By Cryptocurrencies are, slowly yet steadily, changing the way people do business. The idea of having currency free from the whims of national governments in a crypto coin society and the possibility of making local or international transactions without any banks’ meddling is certainly an attractive one. But there are even more great things that blockchains bring to the table. When Ethereum introduced smart contracts and scripting in 2015 it established the base for decentralized finance and creating blockchain-based decentralized applications (known as dApps). The Ethereum blockchain now hosts over 2,600 dApps, but other smart-contract capable blockchains are expanding rapidly.
The EOS blockchain was launched in 2018 as a smart contract platform driven by the EOS token, with no transaction fees. It claimed to be fully scalable and capable of handling millions of transactions per second. As of writing, it is the second-largest smart contract platform by the number of dApps, hosting over 300 applications. This looks promising enough at first glance, but let’s take a deeper look at this ecosystem and see if everything is as good as it seems.
The EOS ecosystem yesterday:
The EOSIO white paper was published in 2017.
It was the first blockchain-based on the DPoS (delegated proof-of-stake) protocol. An ICO (Initial Coin Offering) of EOS tokens began in June 2017. Later that year, online encyclopedia Everipedia decided to move to a blockchain so that their content could be accessed from anywhere in the world, without government restrictions and to reward article creators and editors with crypto tokens. To achieve these goals, they chose the EOS blockchain.
Version 1.0 of the EOS blockchain went live on the EOSIO mainnet in June 2018. The current version is 1.8.1
The EOS ecosystem today:
The EOS mainnet is driven by the EOS cryptocurrency. At the time of writing this article, EOS is the seventh-largest crypto token by market cap with a 24-hour trading volume exceeding 2 billion USD. Not bad for a token that is less than two years old.
As to the ecosystem itself, the EOS platform is currently the second largest of the smart-contract capable blockchains, with over 300 dApps. According to stateofthedapps.com, there are 115 gambling, 51 gaming, 28 social and 25 exchange dApps, among others, running on the EOS mainnet right now.
Let’s have a look at their top 10:
1. Prospectors (Game):
Prospectors is a Massive Multiplayer Online Economic Strategy Game. It lets users live the life of a 19th-century gold miner, mine resources, build shops, trade, form communities, all while earning tradeable cryptocurrency.
2. Bancor Network (Exchange):
Bancor Network is an automated exchange that allows users to convert between over 100 cryptocurrencies on the EOS and Ethereum blockchains.
3. EOS Dynasty (Game):
EOS Dynasty is billed as the blockchain’s first RPG and PvP game. Players collect materials like leather, metal, gemstones and bones and use them to forge new equipment. They also tame animals to use as mounts and battle each other in PvP battlefields. The game grants players bonuses in the form of the Three Kingdoms Token.
4. KARMA (Social):
Some people have described KARMA as “Instagram on a blockchain”. Like Instagram, KARMA is a media-sharing service, but with a different purpose. KARMA seeks to reward users who strive for positivity and social change. Good actions shared on the service can receive rewards in cryptocurrency.
5. Crypto Sword and Magic (Game):
Crypto Sword and Magic is a traditional RPG, where players create their heroes, level up, team up, engage in battles and solve dungeons. The game’s economy is based on the EOS token.
6. EOS Knights (Game):
Billed as the first mobile game on the EOS platform, EOS Knights has players collect materials, use these materials to craft different items and adopt 24 kinds of pets. Materials and crafted items can be traded with EOS tokens in the game’s marketplace.
7. ADM (Marketplace):
ADM’s interface is presented as a shopping center. It’s aimed at being a “perfect application scenario”, combining a blockchain navigation app, entertainment center and other functions.
8. WhaleEx (Exchange):
WhaleEx calls itself the “#1 Decentralized Exchange in the World”. It allows users to exchange between crypto tokens. It offers no minimum exchange size and allows users to stake the native WAL token to eliminate exchange fees.
9. Yup (Social):
Yup’s goal is to “add a social layer to the internet”. Users rate content on any site or service, be it a random tweet, user profile or website. If other users agree, they are rewarded with increased influence and cryptocurrency.
10. Dice (Gambling):
An online casino running on the EOS blockchain. Available games include roulette, blackjack, baccarat, slot machines, sports betting and, of course, dice.
There are other popular dApps on the EOS blockchain, including Everipedia (an online encyclopedia), Effect.ai (a decentralized network for artificial intelligence where users can get rewards for completing micro tasks), Sense chat (a text- and video-messaging app), Murmur (a microblogging platform) and wallet dApps like Scatter and TokenPocket.
The EOS mainnet hosts many different dApps and there are more going live regularly. With new blocks being produced twice each second, transactions on this blockchain are almost instantaneous. That, and the fact there are no transaction fees, makes it a tempting platform for developers and people who just want to make regular business transactions with cryptocurrency.
