What is EOS?

dan, larimerEOS creator Dan Larimer.


EOS is the native cryptocurrency of the EOS blockchain, developed with the aim of facilitating efficient and scalable decentralized applications (dapps). The blockchain includes an operating-system like set of services and functions1
that works similarly to the ethereum platform.

EOS was announced in 2017 by the private company Block.One and released as open-source software in June 2018. EOS seeks to achieve greater scalability than bitcoin and ethereum with its delegated proof-of-stake (DPoS) consensus mechanism.

According to the white paper, this allows EOS to process transactions more quickly because there are only 21 block producing nodes. This means that the network must only reach consensus between 21 nodes in order to produce a block, compared to millions of nodes in the bitcoin and ethereum networks2.

EOS has four distinctive features3.

First, EOS transactions are quick, it takes about half a second to confirm a transaction, and approximately 2 minutes to finalize it. Second, EOS tokens are free to transfer since there are not mining fees. Third, EOS is the only token on the network that can be used to obtain resources that developers need to run their dapps. These are CPU (the processing power it takes to run a dapp), NET (network bandwidth) and RAM (data storage).

Lastly, the tokens play a very important role in governance. Only people who hold the EOS token can vote for block producers who run the network.

One of the major differences between ethereum and EOS is that programmers can develop dapps using any WebAssembly programming languages in EOS (eg. C++, Java, Python, etc,) whereas in ethereum, that have to use the native programming language, Solidity.

Furthermore, EOS uses delegated proof-of-stake (DPoS) as its consensus model which differs from ethereum’s proof-of-stake (PoS) model.

 

How Does EOS work?

 

Launch & Issuance

Block.one completed its initial coin offering (ICO) of EOS in June 2018 after taking over a full year and 350 periods of distribution (one token distribution of 2 million tokens per day)4. The ICO raised over 4 billion dollars over the full year5, with 1 billion tokens sold. 

Ninety percent of the tokens were sold to the ICO participants and 10 percent were sold to the EOS team.

At the end of each distribution period, the total number of tokens designated for that period were distributed to contributors based on the amount of ETH they contributed divided by the total contribution amount. EOS tokens were initially distributed as ERC-20 tokens6.

They were later swapped for native EOS tokens7.

Network Design & Security Model

In order to secure its network, EOS uses a delegated proof-of-stake model (DPoS). DPoS uses real-time voting combined with a social system of reputation to achieve consensus as to who can create the next block of transactions in the blockchain8.

Every EOS token holder has influence as to what happens on the network, proportional to how many tokens their account holds. The voting process has been somewhat controversial.

In order to vote, users must stake tokens for three days, and those who stake their tokens cannot sell them, putting them at risk of losing money should the price of the token change during that time9.

Monetary Policy

There is no maximum supply limit of EOS tokens. The delegated proof-of-stake model uses inflation to fund transactions and pay block users10.

There is a 5 percent cap in the rate of inflation that has been agreed upon which is expected to exist forever. This means that at the end of the ICO, once the 1 billion tokens were issued, a maximum of 50 million new tokens would get created within the year following that.

Transaction Processing

According to the white paper11, a transaction within EOS can be confirmed with 99.9% certainty after an average of 0.25 seconds from the time of the broadcast.

The EOS software requires every transaction to include part of the hash of a recent block header in order to prevent a replay of a transaction and to also signal to the network that a particular user and their stake are on a specific fork.

Resources

Website

Github

Twitter (Block.one)

Reddit

Medium

Guides

Whitepaper

FAQs

Authored by John Metais

  1. https://eos.io/
  2. https://github.com/EOSIO/Documentation/blob/master/TechnicalWhitePaper.md
  3. https://www.coinbase.com/earn/eos/lesson/3/
  4. https://blockgeeks.com/guides/eos-blockchain/
  5. https://cryptoslate.com/eos-raises-record-breaking-4-billion-from-crowdsale
  6. https://www.cnbc.com/2018/05/31/a-blockchain-start-up-just-raised-4-billion-without-a-live-product.html
  7. https://www.coindesk.com/token-swaps-work-theyre-happening-now
  8. https://lisk.io/academy/blockchain-basics/how-does-blockchain-work/delegated-proof-of-stake
  9. https://www.coindesk.com/eos-coming-anyone-can-figure-vote
  10. https://www.eoscanada.com/en/inflation-on-eos-what-do-i-need-to-know
  11. https://github.com/EOSIO/Documentation/blob/master/TechnicalWhitePaper.md#consensus-algorithm-bft-dpos