The focus of the company behind this project is to design a network that would support industrial-scale decentralized applications at amazing speed, fees excluded. Sounds amazing right?
Keep reading to find out how EOS works and whether or not it sounds like a promising investment to make.
What is EOS
EOS.io is an open-source blockchain protocol for developing advanced decentralized applications (dApps) on a globally scalable blockchain.
EOS was able to raise up to $4 billion through its ICO that was launched in 2017 and ran for a whole year. This was done so that more people could find out about the project.
Block.one, a leading company for blockchain-based software based in the Cayman Islands, is the one backing up this project. David Larimer, the co-founder of BitShares, is the Chief Technology Officer of the company and the main person behind EOS.
Even though EOS is still in its early stages, and hasn’t implemented all its protocol features yet, the vision of the company was presented in the EOS.IO Technical White Paper, released in 2018 on GitHub.
EOS Blockchain Requirements
So, how does EOS plan on becoming the most performant blockchain to date?
In its white paper, the EOS team announces a next-generation blockchain technology that “may ultimately scale to millions of transactions per second, eliminates user fees, and allows for quick and easy deployment and maintenance of decentralized applications, in the context of a governed blockchain.”
Other blockchain networks usually charge large transaction fees and use mining mechanisms that require an incredible amount of CPU which prevents them from achieving widespread use. EOS proposes the following requirements:
- Support Millions of Users.
The most important thing a network should do is be able to handle millions of active users. Just think of how many people use some of the top 5 widespread applications such as Facebook, Amazon, Uber, or Airbnb. Decentralized applications should be able to deal with such a huge clientele too.
- Free Usage.
The application would be more widely accepted if it doesn’t require users to pay in order to use the services. Therefore, EOS should provide a platform where developers can create free software and create their own monetization strategies afterward.
- Easy Upgrades and Bug Recovery.
Any blockchain platform should support continual software upgrades. Developers should have the option to perform such updates effortlessly to their smart contracts or decentralized applications. Moreover, if EOS experiences bugs, the network must be ready to solve these issues in advance.
- Low Latency.
Only the lowest possible latency is acceptable! Good customer rapport is built by providing fast feedback.
- Parallel and Sequential Performance.
The execution of a large scale application is only possible with a platform that supports both parallel and sequential performance. The former is needed to divide and distribute the workload across a number of CPUs.
Other applications require a sequential performance. Sending multiple transactions via a crypto exchange is just one example.
EOS Consensus Algorithm
You also might have heard that most of these exchanges are planning to switch to another mechanism called Proof of Stake (PoS) as a more cost-effective and secure alternative.
To meet the requirements listed above, EOS uses a variant of PoS called Delegated Proof of Stake (DPoS). How does it differ from traditional PoS?
First of all, instead of miners or validators, here we have “producers”. Anyone who owns EOS tokens can choose the block producers through a continuous approval voting system. Accordingly, if you want to be a block producer, you have to earn the EOS holders’ votes.
Every 0.5 seconds, a new block is produced on the EOS blockchain. Only one producer can create a block at a given point in time. Moreover, blocks are produced in rounds of 121 with 21 producers chosen by the token holders at the start of each round.
If a producer misses his/her scheduled time, then that block is skipped and a gap is created. If a producer hasn’t created a new block in the last 24 hours, that producer is suspended until he/she notifies the network that they’re ready to produce again. This way the network protects itself by eliminating unreliable members.
Blockchains using DPoS usually have 100% block producer participation. The average transaction confirmation time is 0.25 seconds after it has been broadcast. A transaction is considered reliable if at least 15/21 producers or a ⅔ majority has validated it.
Another level of protection is added with the Byzantine Fault Tolerance:
Byzantine Fault Tolerance is added to traditional DPOS by allowing all producers to sign all blocks so long as no producer signs two blocks with the same timestamp or the same block height. Once 15 producers have signed a block the block is deemed irreversible. Any byzantine producer would have to generate cryptographic evidence of their treason by signing two blocks with the same timestamp or blockheight. Under this model a irreversible consensus should be reachable within 1 second. (EOS White Paper)
Eliminating Transaction Fees
Just like any other blockchain, EOS has its own native token that goes under the same name. What makes this token different is that it’s not used for paying service fees like GAS is used by Ethereum or NEO, for example.
On those platforms, if you create a decentralized application where one of the things the users can do is, let’s say, send friend requests, the users will be required to spend some GAS to perform the function.
On EOS, you earn ownership over the network. If you own a 5% stake in EOS coins, it means you own 5% of the EOS network and computing power which is how you use the network’s services without paying transaction fees as such.
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