What is EOS?
EOS intends to be the most powerful infrastructure for decentralized applications. Developers can use it to host their decentralized applications (DApps). The Ethereum Whitepaper listed three different types of decentralized applications: financial applications (using contracts to manage money), semi-financial applications (money is involved but not integral to the application), and voting/governance applications that do not include any finances. Although not always a better alternative, decentralized applications may offer less fees, less censorship, and more security than centralized applications. Some commonly used decentralized applications are Steemit, DTube, Brave browser, bountyOx, and more notoriously, CryptoKitties.
The current state of DApp infrastructure faces a problem concerning speed and scalability. DApps that may save their users money by eliminating middlemen fees have their benefits in theory but are not practical if they are inconvenient to use. CryptoKitties was a popular DApp that used the Ethereum network in December 2017 and single handedly congested the Ethereum network, which caused slow transaction times and high transaction fees. Ethereum hit a peak of about 15 transactions per second. For global DApp adoption there needs to be a scalable solution. Ethereum, Cardano, and EOS are the three most popular platforms that intend on offering a scalable infrastructure for DApps.
EOS uses a delegated proof of stake (DPOS) consensus mechanism that will supposedly compute thousands or millions of transactions per second. Under a DPOS algorithm, token holders may vote for representative block producers to produce blocks (verify transactions). The software enables blocks to be produced every 0.5 seconds.
Dan Larimer and Brendan Blumer lead the team but they haves several contributors on Github. Most notably, Dan Larimer created Steem and Bitshares, two successful blockchain projects. EOS’s 6th biggest market cap size suggests that investors are speculating that Larimer’s history proves that he can develop a scalable platform for decentralized applications and smart contracts.
The cryptocurrency community is concerned that EOS is too centralized, especially people within the community that have an allegiance to Ethereum.
Point of EOS Token
The token provides access to three resources on the network: bandwidth and log storage, computation and computational backlog, and state storage. The token also empowers voting power for nominating block producers as well as how inflationary funds will be allocated. There are several DApps being developed on the EOS blockchain that require EOS and if one or a few of those DApps become popular, EOS could be a close competitor to Ethereum.
The market cap size of the cryptocurrency that eventually solves the scalability issue regarding hosting decentralized applications and smart contracts will be huge. Even with its limitations, Ethereum is the most widely used platform and it peaked in market cap size at about $135 billion. Ethereum’s peak market cap size suggests that a better solution could surpass $135 billion in market cap size. The potential is so high, which makes projects like EOS, Cardano, NEO, NEM, Qtum, Icon, etc., so high.
For more in depth information about EOS visit the technical whitepaper or a YouTube presentation on EOS: