What Is EOS?

Blockchain technology is still in its developing stages and its use case is more prominent in Financial Technology (FinTech).

The advent of Bitcoin in 2009 and subsequently Ethereum in 2013 established the need for the use and adoption of blockchain technology, because of its decentralized, transparent, and secured nature built using cryptography. Trading of digital currency saw a boost with the launch of Bitcoin eliminating the need for a third party and thus protecting the anonymity of those involved in the transactions.

Despite its dominance it is practically difficult to build on the Bitcoin blockchain, considering the time needed to add one block to the network, and also it could not solve the problem of scalability, speed, and efficiency needed in the transaction of digital currency.

Consequently, the emergence of Ethereum and Smart Contract tried to solve the issue of efficiency and scalability. The network enabled the building of Decentralized Applications, (DApps), Fungible and Non-Fungible Tokens, (NFTs) and allowed for the smooth running of these apps or tokens on-chain.

Bitcoin and Ethereum are still the envy of many but due to their network congestion, high gas fee, and slow transaction time other blockchains were developed to tackle these challenges.

This led to the development of the Electro-Optical System popularly known as EOS blockchain by Block.One in 2018. The aim is to build a decentralized blockchain that is scalable, efficient, fast, environmentally friendly, and highly cost effective that will enable developers to build a business or decentralized apps with ease backed by Smart Contract.

Our focus in this article would be to explain what EOS blockchain is, discuss the unique features of the network, and examine how they work and how the EOS token is used and traded.

What Is EOS?

EOS is a blockchain-based decentralized platform used to create decentralized applications (DApps) and uniquely developed to support secure access and authentication, permissions, data hosting, usage management, and communication between DApps and the internet.

EOS, which means Electro-Optical System is a decentralized operating system that is established on blockchain technology and is used to create, organize and operate business applications or decentralized applications.

It provides a safe passage, authenticity, approval, and communication between decentralized applications and the internet; supporting core potency that enables businesses and people to develop a blockchain-based application in a manner that is comparable to a web-based application.

The EOS blockchain, regarded by many blockchain developers and crypto enthusiasts, as a network for the burgeoning world of cryptocurrency and blockchain technology solves the problem Bitcoin and Ethereum struggled with by providing high-speed infrastructure that is highly scalable, efficient, fast, and environmentally friendly with zero transaction fee.

It is similar in many respects to Ethereum as a smart contract blockchain that enables the building and development of DApps or business apps. The notable difference and advantage it has over Ethereum is that it enables the processing of millions of transactions per second and requires zero transaction fees to carry out these transactions. On the other hand, Ethereum, the most popular smart contract blockchain, can handle just 15 transactions per second.

This is largely due to the consensus model deployed by the two blockchains. While Ethereum relies on Proof of Work (PoW), EOS operates on “Delegated Proof of Work, (DPoS).” More on this subsequently.

Components of the EOS Ecosystem

The EOS ecosystem is made up of two parts, namely, the EOSIO software and the EOS tokens.

What Is EOSIO Software?

EOSIO oversees and supervises the EOS blockchain network, and can be likened to the operating system of a computer. EOSIO is an authorized platform that is designed to enable developers to build decentralized applications. The operating system also manages and regulates EOS.

What Is EOS Coin?

The EOS coin is a digital currency recognized and used on the EOS network. As the native cryptocurrency of the EOS ecosystem, it is used for several purposes, such as:

• Carrying out transactions in the network

• For payment purposes

• Needed to build on the blockchain

Developers need to hold some percentage of the coins to be able to build on the blockchain. For instance, if you have a stake of as low as 1% of the network, then you own a 1% stake in the ecosystem. This qualifies you to a similar percent of the required computing capacity of the blockchains. You can utilize the network resources to build and run DApps and carry out transactions. This is not obtainable in most blockchains and underpins the reason why the network is cheap.

You might be asking, how do non-developers or ordinary network users benefit from holding EOS coins? Here is the answer!

Any coin holder or investor can decide to allocate or lease their ownership to other active participants, and in this case, developers who need it.

Furthermore, the coins can be bought and traded on various exchanges such as Gate.io, Bitfinex, YoBit, and Coinbase among others, and can be saved in numerous wallets including Ethereum Wallet, MyEtherWallet, as well as MetaMask.

Let’s look at how the EOS blockchain works!

