What is EOS? The Complete Guide to understanding EOS Blockchain
EOS or EOSIO took the blockchain world by storm when the first initial coin offering (ICO) was launched in July 2017. In fact, EOS established itself as one of the top 5 crypto-currencies within two years of launch, providing stiff competition to market leaders such as Ethereum as well as new entrants like Tron and NEO.
In this article, we will provide a general introduction to EOS and discuss its salient features.
During the course of our discussion, we will also touch upon the facets that make EOS one of the most promising and much sought after blockchain platforms for building scalable enterprise-level dApps. We have organized this article into the following sections to help structure our thought process:
- What is EOS?
- Key Features of EOS
- Technical Features of EOS
- Concept of Account and Wallet in EOS
- How is to Cost to Build a dApp on EOS Determined?
- EOS dApp Use Cases
What is EOS?
Let’s get started by first answering the most basic question that beginners may have – “what is EOS?” or “what is EOS Blockchain?”. EOS, also known as EOSIO, is a blockchain platform with a powerful underlying infrastructure to support the development of industrial-scale decentralized applications. The primary aim of EOS is to provide a user-friendly and business-friendly tool for building dApps, while overcoming some of the major challenges inherent in traditional blockchain platforms such as Ethereum.
Scalability is by far one of the biggest drawbacks that is holding back blockchain technology from becoming mainstream. For example, the rate of transactions currently possible with Ethereum is extremely low.
Furthermore, users have to pay the Gas fees to use any of the dApps built on the platform. This arrangement is highly counterproductive as users will be actively discouraged to use a system that requires them to pay a transaction fee at every step.
EOS has sought to address this deterrent by introducing vertical and horizontal scaling (done by block producers) in order to make applications on the platform free for users. Furthermore, it provides a secure and scalable platform to run thousands of transactions every second. If you are still wondering what is EOS blockchain and what benefits does it provide for your business, you’ll be thrilled to discover that it is a fully functional and secure blockchain platform for providing web services such as EOS smart contracts, cloud storage dApps, user authentication and so on.
In fact, the developers and promoters of EOS have specifically called out two of the biggest selling points of the blockchain platform:
- Complete removal of transaction fees.
- Ability to conduct millions of transactions per second.
Key Features of EOS Blockchain
There are several factors that can make or break a dApp among the mainstream audience and EOS has certainly ticked some of the key checkboxes to accelerate its rise to success.
In general, the following list comprises the key success factors for any dApp:
- Support for Large User Base
A dApp platform must be scalable enough for millions of users to use it seamlessly and simultaneously, without facing any performance issues.
- Free Usage
A dApp on any blockchain platform should be free for end users, with the ability to upgrade with ease. Any type of transaction fee would eventually discourage users from coming back to the dApp.
- Low Latency
A dApp should run with the lowest possible latency in order to provide a favorable user experience.
- Parallel and Sequential Performance
A dApp on any blockchain platform should offer the ability of parallel processing in order to distribute the workload and save time. Moreover, the dApp should allow for multiple sequential performances to avoid errors such as double spends.
So, what are the opportunities with EOS? The answer to this question lies in the gamut of features offered by the EOS blockchain platform, which are listed below.
Scalability (or the number of transactions executed per second) is a major concern for most blockchain platforms. At the heart of this problem lies the fundamental nature of blockchain transactions, which requires each and every node in the blockchain network to come to a consensus for anything to pass through.To provide a perspective on how it impacts user experience, let’s take Visa and Paypal as examples. Visa manages 1667 transactions per second while the latter manages 193 transactions per second. In contrast, Bitcoin only manages 3-4 transactions per second while Ethereum is slightly better placed with 20 transactions per second.
EOS, on the other hand, claims the ability to support millions of transactions per second owing to their distributed proof of stake (DPOS) mechanism.
If you remember, in 2016, a code vulnerability in Ethereum was exploited, which led to the siphoning off of almost one-third of the funds held by the Decentralized Autonomous Organization (DAO), a venture capital fund initiated by Ethereum. The entire system came to a standstill and Ethereum had to be hard forked, leading to two distinct blockchains each with its own cryptocurrency – Ethereum Classic (the blockchain that continued to use the old validation rules) and Ethereum (the blockchain with a new set of validation rules).EOS claims to provide security from such vulnerabilities because of the DPOS mechanism. In the case of dApp faults or attacks, the elected block producers can freeze the dApp until the system is restored.
- Permission Schema
EOS features a comprehensive permission system for creating custom permission schemes for various business situations. For example, you can create a custom permission to protect a specific feature of an EOS smart contract.It is also possible to split the authorities required to invoke an EOS smart contract function across multiple accounts with different authority weights. Such a permission system enables developers to build robust dApps without the necessity to reinvent the wheel.
All dApps deployed on the EOS blockchain platform are upgradeable. This means users can be authorized to deploy code fix, add/change features, and change application logic. Moreover, developers can iterate their application without the risk of being permanently attached to a mistake or bug.Nonetheless, it is also possible to deploy irreversible EOS smart contracts. But such decisions are based on the discretion of developers and not because of limitations imposed by the protocol.
- Less energy consumption
With DPOS being the consensus mechanism for validating transactions, EOS is a much less energy intensive platform compared to other consensus algorithms.
In EOS, the governance is maintained by setting up jurisdiction and choice of law, coupled with mutually accepted rules. This is achieved via the legally binding constitution. Each transaction in EOS requires the hash of the constitution attached to the signature, which essentially binds the users to the constitution.
- Parallel Processing
EOS enables parallel processing of EOS smart contracts through horizontal scalability, asynchronous communication, and interoperability. Let’s understand each of these terms further:
- Horizontal scalability
Unlike vertical scalability, where the transaction rate is increased by adding more processing power, in the case of horizontal scalability, transaction rate is improved by adding more systems and computers to the resource pool.
- Asynchronous communication
All the parties involved need not be present at the same time to have communication.
It refers to the ability of a computer system to exchange as well as utilize information meaningfully.
- Horizontal scalability
- Decentralized Operating System
Unlike Ethereum, which functions as a decentralized supercomputer, EOS has strategically positioned itself as a decentralized operating system. This is one of the underlying reasons for the vast array of business-friendly and user-friendly features that EOS offers.
Technical Features of EOS
In the EOS infrastructure, the EOS wallet can be considered as a repository of public-private key pairs, which are required to sign actions performed on the blockchain. EOS wallets and their content are managed by keosd (the EOS program that stores private keys). Wallets are accessed using cleos (the EOS command line tool).
It’s worth mentioning that there is no inherent relationship between accounts and wallets.
Concept of Accounts and Wallets in EOS
Consider any of the mainstream uses of the internet. Browsing, uploading, downloading, watching videos, playing games, preparing documents, storing and retrieving files, sending emails, chatting, and more.
For all of our common usage, we are dependent upon a client-server network. That is to say that the data is stored in a central computer or ‘server’ which the client computers (you, for instance) can access upon request. All the personal data that you provide on the internet (card details, DOB, and more) is stored on some server or the other.
The servers themselves are computer and cannot ‘make sense’ of our data. However, the human owners of these servers can and most of these servers are either owned by government agencies or by private corporations.
Given that, and cases like The Cambridge Analytica, it is quite evident that such data can be misused. That too, against the very owner of the data. Some, like Brian Behlendorf, have regarded this centralized structure as the internet’s ‘original sin.’
The blockchain technology, in general, and the Ethereum, in particular, exists to remedy this. Its vision, in short, is to build a ‘new internet.’ One that would be decentralized, as it was always meant to be. An internet where,
- Peer-to-peer networks would replace the client-server model.
- Any data would be owned only by its creator, and there would be no monopoly of data, at least.
- Applications won’t steal data in the name of ‘tailor-made’ services.
