enables businesses to create blockchain based applications in a manner similar to the creation of web platform applications.
The protocol provides businesses with access, authentication and communication between created decentralised applications and the general internet.
The EOS protocol provides a platform that is scalable and secure and capable of running thousands of transactions per second.
It provides a functional platform for web service delivery in such areas as:
- EOS smart contracts
- Cloud storage
- Decentralised applications
- Authentication of users
However, the most significant selling points surrounding the EOS protocol include the complete removal of transaction fees and the capacity to process millions of transactions per second.
Developer use
Likewise, EOS provides usability tools for the purpose of making the developer's job simpler in the creation and maintenance of applications.
Such tools include a toolkit for interface development, self-describing interfaces, declarative permission schemes and self-describing database schemes.
EOS specifically provides the ability to create custom permission schemes adaptive to numerous business applications through its comprehensive systems.
A developer, for example, may include a custom permission within the EOS smart contract to provide protection for a specific feature thereof.
Likewise, authorities necessary to use an EOS smart contract function may be split across various accounts each bearing varying authority weights.
Furthermore, each and every decentralised application built on the EOS blockchain protocol is fully upgradeable.
Developers may authorise users to deploy code fixes, add or change code features, and change the application's logic.
Business use
EOS.IO boasts of its ability to support thousands of business decentralised applications in the absence of any performance system bottlenecks.
The platform achieves this by utilising parallel execution as well as asynchronous communication methodology throughout the entire network.
The system's efficiency is also boosted through use of separate modules involved in the mechanisms within the decentralised applications.
Real use-cases for EOS and EOSIO
Presently there are more than 500 decentralised applications created and/or deployed on the EOSIO platform.
These decentralised applications are in the genres of:
- Gambling
- Gaming
- Exchanges
- Finance
- social applications
- Marketplaces
- Utilities.
For a full list, check out the top EOS dApps section on Dapp Radar.
Just by browsing that list in a little more detail, you can see that most of the applications on the EOSIO network at this time are in the areas of gaming and gambling.
A plus for the system is that there already exists thousands of users for these EOS decentralised applications.
Famous EOS based dApps
One of the more famous and well known decentralised applications on EOSIO outside the gaming and gambling genre however, is Everipedia.
This application in essence is a decentralised version of Wikipedia and is particularly useful in countries that have banned Wikipedia and further suppress the dissemination of information.
Final thoughts on what EOS and EOSIO is used for
It appears that the EOS/EOSIO ecosystem possesses future potential.
One must remember though, this project is in its embryonic stages.
Nonetheless, with all its offerings, EOS/EOSIO is sure to fascinate the cryptoverse for years to come.
EOS vs Ethereum (ETH)
A side by side comparison of EOS and Ethereum (ETH) with a final verdict.
Are you after an unbiased feature set comparison between EOS and ETH?
This section of our EOS guide compares two similar, competing blockchains:
- EOS (EOS)
- Ethereum (ETH)
EOS vs Ethereum (ETH) comparison table
The table below shows you the major comparison points between each blockchain.
| EOS (EOS) | Ethereum (ETH) | |
|---|---|---|
| EOS had their ICO for the coin in 2017, and the blockchain was launched in June 2018. | Ethereum’s whitepaper was launched in 2013, and mainnet launched in 2015. | |
| The circulating supply of EOS is 972,456,154 EOS coins. | Ethereum has a circulating supply of 117,046,619 coins and total coins $365,186,415,050 coins in supply. | |
| EOS makes use of a Delegated Proof of Stake (DPoS) consensus algorithm in its network. | Ethereum, on the other hand, makes use of a Proof of Work (PoW) consensus algorithm and is switching to a Proof of Stake (PoS) algorithm soon. | |
| EOS has a transaction per second rate of 4000 TPS documented so far. | Ethereum has a transaction per second rate of 9 to 45 TPS, depending on the network load. | |
| EOS has a block confirmation time of 1.5 sec. | Ethereum has a block confirmation time of 20 sec. | |
| EOS has around 21 block validating nodes. | Ethereum has around 6,700 block validating nodes. | |
| EOS has lower transaction costs for its smart contracts. | Ethereum has higher transaction costs, and is rising with network load. | |
| EOS is faster, and despite lesser nodes, it has more capacity to scale and handle the network load. | Ethereum, on the other hand, has demonstrated an inability to scale and also has been unable to handle an increased network load. | |
| EOS appears to be more centralised due to venture capital investment into the blockchain. | Ethereum has both private and foundational control over the blockchain, and it leans more towards decentralised and governance-based blockchain. | |
| EOS was designed with the need of assigning and voting for network validators. | Ethereum was designed to create dApps and smart contracts on the blockchain. |
Final verdict on EOS vs Ethereum
Ethereum's layer 2 solutions and the dApps and the NFT and crypto gaming ecosystem have been increasing every day.
