EOS has been a blockchain protocol that has gotten notability for their year-long crowdsale but more recently, I’ve been hearing from investors about the traction of decentralized applications building on the platform. I decided to look into it a bit further and give both a quick primer on EOS and a snapshot of the activity.
• EOS is a blockchain protocol for running Dapps. It uses smart contracts and peer-to-peer systems to distribute processing jobs among a network of computers rather than using a centralized system. All of its operations are displayed on a public blockchain that’s cryptographically secured.
• EOS’s main advantages over other Dapp platforms (Ethereum, Tron, Graphene, etc.) are its scalability, parallel processing capabilities, lack of transaction fees (no gas), and its unique decentralized operating system that makes Dapp development easier than ever.
• EOS’ core use case is building decentralized marketplaces to exchange assets of various sorts––personal information, financial capital, virtual assets, etc. Still, like most blockchains, the largest user market on EOS is gambling, with over 67% of users making transactions on the platform for gambling.
• In late 2018, the price of EOS surged 25% and the blockchain hit a market cap of $2.5 billion. The total value of all transactions processed over EOS is almost at $3.5 billion, and EOS has become the second-most popular platform for supporting Dapps.
What is EOS?
EOS (also known as EOS.io) is a blockchain platform that powers Dapps. It provides most of the traditional computational capabilities including CPUs, GPUs, RAM, hard-disk memory implemented through a decentralized peer-to-peer network built off of smart contracts.
What is a Dapp?
Dapp is short for decentralized application. All computer applications have two main components: the frontend, which the user directly interacts with, and a backend that generally runs on centralized servers (AWS, Azure, Google Cloud, etc.). Dapps maintain the frontend aspect of an application, but rather than running their backend on a centralized server, they run on a peer-to-peer network powered by all computers that use the Dapp. Computing power and resources are distributed among all the computers, or nodes, on the Dapp. Nodes work together to power the Dapp through the use of smart contracts. All the of the Dapp’s operations are recorded on a public blockchain and the Dapp uses a cryptographic token to maintain the security and privacy of its users.
Dapps either build their own platform and run on that platform or use a third-party platform like Ethereum or EOS to power their processing.
What are popular Dapp platforms?
The list of popular Dapp platforms includes EOS, Ethereum, Tron, STEEM, ONT, NEO, and NAS.
Generally, Ethereum has been the most popular Dapp platform. Ethereum has always had first-mover advantage and their incomparable smart-contract capabilities have made them the lone wolf ahead of the pack. But Ethereum’s growth is limited by its low transaction speed, which limits the latency of Dapps that run on its protocols. Ethereum’s gas (essentially a transaction fee) is fairly hefty and has also disincentivized developers from using it.
What makes EOS different?
1. Scalability. EOS is the popular choice for Dapps that target mainstream users because they use an algorithm called distributed proof-of-stake (DPOS) to compute consensus. Most platforms use other algorithms like proof-of-work (POW) to compute consensus that require agreement among almost all of their nodes––incredibly costly when you have millions of computers on the network. Ethereum, for instance, runs at 25 transactions/second. EOS’s DPOS architecture allows Dapps on the protocol to scale easily and quickly.
2. Parallel Processing. EOS is architected with smart contracts so that processing is distributed evenly among many different processors to reduce processing time and improve latency. This provides a comparative advantage against other Dapp protocols like BitShares and Graphene which have poor smart-contract processing.
3. Low Cost. Almost all Dapp protocols charge a transaction fee (oftentimes referred to as gas, especially on Ethereum) to pay back miners that help support the network. EOS doesn’t charge any transaction fees for Dapps, meaning that Dapps can run and scale on the protocol without worrying about paying fees to an external service.
4. Decentralized Operation System (OS). EOS’ main advantage over Ethereum lies in its main feature as an operating system, not just a processor, that runs on a decentralized network. Ethereum powers processing by distributing computing work among all the nodes on the work. EOS does the same, but also runs an operating system (think Windows or macOS) for Dapp developers and users to interact with.
What have people been doing with EOS?
Here are a few interesting Dapps built on top of the EOS protocol:
• Everipedia: This was one of the first large Dapps built on EOS (traditionally built on Ethereum). Everipedia implements Wikipedia on the blockchain, tokenizing contributions to the knowledge base and rewarding contributors in their decentralized systems. It also includes more multimedia content. The co-founder of Wikipedia, Larry Sanger, recently joined Everipedia as Chief Information Officer.
• EOSfinex: This extension of Bitfinex plans to apply their financial exchange model to decentralized exchanges like Ethereum and now, EOS. EOSfinex extends the traction and established market experience of Bitfinex to the speed, scalability, and operating system of the EOS protocols, making it a promising project.
• WAX Project: WAX stands for Worldwide Asset Exchange. It’s a decentralized global market place to trade assets, specifically targeting gaming that has virtual assets worth more than $50 billion. The WAX platform enables anonymous, secure trading of digital assets; one of their initial trading platforms (Opskins) has already seen 150+ million transactions.
• EOS Knights: EOS knights is one of the first mobile games that runs on the EOS protocols. The platform powers trading of digital, gamified assets. It currently ranks at #2 on the Dapp Rankings list made by Dapp Radar.
• Medipedia: Also known as MEP, this application implements peer-to-peer matching and consultation for health tourism with the ultimate goal of removing the middle-man in many of these services. Medipedia experienced incredible growth and traction during its initial deployment on Ethereum but has since moved to EOS, citing concerns with Ethereum’s speed and scalability.
The vast majority of use cases for EOS come down to building decentralized marketplaces to exchange data, which includes things like knowledge, personal data (advertising information, online profile, healthcare information), capital, and assets (physical and digital). Dapps that target huge markets, large transaction volumes, and high-speed processing generally are moving towards EOS to power their architecture. Like most blockchains, gambling is the largest player on EOS blockchains, with over 67% of all users using EOS for betting. 10% use EOS for financial services, 5% use EOS-powered games, and 2% use other tools.