After a year long initial coin offering (ICO) that raised a record $4 bln, Block.one’s EOSIO has officially been launched.
The project is highly anticipated and the June launch is as close to a moment of truth as you will get in the world of blockchain technology and cryptocurrencies.
Developers can now actively build blockchain-based applications on the platform – which is being aimed at businesses and large scale commercial applications.
However, the launch of v1.0 could be a defining moment for the project that has promised to be able to process millions of transactions per second and eliminate user fees in its technical white paper.
EOS – A brief history of Block.one
EOS is a decentralized blockchain-based operating system that was introduced to the world in 2017. Its developers, Block.one, headed up by CEO Brendan Blumer and chief technical officer Dan Larimer, unveiled EOS at Consensus 2017. 12 months later, the project raised a record-breaking $4 bln.
The EOS operating system promises to allow developers to build decentralized applications - similar to Ethereum - that can be commercially scalable. The software includes “accounts, authentication, databases, asynchronous communication, and the scheduling of applications across many CPU cores or clusters,” according to the white paper.
The EOS token sale started in June 2017 as an Ethereum-based ERC-20 token - but as of June 2, 2018, EOS token holders that had registered for the mandatory token swap would see those ERC-20 tokens converted to EOS tokens on the EOSIO platform.
Holders of these native EOS tokens will be responsible for the management of the ecosystem, by voting for block producers that mine blocks and maintain the network.
Meanwhile users of EOS-based decentralized applications will have access to a certain amount of resources directly proportional to the amount of EOS tokens staked in an application.
EOSIO is maintained by a Delegated Proof of Stake (DPoS) system, originally created by Larimer and still used by Steemit - the blogging platform he created in 2016. Larimer explains the finer details of DPoS in what he dubbed ‘his missing whitepaper’ on the platform.
In layman's terms, a DPoS system looks to answer some shortcomings of both Proof of Work and Proof of Stake consensus mechanisms.
The EOS DPoS system allows users to vote for block producers - who are rewarded tokens for validating transactions and maintaining the blockchain. These block producers are constantly evaluated by the community and will be ‘fired’ if they underperform - i.e. fail to validate transactions and create blocks.
According to the Ledger Intel Dossier on EOS, Steemit’s DPoS currently handles thousands of transactions per second - which does bode well for EOSIO.
This is why the launch of the EOSIO is a moment of truth - the cryptocurrency community finally has a chance to use a platform where it can handle potentially millions of transactions per second.
Now that the ICO is over, and EOSIO has been launched, there are a number of things to consider in the coming weeks and months.
First and foremost, users that participated in the EOS Ethereum-based token sale need to participate in a token swap.
The conversion of their ERC-20 based tokens to EOS.IO tokens required users to register before June 2. If they failed to do that, their ERC-20 EOS tokens would not be attributed to the EOS main net.
This essentially means that any users that did not register for the token swap will see their ERC-20 EOS tokens become non-transferable - rendering them useless.
Furthermore, the token swap is considered to be a critical component of the EOS ecosystem. Community participation is crucial for the DPoS system to work and ensure the voting of block creators and their constant evaluation.
From beta to launch
Like many blockchain projects, the promises of a white paper paint a pretty picture, but the finished product is what matters.
The year long ICO provided a massive amount of funding for the project and a number of beta versions of the EOSIO have been released during that time, under the project name ‘Dawn’. The latest beta, v4.0, was released in May 2018.
According to EOS’ Github page, there are 620 issues still open on the project, while over 1400 have been resolved during the development phase.
Nevertheless EOSIO v1.0 is officially out and there is sure to be plenty of feedback once more developers start using the platform. With that being said, a number of projects are already being worked on.
According to EOSindex, which tracks that number of blockchain decentralized applications based on EOS, there are over 140 projects being actively developed. One of the most well-known is Everipedia - an online encyclopedia based on the EOS blockchain that will reward content creators with native tokens.