This market strength is something almost none of the market's blockchain has been able to match so far in terms of adoption numbers.
EOS has a long way to go to compete on the same grounds.
If you're a developer who intends to use the EOS for a specific set of use cases, then it'd be reasonable to use EOS.
Otherwise, developers can overcome many of Ethereum's shortcomings by adopting the tokens on a layer-2 solution.
EOS is a blockchain that is much more scalable and has many other benefits that are attractive to developers and investors.
However, Ethereum has been heavily used for dApps, smart contracts, NFTs, and other blockchain solutions.
Another point that goes in favour of Ethereum is its decentralised approach more than EOS blockchain.
Depending on your role as an investor or developer, you'd be best choosing the most suitable blockchain for your particular use case.
EOS community vs Block.One
The EOS community is going head to head with Block.One, with a plot to fork out their ‘undeserved’ vested stake starting to play out.
Following on from the way our own community forked Justin Sun and Steemit Inc out of their own project by forking to Hive, the EOS community looks to be heading down a similar path.
The unfolding EOS community vs Block.one battle offers an intriguing narrative to follow and this blog is designed to add to the discussion.
Let’s get right into it.
Who is the ‘EOS Community’?
As we know here on Hive, it is extremely rare to find truly community driven crypto projects.
Unlike the Hive split from Steem which was driven by stake weighted voting within the community, what we’re referring to when we say the EOS community, is another closed foundation/organisation that say they simply represent the community.
This organisation is known as the EOS Network Foundation (ENF) and is led by CEO Yves La Rose.
While there’s no doubt that that La Rose has what he sees as EOS’s best interests at heart, I can’t help but question how you can call the ENF a true community representative.
There’s no doubt that the ENF won’t represent everyone and by calling a closed organisation ‘the EOS community’, I certainly have my reservations.
But this is where EOS is at right now and it’s the ENF who are certainly trying to lead EOS in an alternate direction to Block.one.
EOS is a failure
Honestly though, how else would you describe EOS in its current state as anything other than a monumental failure?
Just look at the following EOS chart as the rest of the market (even HIVE!) pushes toward or into new all time highs.
As things stand, the only winner from their pretty awesome, open-source EOSIO software, is Block.one.
All down to the fact they were able to raise $4 billion in their scammy as fuck ICO and then get rich off their Bitcoin holdings.
At an invite only virtual event which to be fair has only been very flakily reported on by those supposedly in the know, La Rose addressed EOS’s failure.
“EOS, as it stands is a failure,” said La Rose.
“What we are experiencing is a shift whereby the EOS community is placing itself in a position to be able to move away from Block.one, essentially forking them out.”
“This break is needed for a narrative and a branding shift to occur, so there is a clear delineation that EOS does not equal Block.one,” added La Rose, making it completely clear that his community backed foundation squarely blames Block.one for the network’s failure.
And with that, the battle for EOS between the community and Block.one begins.
Can EOS really fork out Block.One?
So with the relationship between the EOS community and Block.one now all but untenable, the validity of Block.one’s vested stake has come under fire.
When EOS was first launched, 10% of EOS’s 1 billion token total supply, was allocated to Block.one, vested over a 10 year period.
As of right now, Block.one has access to 45/100 million of these tokens.
With EOS currently sitting as the failure we spoke about in the section above, La Rose and the ENF believe that by failing to make any meaningful headway for EOS, Block.one has failed in its agreed charter and should lose the rights to that vested stake.
But then the biggest question becomes whether the community will and technically can actually fork out Block.one.
