In this article, we track the emergence and development of one of the biggest new projects in the cryptocurrency industry – EOS. We also look at how this new project may have the ability to topple the number one smart contracts platform – Ethereum.
What Is EOS And What Can It Do?
EOS is a smart contract platform based on Blockchain technology. It promises to address some of the biggest challenges that are being faced in Blockchain technology today – user experience, performance and governance. And while the EOS project is still being developed, it is well funded and the concepts and philosophies behind it are based on the founder and CTO, Dan Larimer’s many years of experience building the Steemit and Bitshares platforms.
EOS claims that it can offer high transaction throughputs, no transaction fees and a strong, structured governance. These claims have given the project the moniker Ethereum Killer, therefore it would be a good idea to analyse each point more carefully.
High Transaction Throughput
EOS claims that it will use multiple scaling methods such as Delegated Proof-of-Stake (DPoS), partial evaluations, parallel execution, etc. While similar solutions are also being
researched by Ethereum developers, there is little in common between Ethereum’s Casper The Friendly Ghost (TFG) protocol and EOS’ DPoS.
In TFG, anyone who is willing to deposit the required amount of Ether (ETH) is allowed to participate in the consensus mechanism. The only penalty that is incurred by a malicious or faulty action is the loss of the user’s deposit.
In DPoS, there are a set 21 elected block producers who keep taking turns to create the blocks that give extremely high throughput. If any one of these producers misbehaves or does not perform, then they are voted out of that powerful and lucrative position.
EOS gets an innovative advantage over Ethereum as it can build a brand new EVM as well as Blockchain without having to worry about billions of dollars’ worth of smart contracts getting impacted. Ethereum has to tread carefully while it applies carefully researched theoretical validations to its PoS implementation, EOS is charging full speed ahead with a repackaged form of the current Bitshares DPoS protocol.
No Transaction Fees
Both EOS and Ethereum are powered by user-held tokens. However, how these tokens are used differs widely.
In EOS, users receive transaction allotments after making deposits that are visible to the block producers. In Ethereum, on the other hand, user pay the miners directly through transaction fees.
EOS says that it will have zero transaction fees. However, it remains to be seen how the network will handle the spam and DoS attacks that come with using this kind of a service
model. Despite the fact that Ethereum charges fees for transactions, the network has still been a victim of such attacks, which have necessitated hard forks with price changes.
EOS says it has a solution for this challenge by defending attacks using dynamically tightening reserves which would then increase the overall cost of the attack. If this solution works, the EOS will have the upper hand in the battle to become the best smart contracts platform.
Strong, Structured Governance
Ethereum and Bitcoin have similar governance structures – the balance of power is shared by miners, developers as well as users. Evolution is governed by community consensus, which has led to conflict and hard forks as well as splits in the community, leading to the emergence of new cryptocurrencies.
EOS, on the other hand, promises strong and structured governance which will be led by the 21 block producers. These producers – as elected representatives of the community’s users – will carry out governance functions. A simple majority of 80% (17 of the 21 producers) is needed to freeze accounts, update codes in faulty smart contracts as well as carry out hard forks.
In conclusion, EOS is addressing the challenges being faced by Ethereum by granting a lot of power to a small group of delegates. The assumption that the project is working on is that the group will be active in exercising their power to prevent any form of abuse of the system. How successful this will be in practice still remains to be seen.
Images credit to following owners (sources):
- EOS by EOS project
- EOS vs Ethereum by CaptainAltcoin
- Casper Ethereum by Blockonomi
- EOS Coin by Hacked website