- EOS is a smart contract platform that went live in 2018
- EOS can handle 3,700 transactions per second and has a 1.5 second block time
- Its fee-free ecosystem is also appealing to users
EOS, also just called EOS, is often referred to as one of the many so-called ‘Ethereum killers’ in the blockchain space. Time will tell if this bears out, but the way that EOS approaches issues such as scalability and usability certainly puts it in a good position to be able to challenge. It has however also faced criticism for its Delegated Proof-of-Stake (DPoS) consensus algorithm and its governance mechanism, which critics claim has echoes of centralization.
What is EOS?
EOS was founded through U.S. company Block.one, headed by Dan Larimer, who also founded two other blockchain projects – crypto exchange BithShares and social media network Steemit. The project was announced in 2017 and EOS went live in June 2018 after a year-long $4.1 billion ICO.
However, the Securities and Exchange Commission (SEC) took a dim view of the ICO and accused Block.One of operating a sale of unlicensed securities, eventually settling with the company for $24 million in September 2019. This wasn’t the end however, as disgruntled investors launched a class action lawsuit along the same lines, with Block.One forced to pay out another $27 million to settle the case in June 2021.
How EOS Works
EOS provides decentralized application hosting, smart contract capability, and decentralized storage for enterprise solutions, attempting to solve the scalability issues of older blockchains like Ethereum, as well as offering a fee-free ecosystem. EOS accomplishes this by being multi-threaded (able to run on multiple computer cores) and through its use of the DPoS algorithm.
EOS block times are fixed at 1.5 seconds, some ten times quicker than Ethereum, and can handle 3,700 transactions per second (TPS). EOS is the token used on the EOS.io blockchain.
DPoS involves a set number of voter-appointed nodes, in EOS’ case 21, to produce and verify blocks on the EOS chain, with all token holders allowed to partake in the voting process and put themselves forward for nomination. The algorithm randomly appoints block producers proportional to their voting stake, meaning there is no competition between delegates, with the top three block producers thought to earn some 1,000 EOS per day in rewards.
The EOS ecosystem relies heavily on two major entities – the EOS Core Arbitration Forum (ECAF), the EOS ‘police’, and the 21 nominated block producers. This governance system has come in for criticism in the past, particularly in November 2018 when evidence emerged of ECAF reversing previously confirmed transactions, anathema for those who support true decentralization.
EOS spokespeople have said in the past that this is only ever done to correct fraudulent transactions, but the fact that the facility to reverse transactions exists at all has led some to argue that EOS leaves itself open to attacks, particularly when only 11 block producers need to be compromised in order to achieve this.
EOS has a different approach to transaction fees than more traditional blockchains, which allows it to be a fee-free ecosystem. The only requirement for sending a transaction is to have tokens in your account to rent the bandwidth to send them, and the more tokens you have the more bandwidth you are entitled to.
The average holder/user won’t need to stake many tokens to ensure their transactions are free, but a heavy user, such as a dApp developer, will have to hold increasing amounts of EOS as their usage increases to ensure that their users don’t incur fees at the other end.
EOS is a unique blockchain both in its governance and its approach to blockchain, with its DPoS algorithm muddying the waters between centralization and decentralization. This has attracted heavy criticism from those who say it cannot call itself a decentralized system compared to the likes of Ethereum. Proponents argue that the democratic node selection process means that the mining process is fair and free from manipulation from a single entity, which is what decentralization means.
The fact that ECAF has the ability to reverse transactions however illustrates that this argument might not hold as much water as they would like. Whatever the case, EOS certainly looks like it will be a competitor for the title of the smart contract king in the years to come, so it will be interesting to see how the platform evolves, and what the critics make of it, as it does.