I’ve read a few headlines across the various crypto media platforms that talk about the community deleting Block.one’s stake.
But in blockchain tech, it’s not as simple as pressing the delete button and changing the agreed upon rules set out in code.
One option that the community always has is to fork the blockchain once again.
But as I also touched upon above, this is where we’ll find out just how much of the EOS community, this so called community foundation truly represents.
Either way, the waters are about to get really dirty in EOS land.
What’s next in the EOS community vs Block.one battle?
How this battle will eventually play out is hugely up in the air.
Funnily enough, Block.one has recently agreed to transfer ownership of those 45 million EOS tokens to Brock Pierce’s Helios.
So now EOS has a community.
Then sitting between them and the funds, we have the centralised ENF who supposedly represent them.
And then between the ENF and the funds, we now have Brock Pierce.
Pierce has made it clear that he supports the ENF, but by acting as another buffer between a true community ownership model of the vested funds, I can’t help but continue questioning the validity of what’s happening here.
I encourage you to debate the validity of anything you read in this blog in the comments, or simply just to add your own 2 cents.
EOS pros and cons
The pros and cons of EOS and a final verdict on whether Dan Larimer’s latest project can be viewed as a success.
EOS, created to solve the scalability issues found among other similar projects, has by some metrics, been a success.
But EOS has now also been joined by a gaggle of fierce competitors, somewhat losing its soul as it struggles to remain relevant.
Created by software engineer Daniel Larimer and entrepreneur Brendan Blumer, EOS is a platform that enables the easy execution of smart contracts on a decentralised system.
Unlike its major competition of Ethereum, EOS provides its users with free execution of smart contracts and extremely low transaction fees.
Bock.one, the company behind the EOSIO ecosystem and the EOS token, has expanded since the launch of the coin in 2018.
They have formed partnerships with Google cloud, FinLab, SVK Crypto, and Galaxy Digital, among other high-end investment firms.
Although it is considered a major competitor of Ethereum, it is nowhere near its equal in terms of price.
In that same vein, it has found itself amid many other competitors such as Solana and Avalanche.
EOS pros
Due to the next list of pros, a lot of experts believe EOS has what it takes to overthrow Ethereum as the second-largest cryptocurrency and number one executor of smart contracts.
1. High-end partnerships
Block.one are leaders in the corporate scene and have taken full advantage of their position.
Partnership with companies like Galaxy Digital, Google Cloud, FinLab and SVK Crypto are defining deals that set EOS apart from its competitors.
These partnerships increase the utility of the EOS token, provide priceless exposure and also improve the overall market capitalisation of the token.
2. Consistent improvements
EOS has seen a consistent volume increase every year since 2020.
It recorded a ground-breaking 164.833% trading volume increase from April 2020 to April 2021 and a 498.855% increase from May 2020 to May 2021.
This trading volume increase has led to speculation around the price reaching $6 by the end of 2021 and an upward projection of up to $17 in 2033.
3. Scalability and low transaction fees
By adopting a DPOS (Delegated Proof of Stake) algorithm, EOS has been able to increase scaling time to about 10,000 transactions per second.
Also grossly reducing transaction fees.
Its version of DPOS involves the election of 21 witnesses who serve as leaders of the system.
They are the first to receive an EOS token after it is mined and is then in charge of how it is dispersed.
The low transaction fees caused by fast scaling time is an attractive feature that could lead to a major repricing.
4. It is cheaper than the competition
Placing itself in competition against Ethereum, EOS provides a much cheaper token with a similar utility to Ethereum.
EOS, at the time of writing, is valued at an average price of $5. However, there are rumours that EOS could reach a new all-time high by the end of this year.
Its first ATH was in April 2018 where it averaged $22 for a brief period.
It has not been able to reach such a level since.
With the number of developers staking the EOS tokens to add to the already existing 5,000 Dapps built on the chain, the token looks underpriced.
These are just some of the reasons that speculators believe that better days are ahead.
5. High volatility
Where cryptocurrencies are concerned, this causes an extreme love/hate relationship.
Investing in EOS at the right time could be the best decision you ever make, however, investing close to the end of a bull run could see the tide soon turn.