The Everipedia project attracted the co-founder of Wikipedia, Larry Sanger, back in 2017, who joined the team as its chief information officer. Sanger made the move to combat the control and centralization of information, which he believes Wikipedia has now become:
"The biggest problem with online information today is that it is centralized and controlled by a very few players, that it benefits to have the most salacious and hype-ridden information. We can do much better."
It must be mentioned that Everipedia is planning an airdrop of its token to any holders of EOS, as reported by Fortune.
$50 mln raised to fund ecosystem development
While the project itself raised more than $4 bln during its year long token sale, Block.one have also managed to secure $50 mln of funding from blockchain investment firm SVK Crypto.
The London based investment firm will invest in companies building decentralized applications on EOSIO - with a particular focus on social media, data ownership, tech platforms and logistics.
Block.one’s EOC VC is a funding program that looks to provide developers and businesses with funding for projects using the EOSIO. The program has pledged to raise over $1 bln for funding EOSIO projects in future.
This includes the $325 mln EOSIO Ecosystem Fund with Mike Novogratz’s Galaxy Digital LP.
Ethereum’s new rival?
EOSIO will be keenly watched in the coming months as it provides a fresh blockchain platform for the development of DApps - which is in direct competition to Ethereum.
If the EOS token swap goes according to plan, the EOSIO ecosystem should begin to function as planned. This could well signal the arrival of next big smart contract DApp platform.
Ethereum founder Vitalik Buterin and EOS CTO Dan Larimer have had some philosophical debates on both Steemit and Reddit about the pros and cons of Proof-of-Stake vs Delegated Proof-of-Stake.
In a reddit thread, Buterin explained his misgivings of Larimer’s DPoS protocol, highlighting concerns of voter participation and the mechanics of fee-less system.
Buterin believes low voter participation, exchange voting on coin holders behalf and a discrepancy between coin holders and users interests could be major stumbling blocks:
“To try to ensure decentralization, DPOS allows all coin holders to vote on who the nodes running the consortium chain are. This, together with the lack of in-protocol economic incentives for these master nodes to behave correctly, and the lack of client-side validation capability, mean that there is an extreme reliance on the voting mechanism.”
Furthermore, Buterin believes the voting system is open to manipulation:
“There is also one other substantial concern with voting: in order to win votes, any delegate would need to have a visible public identity; anonymous delegating would be very difficult to sustain in the long term. This makes the entire system substantially more vulnerable to political attacks.”
Larimer hit back on Steemit, countering Buterin’s claims while providing what he describes as points that debunk Ethereum’s proposed Proof-of-Stake algorithm, Casper. Larimer believes that the Casper PoS “encourages collusion and cooperation rather than competition”.
The EOS CTO also addressed Buterin’s critique of low voter participation and the potential for collusion of voters for an attacker to acquire stake.
“Low voter participation has been addressed over the past 3 years through a combination of voting proxies, easier user interfaces, and a reduction on the number of things people have to vote for.
“Furthermore, non-voters do not make things less secure. They keep tokens off the market which still makes it more expensive for an attacker to acquire stake. Large stakeholders have a huge incentive to vote to protect their wealth and an attacker would have to acquire more stake than the largest whales in the system.”
Larimer also stands by EOS’ fee-less system, which requires DApps to cover network costs:
“Lastly EOS is designed around the idea that service providers (DApp Developers) should cover network costs, not the users. A good application needs a monetization strategy that is fully independent of network operation.
“The existence of Steem is all the proof we need to demonstrate the value of "free" transactions and how we solve the issues with users needing stake.”
While their back-and-forth, academic style feud has been interesting, it does show the stark differences between the technology underpinning the two contrasting platforms.
Nevertheless, with an enormous amount of capital raised, Block.one should be able to ensure the continual improvement of EOSIO in the coming years. Whether or not it becomes a rival to Ethereum remains to be seen.
As was the case with Ethereum, the development of popular decentralized applications will no doubt prove the usefulness of EOSIO and drive its adoption in the future.
First things first - a successful token swap is required to ensure that EOS tokens are registered on the EOSIO so that voters can actively participate in selecting block producers that will validate transactions and maintain the ecosystem.