However, not everything is bright and easy. EOS dApps use computing resources like CPU processing time, NET bandwidth and RAM and users need to get used to managing them; transactions might not be completed because a user is low on CPU at that particular moment. EOS accounts typically aren’t free, since some initial resources must be allocated to that account so it can be used. These two aspects mean EOS isn’t quite ready for mass adoption. I really don’t see my mom understanding she has to buy some more RAM or delegate some tokens for CPU so she can post a picture of her dog on Murmur.
The EOS ecosystem tomorrow:
EOS has had its share of issues. The first controversy started right after it was announced. Many crypto analysts, technicians and investors aren’t too thrilled with the DpoS model for establishing governance on the blockchain.
As in any blockchain, many computers are serving as block producers (BPs). On EOS, the blockchain is “ruled” by 21 block producers that are elected by users holding EOS tokens. This is an ongoing process that allows BPs to dynamically go in and out of the top spots. These 21 BPs earn the highest amounts of EOS tokens. On paper, this doesn’t sound so bad. But in the real world, there have been issues.
The rules for the voting process give users that hold a lot of EOS (called “whales”) a lot of voting power. This amount of voting power lets them decide, almost without contest, which BPs are on top, no matter how much or how little that block producer is actually contributing to maintaining the blockchain’s health. Because of this, some of the more technologically and technically capable block producers, who generate proposals that benefit the entire ecosystem, are out of the top 21 and thus earning little to no profit.
Many analysts claim that Block.One (the company that developed EOSIO and the largest holder of EOS tokens) can solve the governance issue by several means, but so far have chosen not to get involved.
Blockchain governance might not be the most relevant issue for an average user. After all, if my cousin wants to post pictures of the puppies in her animal shelter on KARMA, she isn’t too worried if the blockchain’s top 21 is located in China or Ukraine or how much profit they are turning in. But she does care about the network’s performance.
Until recently, performance on the EOS mainnet was very good. Sure, sometimes a user (myself included) couldn’t post because of CPU shortage, but someone in the community could lend them some CPU or they could simply wait a few hours for processor time to free up. It was mildly annoying, at worst. For the most part, users got safe, almost instant transactions with no fees, as promised. I personally know some freelance workers that were perfectly happy to accept payment in EOS.
But something changed. And not in a good way.
On October 31st, 2019, a new airdrop launched on the EOS mainnet for the EIDOS token. This, in itself, is nothing extraordinary. New tokens, airdrops and ICOs appear regularly on the blockchain. However, this airdrop leased such a massive amount of CPU and has so many transactions that it managed to congest the whole mainnet by using almost all available processing time. Over 95% of all transactions are failing due to low CPU (and almost all transactions that are being completed are related to the airdrop itself). Because of this, average users haven’t been able to play, post, comment on their favourite dApps nor make commercial transactions. You can see the spike in CPU usage in the following graph, courtesy of EOS Titan.
The mainnet’s congestion problem is expected to last until the airdrop’s CPU lease expires at the end of the month. But a month’s worth of failed transactions is creating many problems, as is to be expected. The fact that one single airdrop managed to affect all dApps and users on a blockchain raises legitimate questions about the platform’s scalability. After all… what happens when many airdrops are happening at the same time? What if a single dApp routinely congests the network? How is the network going to function when there are 3,000 dApps instead of 300?
As of writing this article, the network is still in congestion mode and some of the more important dApps are considering migrating to other smart contract platforms.
In conclusion
The EOSIO blockchain is currently facing some challenges it must overcome to be truly successful. First, the ecosystem needs to be more accessible to people who just want a simple user experience similar to what they’re used to having on traditional social media. Some steps are being taken in this regard. In September an update to the EOSIO code allowed dApps to pay for user’s CPU usage so this would no longer be an issue. It still didn’t prevent the current congestion mode to affect users, but it is definitely a step in the right direction.
Second, the governance issue has to be addressed in a way that more active and technically proficient block producers can keep earning rewards. This would help keep the producers on the net and improving the ecosystem for everyone. Telos, which is an EOS sidechain, opted for putting a cap on how many tokens users may have staked. This would prevent any single user from having too much voting power. Only time will tell if this strategy works.
Finally, something has to be done about performance and preventing the congestion mode the platform is currently experiencing. There has to be some solution that prevents any single dApp, smart contract or user from using so many resources that the network becomes non-functional for the average user. And it must be implemented before the next EIDOS shows up.
Don’t get me wrong. I truly like the EOS ecosystem. I think it’s a great project with a lot of potential. Some of the dApps are among my favorite social media services. I post on Murmur and KARMA, have a Blabber account, chat on Sense and even do some edits on Everipedia every now and then. I guide workshops that teach people how to use decentralized social networks, some of them on the EOS mainnet.
But is this ecosystem ready for mass adoption?
To handle tens of millions of users with very different levels of technical expertise and knowledge?
No. At least, not yet.
And there is competition in this area. EOS side chains like Telos and Worbli are surely taking into consideration the issues on the mainnet. And completely separate projects like TRON are taking off. Whether EOS itself or one of its competitors learns faster from EOS’ issues remains to be seen.
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