ICO Review of EOS

EOS is an exciting blockchain project described as the Ethereum killer. In 2 months, it has raised the most amount of capital through an ICO. A total of $250 million dollars has been raised up to date. The token sale is set to continue till July 2018. At this rate, EOS is likely to raise close to $ 1 billion by the end of the sale.

So why does EOS need this much money?

The EOS blockchain is part of a paradigm shift in designing scalable, user-friendly but still secure blockchain platforms.  Its key selling point is the millions of transactions it can handle per second. At 1 million transactions per second, it can support corporations and enterprises.

Existing public blockchain platforms have run into hurdles that require a rethink of how to construct a blockchain.

For example, the Bitcoin scaling deadlock highlighted the lack of an all inclusive governance model. Ethereum charges users a fee for actions on decentralized applications. Both Ethereum and Bitcoin suffer severe limitations on the number of transactions they can handle per second

EOS is set to be a significant competitor to the current leading blockchains. Its scalability, user friendliness, transactional throughput and low-cost maintenance makes it superior to all existing blockchains. 

This review will cover all the aspects of the EOS project. As an investor, you will get a full picture of EOS before arriving at the best investment decision.

●      An overview of EOS

●      The team involved with the project

●      The product - EOS blockchain

●      Features of EOS

●      Details of the EOS token sale

●      The vision, plans, and roadmap of EOS

●      Verdict on this project

Background an Overview of EOS 

EOS is designed to address the failures of current existing blockchain platforms. It supports smart contracts, introduces a governance model and drastically increases transactional throughput. The goal is to be user-friendly and support a decentralized application for developers and corporations.

The EOS technical white paper was released in July 2017.

Despite being the most popular, Bitcoin and Ethereum are far from perfect as public blockchains. A huge gap exists between what is required for blockchains to go mainstream, and the realistic abilities of both.

The problems include

●      A lack of a governance model that led to the Bitcoin scaling deadlock and Ethereum DAO hard fork

●      Reliance on mining which is wasteful regarding capital and electricity

●      Users pay fees to interact with the platforms and applications

●      Limited capacity at 30 and 9 transactions per second for Ethereum and Bitcoin respectively

EOS is built with prior experience from building Steemit and Bitshares since 2013. Steemit is a user-friendly content platform that runs on a blockchain and charges zero fees. Bitshares is a decentralized exchange processing 800,000 transactions per day, more than Bitcoin and Ethereum combined. The technology and lessons learned from both projects have informed the design of EOS.

EOS intends to tackle all the problems preventing blockchains from going mainstream.

Who are the team building and supporting EOS?

EOS is made up of a team of 35 people with an extensive background in business, finance cryptography, and blockchain technology. Block.one; the founding company is led by Brendan Blumer as CEO and Dan Larimer as Chief Technology Officer.

Brendan's background is in ventures selling virtual assets since 2003. He is a serial investor and salesman.

Dan Larimer is a software engineer with prior experience building two blockchain platforms. He built steemit and bitshares using graphene, a technology he developed. Graphene enables up to 100,000 transactions per second. Dan worked closely with Satoshi Nakamoto, creator of bitcoin in early 2009.

The team also includes Ian Grigg, inventor of the Ricardian contract, with 25 years experience in financial cryptography. He was the chief architect at R3 Corda blockchain consortium before joining EOS.

Some developers from Dan’s steemit and bitshares project are also part of the tech team at EOS.

What product is EOS building?

EOS is a decentralized blockchain platform for decentralized applications and smart contracts. It uses a delegated proof of stake consensus mechanism to process transactions. 21 block producers work together to validate transactions. A block filled with transactions is produced. Every 3 seconds, Only one delegate is authorized to produce a block at any time.

Unlike proof of work based blockchains, EOS uses messages instead of state to represent and execute transactions. The use of state models is a fundamental flaw limiting blockchain performance. Models built using messages are superior for achieving high performance.

EOS supports asynchronous smart contracts. They are cheaper to run, execute faster and finalize in a shorter period. There are no fees for executing smart contracts, only an appropriate bandwidth allocation. There is no bloat when multiple smart contracts execute simultaneously.

EOS transactions occur in parallel versus serial processing common in other blockchains.This means multiple processes do not have to queue and wait their turn. Transactions are handled simultaneously on the network. Large scale applications can thus minimize workloads by splitting up transactions across multiple CPUs and computers. 

