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EOS is an ambitious blockchain project described as an Ethereum killer. EOS describes itself as a platform for decentralized applications and smart contracts. It is evident from the white paper EOS is going after Ethereum's market share. With a million transactions per second, zero fees for transactions and a delegated proof of stake governance model, EOS is a real threat to Ethereum.

But skeptics and critical observers have raised valid concerns about the project from an investment perspective. EOS' atypical approach to its ongoing ICO token sale has investors worried. Some have outrightly written it off as a scam.

These serious allegations prompted us to take a closer at why EOS' fine print is raising alarms. We found 5 points of contention.

The Token supply is too much

EOS is distributing 1 billion tokens into the market, far more than most blockchain projects. Ethereum, for example, has 93 million, Bitcoin has 21 million and Filecoin 200 million tokens.

Investors are upset this huge supply will suppress the price of each token in the long term. They would rather see a lower supply of tokens. If there are too many tokens in circulation, the upside potential is limited.

No investor wants a price ceiling on their potential returns.

EOS' distribution model is a year-long token supply

EOS' token sale was intentionally scheduled for a whole year from June 26, 2017, to June 18, 2018. Every day, 2 million EOS tokens hit the market and enter circulation. This fresh supply comes in daily and adds to the amount already in circulation. A total of 700,000,000 is available for distribution. This drawn-out token sale has drawn anger from some early investors.

Investors feel this dampens the exchange price. The ongoing flow of new tokens suppresses the price of EOS on exchanges. This token model is off-putting for potential investors who are now wary of buying EOS at this early stage.  14 million tokens per week is a lot to absorb especially when there is not enough demand to absorb supply.

It is, therefore, no surprise that the price of EOS has been in decline since the launch of the token sale. Price has dropped from a high of $6 to a low $0.6. Potential investors are on the sidelines awaiting the last stages of the token distribution.

EOS tokens have no utility and serve no purpose

The team backing has expressly stated the EOS tokens are useless and have no utility. The FAQ page warns investors not to expect any returns or value from EOS tokens. There is little left for investors to hang on to when the terms are spelled out.

"The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform."

This open admission is puzzling, leading many to deliberate on its implications across threads, forums and comment sections. How does EOS expect to attract capital if the promise is a useless token?

At least with most ICOs, they tell you the purpose of the token on the platform. The approach by EOS is a whole new level of trolling!

All Proceeds from EOS are revenue for a private company

The EOS FAQ page blatantly states

"Proceeds from the EOS Token distribution will be the revenue of block.one"

Block.one is a private company registered in the Cayman islands. It is also the company responsible for building the EOS software. Block.one has sole discretion on how to spend the proceeds. As a private company, it is not subject to any scrutiny on how the money raised will be used.

Already, the company has raised close to $300 million in revenue even before the ICO is over. In addition to proceeds from the token sale, Block.one is entitled to 100 million tokens or 10% of the total token supply. So not only does the company bag the proceeds of the ICO, but they also get to keep a significant stake of the total tokens.

You can see why investors are skeptical of EOS when they can't even be bothered to cover up their dodginess. 

Suspicious Price disparity between ICO tokens and exchange prices

The distribution model chosen for EOS tokens has led to price disparity between the tokens available from the ICO and those trading on exchanges. Unlike most other ICOs, EOS tokens were made available for trading on exchanges from day 1. Typically, ICOs hibernate as soon as the token sale is over and only list tokens weeks later.

Listing EOS on exchanges such as Kraken, Bitfinex, and Chinese exchanges, has created arbitrage opportunities. Unknown buyers pick up cheap coins from the ICO and sell them on exchanges at higher prices. Consequently, this continued dumping activity suppresses prices on exchanges.

Rumours have surfaced suggesting block one or one of its high-profile investors are responsible for the massive sells offs exchanges. Investors aren't too pleased.

Planned Audit to Reassure Investors

While it is hard to verify the truth to these claims, it tarnishes the reputation of the overall project. Block one has not come out officially denied or confirmed the claims.

According to Brendan Blumer, Block.one CEO, an official audit will take place at the end of the token sale  to assure token holders the EOS distribution phase was transparent. Brendan Blumer has said 

“We are working as quickly as we can to finalise things with an auditing firm that is in line with scale of this project; we are in advanced discussion with multiple firms. This is an initiative I am overseeing daily along with our CFO.”

Is EOS is a scam?

These damning points brought up by investors, critics and skeptics are making rounds online. They paint a bad picture of the overall project. However, only time will tell. EOS needs to deliver a product to assuage investor fears and win the public's confidence. But until the token sale ends, and the EOS blockchain is live, these doubts will continue to linger in the minds of investors.