How Does EOS Work? Delegated Proof of Stake (DPoS)

EOS offers high-speed transactions with the deployment and use of “Delegated Proof of Stake (DPoS)”. The DPoS is a consensus model that requires the services of a select few, known as ‘Block Producers’, to verify and authenticate each transaction on the blockchain. The Block Producers are selected through voting by coin holders or investors.

These investors hold a certain amount of EOS coin and the strength of their vote depends on the amount of EOS coin they are holding or better still ‘staked’, this simply means, the more EOS staked, the more voting powers.

Once Block Producers have been selected, their goal is to ensure that the blockchain is secured and blocks are added efficiently.

Also, there is a provision for Backup block producers and their function is to replace Block Producers that are not doing their job correctly. Again, coin holders or investors vote for this to happen.

However, block producers are paid in EOS coins for each EOS block produced and they work tirelessly to generate the required number.

Moreover, there is every possibility for block producers to aim for higher pay and thus strive to produce lots of blocks without due diligence, thereby undermining the entire process.

To ensure the production of desired results, a “mechanism caps producer” awards tokens so that the total annual hike in token supply will not exceed a certain percentage, for example, 5%.

Also, coin holders have the power to checkmate the activities or excesses of block producers and to vote them out if they are not performing optimally or unnecessarily demanding to earn more coins.

Nevertheless, the coin holders can vote to increase the pay for block producers based on the demand for more storage, that’s the creation of more blocks, leading to inflation. Thus, block producers would be required to produce extra blocks, but if the storage demand decreases, inflation will be lower, reducing the loss of value for EOS tokens.

In addition, DPoS used by EOS is a direct departure from what is obtainable in Bitcoin and Ethereum which uses PoW - a mining concept that uses individual computers (nodes) connected to the network to generate blocks. This system takes time for a block to be produced and added to the blockchain. The reason these blockchains are slow and congested!

Notable Features of the EOS Blockchain

• With EOS, management and control of DApp and business applications are made easy and free for everyone

• EOS is similar to Ethereum, as both networks are eligible to host dApps

• Unlike the Ethereum network, EOS is fast, easy to use, and solves the problem of gas fees

• It is user-friendly and highly scalable that is capable of supporting several commercial-scale DApps

• It is usable, thereby making the developer’s task of developing, controlling, and maintaining apps much simpler

• Its market value is permanently tied to Ethereum

• It is capable of processing millions of transactions per second making them attractive to users

• It can be kept in multiple wallets and available on several exchanges, such as Gate.io, Coinbase, YoBit, Bitfinex, etc.

The Objectives of EOS

The EOS system was mainly developed to assist decentralized applications (DApps), on a marketable scale and provides the inner functionality for businesses to build blockchain applications in a manner that is related to building web applications.

EOS strives to create a decentralized blockchain that can carry out transactions extremely fast and free of charge as well as help smart contracts.

Furthermore, the platform seeks to operate as an operating system that makes the development of DApps easy and simple.

To utilize this blockchain, it is of utmost importance that the developer holds the EOS coins and clearly understands how the protocol works.

It is important to note that EOS is not the only blockchain that seeks to solve the problem of speed, scalability, gas fees, etc. In the next subheading, we would consider what makes the blockchain special and perhaps different in the cryptocurrency world.

Why Is EOS Special?

EOS is unique because, unlike other blockchain platforms (Ethereum for example), it is capable of processing thousands of transactions within a second, meanwhile, Ethereum takes longer than seconds to process transactions. Although the EOS market value is tied to Ethereum, EOS is faster, easier, and better than Ethereum. It solves the issue of dApp’s limited availability of resources with its flexibility, scalability, and usability mechanism.

Criticisms

Despite the uniqueness of EOS, it equally faces criticism. It has been reported that the blockchain is supporting large token holders or whales and that it does not consider creating new DApps that will attract ordinary users to the blockchain.

Some equally doubt its ability to process millions of transactions in a second. However, the protocol comes off as very attractive to a large number of users.

Conclusion

As cryptocurrency adoption continues to increase, emphasis will be on how fast, scalable, environmentally friendly, and cheap a particular blockchain is. Crypto enthusiasts would seek blockchains that offer these features.

Also, developers would be requiring a blockchain that offers these features and more. An ecosystem that would enable them to create, host, manage, and effectively run their DApps.

The EOS blockchain appears to be very unique and easy to use, which makes it more attractive to developers as well as other users and provides high-speed infrastructure that’s scalable, fast, cheap, easy to build on, and user-friendly, taking care of the need to safeguard t