The overall impact of EOS design is a blockchain that scales without compromising security, speed, and throughput. It is highly scalable both horizontally and vertically.

What are the features of EOS?

EOS' rich set of features are amenable to today's web requirements. EOS' design is considerate of developers. Programmers can quickly leverage EOS' features without worrying about the complexity of the blockchain.

●      EOS is user-friendly account names and identifiers are in human readable form. Accounts are recoverable if a user loses a password.

●      Users of decentralized applications do not pay any fees on the platform. EOS works like traditional websites on the user end. Access is free for users.

●      Applications pay for bandwidth costs but, only when the network is congested. EOS tokens are used for bandwidth allocation. Therefore, developers and corporations running applications have to hold some amount of EOS. The tokens are useful in the event of network congestion.

●      EOS tokens also serve as a voting tool for delegated proof of stake. Token holders continuously take part in deciding block producers. Voters have the power to oust rogue delegates found contravening the constitution.

●      EOS processes 300,000 transactions per second by using graphene technology, asynchronous communication, and multi thread parallel processing. Graphene is likened to a toolkit for real time blockchains.

●      EOS offers developers a stack of integration tools. Developers need not worry about writing a lot of code. For example, relational databases with indexes for data storage come packaged in a dev toolkit. Data and database management are taken care of by EOS.

●      EOS supports programming in familiar languages such as C, C++, Rust, and solidity. The Web assembly language used can compile many languages. 

EOS is built with human users in mind and an app developer's point of view. All its features are appropriate for rapidly developing scalable, user-friendly blockchain apps.

What are the terms and details of the EOS token sale?

Block one, the major investor in EOS, opted for a unique token distribution model. The model was chosen to make the distribution as fair as possible. The token sale offers 1 billion tokens and will run for a full year.

The token sale kicked off on July 26, 2017, using Ethereum's ERC-20 token standard. The EOS blockchain comes out in July 2018. Till 2018, investors will participate through purchasing EOS tokens via a smart contract on the Ethereum blockchain. Some exchanges such as Bitfinex, Kraken, Shape Shift and Yunbi have listed these tokens for direct trading.

Therefore, investors have 2 options

●      Buy EOS ERC-20 tokens on exchanges

●      Purchase EOS ERC-20 tokens via the token sale smart contract

The sale is separated into rolling windows. During each window, a fixed amount of tokens are available for purchase. However, there is no fixed price for tokens. Price is determined on a pro rata basis once the window closes and all ETH funds have been received.

●      20% of the tokens were distributed in the first five-day window.

●      10% of the total number of tokens are reserved for block one as founder’s tokens

●      70% of the total number of tokens are spread out across 350 consecutive 23-hour windows. 2,000,000 tokens are distributed during each period

According to the EOS faq page, the formula that determines price is

Number of EOS tokens distributed to an authorized purchaser = A * (B/C) 

●      A refers to total ETH contributed by an authorized purchaser during the period

●      B refers to total number of EOS tokens available for distribution in the period

●      C refers to total number of ETH contributed by all authorized purchasers during the period

Trades on exchanges value the token between $1 and $2. The token sale is not open to US citizens and investors due to regulatory uncertainty on virtual tokens as securities.

Until EOS releases a product or testnet for developers, pricing EOS tokens is a coin toss. 

What is the roadmap and vision of the EOS project?

EOS plans to be the platform of choice for business and decentralized commercial applications. Its platform is built to appeal developers and tech startups looking to build and scale. EOS intends to break down the barriers that have isolated developers and users from current blockchain applications.

EOS intends to host smart contract applications and attract initial coin offering sales on its platform. Its efficiency and throughput is a vast improvement on Ethereum. EOS plans to convince startups building on Ethereum to shift to its platform. Dan Larimer has publicly said Ethereum can run as a single contract on EOS.

The vision of this project is to be robust enough to support applications as large as facebook and google.

Verdict

EOS has all the attributes of a great project and the potential to rise to one of the top 3 blockchains in the world. The lessons brought forward from previous projects are a huge advantage over most blockchain projects.

It's hard to put a price on EOS before its blockchain is live and running in 2018. That said, however, EOS is a project every investor should be watching. If it lives up to its plans, it has a potential market cap of at least $20 billion.