The key is whether EOS can build anything meaningful that adds fundamental value to the chain, thus helping to shield it from the next overall bear market.
EOS cons
Alongside its many attractive qualities are its less attractive qualities.
Before deciding whether EOS is the right project for you to get involved in, you need to consider the following cons.
1. Centralisation
One of the major attractions to a decentralised project is token distribution.
EOS's parent company Block.one own the majority of tokens, with a large vested EOS stake still earmarked for the company.
This doesn't appeal to the type of people who prefer a decentralised project to be… you know, actually decentralised!
The majority ownership of the tokens downplays the independence of the 21 voted validators.
2. The exit of the co-founder
Dan Larimer, the co-founder and CTO, happens to be a blockchain enthusiast who believes that the majority of the tokens should be made available to the public and not owned by a single individual or company.
His departure from the team on January 10th, 2021, didn’t speak well for the future of EOS and their lack of progress since, has seen his move somewhat justified.
There is so much more to this story that the public is never going to be made aware of and what is supposed to be an open, decentralised crypto project, this just leaves a sour taste in your mouth.
3. SEC scandal
A settlement with the Securities and Exchange Commission (SEC) is never a good sign.
Especially at the start of a project.
There was a case against Block.one where they were accused by the SEC for not registering their digital assets as securities before offering them up for an Initial Coin Offering.
This accusation leads to a $24 million settlement charge.
Chump change in the grand scheme of things, but a blot on the company’s copy paper nonetheless.
Ultimately, the EOS pros outweigh the cons
At the moment, it would appear that EOS has more upside than downside as the pros outweigh the cons.
However, the future of EOS will ultimately be dependent on how much relevance they can gather through current and future partnerships.
We really need to see Block.one do more, or pass the baton to the community for a new dawn.
Should I buy EOS in 2021?
Yes, you should buy EOS in 2021.
There's a lot of expectation with EOS.
A lot of analysts believe it is a great investment regardless of how it has remained pretty dull in the midst of price fluctuations in 2021.
This year, EOS hit its ATH in May at $12 and while a far cry from its 2018 ATH, it was still a huge outcome for the token.
But ultimately yes, you should buy EOS because it's a project that is constantly being developed and has partnerships with high-end tech and financial firms who believe in its future.
EOS has a Bullish future
Prices went up early this year, thanks to Block.one’s announcement that they've secured $10 billion to begin expanding into their own cryptocurrency exchange called Bullish.
This new project is viewed with so much hope for EOS.
The fusion of both decentralised and centralised exchange perks is something not only EOS investors, but the wider crypto community can't wait to see unfold.
An exciting project, offering EOS a potentially bright future.
More incentives
As we're sure you no doubt know just by being here on Hive, the crypto market is highly competitive.
To stay afloat, you need to keep moving.
And to keep moving, you need to keep getting better or you WILL get left behind.
Block.one knows this and that's why they are working on improved incentives for users who stake the EOS token.
In today's crypto landscape, both new and loyal investors need invectives to hold onto the token.
Block.one understand this better than anyone.
Growth is substantial and organic
Asides from its early ATH in May 2018, EOS has seen some substantial growth every year.
Although some analysts think the movement has been slow, its standing history makes it one token to always keep an eye on.
Positive analysis from different analysts
Almost every analysis of EOS points upwards.
While it's obvious that some external factors have to be considered along the way, a lot can not be predicted based on EOS history alone.
Not to mention the fact that EOS price movements are still somewhat pegged to the movement of BTC.
However, if EOS could at some point live up to its expectation of independence, the market is going to respond.
Its competition with Ethereum is the most interesting aspect for me.
Although EOS and Ethereum have the obvious difference where EOS runs on DPOS and ETH runs on POS, EOS has been able to solve several issues with scalability and transaction speed that Ethereum still battles.
EOS also thrives to reduce transaction fees and has recently developed a PowerUp model where transactions can take place in 24 hours with just a single transaction fee payment.
How cool is that!
Final verdict on buying EOS?
Yes, once again you should consider buying EOS in 2021 as either a long or short-term hold.
However, pay attention to the price history and analysis before you do.
Timing is everything.
Different analysts have different expectations around the price of EOS, but what the majority have in common is an expectation of positive bullish momentum.
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