To use a clićhe, Ethereum wants to build a ‘world computer.’ The discourse around the Ethereum also has, time and again, featured the word ‘democratize.’
That is that. This is what the Ethereum strives to achieve. But how? What tools does it have? What pragmatic benefits does it bring to the table? How does it plan to overcome the inevitable obstacles? These are some of the obvious questions which some to the mind at this point.
So now, let us try and find the answers to these.
How is the Cost to Build a dApp on EOS Determined?
The cost of developing a dApp on EOS invariably depends on three primary factors – resource types, resource usage, and resource allocation. Let’s discuss these three factors in detail.
- Resource Type
In the case of dApps, three types of resources are consumed by accounts:
- RAM – State Storage
- Network – Bandwidth and Log Storage
- CPU – Computation and Computational Backlog
- Resource Usage
Blockchain state storage refers to the information which can be accessed from application logic. This includes data such as order books and account balances.
- Network Bandwidth
This is calculated as the average consumption in bytes over the preceding 3 days. Network bandwidth is temporarily consumed every time a user sends an action or transaction.
- CPU Bandwidth
This is calculated as the average consumption in microseconds over the preceding 3 days. CPU bandwidth is temporarily consumed every time a user sends an action or transaction.
- Resource Allocation
- Network, CPU — Staking
The Network Bandwidth and CPU Bandwidth are allocated based on the number of tokens held in a 3-day staking contract. With the passage of time, the consumed Network and CPU bandwidth free up automatically and one can use the same staked tokens again.
RAM needs to be purchased at the market price which follows the Bancor Algorithm (established on the Bancor Protocol for automatic price determination and an autonomous liquidity mechanism for tokens on smart contract blockchains).Unlike Network and CPU bandwidth which gets freed up automatically, RAM only gets freed up when data is deleted from the account state. Once freed up, one can resell the RAM at the market price.
- Network, CPU — Staking
EOS dApp Use Cases
Ever since its launch, EOS has been received very positively by the blockchain community and a large number of applications has already been built on the platform. We’ll discuss a few of these applications here to provide a perspective on the range of uses.
- Ubuntu Energy Ledger
The Ubuntu Energy Ledger is a clean energy marketplace developed on the EOS blockchain. The application aims to provide cost-effective renewable energy to Africa and power 4 billion households by 2030. The community depends on micro loans and investors to help fund small businesses, people’s homes and launch Africa on the path of green energy.
- All_ebt Food Stamps
All_ebt issues an EBT virtual card built on the EOS blockchain platform, which aims to help low income communities solve problems around financial inclusion and access to healthy food. It needs mention that almost 45% of the population in Puerto Rico, including families, mothers and young children, the elderly and disabled, sustain on Food Stamps (22% in the U.S.). However, they have been segregated and sidelined from the digital economy because food stamps don’t work online.
Codenamed ‘DACTROIT’, EOS Detroit’s marquee product is a decentralized autonomous community (DAC) that enables communities with the tools to own and operate a complementary currency and high-speed internet access. This is an experimental initiative to visualize and promote alternative ways for people to come together to share their spaces, resources, and relationships.
At present, EOS or EOSIO is the most widely used blockchain platform in the world. All the decentralized applications built on the blockchain offer services with real-world utility and benefits. EOS leads the charts not only in terms of the development of gaming and gambling applications/software but also for a wide range of other applications for purposes such as ride-hailing, music sharing, fitness tracking, digital payment and more.
EOS dApps have easily emerged as the safer, faster and more affordable alternatives to traditional blockchain apps. Based on the current trends, EOS has emerged as a true champion of blockchain technology and can provide immense benefits for a wide range of business needs in the times to come.
We hope that this write-up on EOS has provided you with a basic understanding of the various aspects of EOS/EOSIO blockchain technology. If you have a business case for a dApp that can be implemented using EOS or you would like to further develop a nascent idea in collaboration with a blockchain expert, get in touch with us and our team can help you.
All information will be kept confidential.
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