Introduction

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. Also, it could not solve the problems 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). It was uniquely developed to support secure access and authentication, permissions, data hosting, usage management, and communication between DApps and the Internet.

EOS, which stands for Electro-Optical System, is a decentralized operating system based on blockchain technology. It is used to create, organize, and operate business applications or decentralized applications.

It provides 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 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, environmentally friendly, and has zero transaction fees.

It is similar in many respects to Ethereum as a smart contract blockchain that enables the building and development of DApps or business apps. Its notable advantage 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 comprises two parts, namely, the EOSIO software and the EOS tokens.

What Is EOSIO Software?

EOSIO oversees and supervises the EOS blockchain network, similar to a computer’s operating system. It is an authorized platform designed to enable developers to build decentralized applications, and 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 build on the blockchain. For instance, if you have a stake of as low as 1% of the network, 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.

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 by coin holders or investors through voting.

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 that the more EOS staked, the more voting powers.

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

Also, there is a provision for Backup block producers, who replace Block Producers who 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, block producers can aim for higher pay and thus strive to produce many 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 can checkmate the activities or excesses of block producers and 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, which means creating 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, the DPoS used by EOS is a direct departure from what is obtainable in Bitcoin and Ethereum, which use 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, which is why 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.

EOS RAM

EOS RAM is a critical resource in the EOS blockchain, used to store smart contracts, account data, and other related information. Due to its limited supply, users must either purchase or lease RAM, with its price fluctuating based on market supply and demand. On December 17, 2023, the EOS ecosystem decided to halt RAM inflation, capping the total supply at 390GB. This move increased the scarcity of RAM, sparking an investment surge within the EOS community, and at one point, the price skyrocketed by sixfold.

The characteristics of EOS RAM are akin to real-world land resources; it can be freely traded within the ecosystem, and its role in promoting ecosystem diversity has become increasingly prominent. For example, the popular dApp on EOS, Upland, requires 6.7GB of RAM to operate. The heavy usage of such dApps has driven up the demand for RAM, highlighting its critical role in the EOS network and expanding dApp functionalities. Additionally, NFTs on EOS EVM (Ethereum Virtual Machine) have become significant consumers of RAM, as their operational efficiency relies on large amounts of RAM.

The EOS Network Foundation has implemented a series of measures to support ecosystem development. These include the introduction of Wrapped RAM (WRAM) to improve its tradability and significant updates to the RAM system, such as transferable RAM, RAM logging and notifications, secure RAM purchases via the “Buy RAM for Self” feature, and RAM tokenization on EOS. These updates aim to enhance the flexibility, efficiency, and overall utility of EOS RAM.

EOS RAM Price Calculator

EOS utilizes a system that adjusts RAM prices based on availability, supported by the Bancor Automated Market Maker (AMM). This unique mechanism ensures that RAM prices are dynamically adjusted in real time as the amount of EOS locked in RAM changes. The core of the Bancor AMM is a mathematical formula that maintains a balance between the available supply of RAM and the EOS invested in it, influencing the price based on this relationship.

EOS exSat

exSat is a bridging layer that connects Bitcoin’s native layer with second-layer scalability solutions within the Bitcoin ecosystem. By integrating multiple blockchain technologies, exSat overcomes challenges related to Bitcoin’s scalability. EOS plays a key role in this vision, as the exSat tech stack combines Bitcoin miners’ Proof of Work (PoW), Bitcoin staker validators’ Proof of Stake (PoS), and an EOS-supported Delegated Proof of Stake (DPoS) data consensus extension protocol, leveraging the advantages of EOS block space for on-chain storage.

EOS RAM is critical for data parsing and storage and is becoming increasingly popular as an essential tool for Web3 developers. In the exSat system, RAM enables multi-layer indexing. Validators and synchronizers within the system collaborate to create trust and robustness in PoW by utilizing real Bitcoin miner information. PoS mechanisms validate the correctness of this information, which is then written into EOS RAM.

exSat allows users to mint wrapped Bitcoin (wBTC), enabling them to interact with scalable solutions, including applications, DeFi platforms, and more. In the future, exSat’s solution will be open to other second-layer networks, offering publicly accessible indexed data. exSat’s EVM smart contracts will allow anyone to access UTXO data, showcasing another example of EOS’s performance and scalability, highlighting the ecosystem’s flexibility and potential.

New EOS Token Model

The EOS network has introduced a new token economic model, marking a significant shift in its economic structure. The primary change is the transition from an inflationary model with a cap of 10 billion tokens to a fixed supply of 2.1 billion EOS tokens. This change aims to create a more stable and predictable economic environment, similar to Bitcoin’s model.

A key feature of the new model is the introduction of a quadrennial halving cycle, which helps regulate the flow of new tokens into the market. This mechanism is designed to prevent inflation and ensure supply stability. Additionally, the model includes high-yield staking rewards and adjustments to staking lock-up periods, encouraging long-term holding and active participation in the network.

The EOS Network Foundation (ENF) is critical in managing this new economic framework. It has allocated specific funds for various initiatives, such as 350 million EOS tokens for the RAM market to ensure liquidity and support market growth. Structured rewards have also been established for block producers and strategic funding for the operations and development projects of ENF, EOS Labs, and other key stakeholders. These changes are expected to make the EOS ecosystem more robust, sustainable, and attractive to developers and users.

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 similar 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 grow, future users will prioritize comparing different blockchains based on speed, scalability, environmental impact, and cost. Crypto enthusiasts will seek blockchains that offer as many of these features as possible.

Developers have similar needs, but they also demand additional functionality—ideally, an ecosystem that allows them to create, host, manage, and efficiently operate their decentralized applications (DApps).

The EOS blockchain stands out in this regard. First, it is easy to use, which appeals greatly to developers. Additionally, it is user-friendly, offering fast and low-cost transactions. Finally, EOS provides a high-speed infrastructure while also meeting environmental sustainability goals, making it a compelling choice for both users and developers alike.