What is EOS? The Complete Guide to understanding EOS Blockchain
EOS or EOSIO shook the blockchain world when the first initial coin offering (ICO) was launched in July 2017. EOS established itself as one of the top 5 crypto-currencies within two years of launch. It provided intense competition to both the market leaders (such as Ethereum) and new entrants (like Tron and NEO).
In this article, we will provide a general introduction to EOS, discuss its prominent features, and the aspects that make it a promising blockchain platform for building scalable enterprise-level dApps.
This article answers the following questions:
- What is EOS?
- What are the key success factors for a dApp platform?
- What are the technical features of EOS
- What is the concept of Account and Wallet in EOS
- How is to Cost to Build a dApp on EOS Determined?
- What are the EOS dApp use cases?
What is EOS?
EOS/ EOS.IO is a blockchain platform to develop industrial-scale decentralized applications. It has a robust underlying infrastructure to support this process.
The primary aim of EOS is to provide a user-friendly and business-friendly tool for building dApps while overcoming the challenges of traditional blockchain platforms like Ethereum.
Scalability is one of the most significant drawbacks of 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 is highly ineffective as users won’t be willing to use a system requiring them to pay a transaction fee at every step.
To make its applications free for users, EOS employs vertical and horizontal scaling (done by block producers). Furthermore, it provides a secure and scalable platform to run thousands of transactions every second. It is a fully functional and secure blockchain platform for delivering web services such as:-
- EOS smart contracts
- Cloud storage dApps
- User authentication, etc.
The developers and promoters of EOS have specifically called out this platform’s most significant selling points:
- Complete removal of transaction fees.
- Ability to conduct millions of transactions per second.
Firstly, let’s understand the factors that contribute to the success of a dApp platform before we discuss the EOS platform in a detailed way.
What are the key success factors for a dApp platform?
Several factors can make or break a dApp among the mainstream audience.
In general, the following list comprises the key success factors for any dApp:
- Support for Large User Base
The dApp platform must be scalable for millions of users to use it seamlessly and simultaneously, without facing any performance issues.
- Free Usage
The dApp on any blockchain platform should be free for end-users, with the ability to upgrade with ease. Any transaction fee would discourage users from using the dApp again.
- Low Latency
The dApp should run with the lowest possible latency to provide a good user experience.
- Parallel and Sequential Performance
A dApp on any blockchain platform should offer parallel processing to distribute the workload and save time. The dApp should also allow for multiple sequential performances to avoid errors like double-spending.
What are the technical features of EOS?
So, what are the opportunities with EOS? The answer comprises of technical features offered by the EOS blockchain platform, which are listed below.
Scalability (or the number of transactions executed per second) is a significant concern for most blockchain platforms, because of the blockchain transactions require each node in the network to come to a consensus for anything to pass through. This negatively impacts the user experience.
For example, Visa manages 1667 transactions per second, while Paypal manages 193 transactions per second. In contrast, Bitcoin only works 3-4 transactions per second, while Ethereum is slightly better with 20 transactions per second.
EOS claims the ability to support millions of transactions per second owing to their distributed proof of stake (DPOS) mechanism.
In 2016, a code vulnerability in Ethereum was exploited. It 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. Ethereum had to be hard forked, leading to two distinct blockchains with its own cryptocurrency –
- Ethereum Classic – the blockchain that continued to use the old validation rules
- Ethereum – the blockchain with a new set of validation rules.EOS claims to provide security from such vulnerabilities because of the DPOS mechanism. In 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 to create 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. You can also split the authorities required to invoke an EOS smart contract function, across multiple accounts with different authority weights. This feature enables developers to build robust dApps without reinventing the wheel.
All the dApps deployed on the EOS blockchain platform are upgradeable. It means users can be authorized to deploy code fix, add/change features and change application logic. Moreover, developers can renew their applications without being permanently attached to a bug.
It is also possible to deploy irreversible EOS smart contracts. But such decisions are based on the discretion of developers and not because of protocol restrictions.
- Less energy consumption
EOS is a less energy-intensive platform compared to others, due to DPOS.
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 smart contracts through:-
- Horizontal scalability
In horizontal scalability, the transaction rate is improved by adding more systems and computers to the resource pool. In contrast, vertical scalability increases the transaction rate by adding more processing power.
- 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 and utilize information meaningfully.
- Horizontal scalability
- Decentralized Operating System
Ethereum functions as a decentralized supercomputer. In contrast, EOS is a decentralized operating system that assists EOS in offering a vast array of business-friendly and user-friendly features.
What is the concept of Accounts and Wallets in EOS?
In the EOS infrastructure, the EOS wallet can be considered a store of public-private key pairs required to sign actions performed on the blockchain.
Keosd is the EOS program that stores private keys and manages EOS wallets. Wallets are accessed using Cleos (the EOS command-line tool).
EOS follows a different structure for accounts in comparison to other cryptocurrencies. An account in EOS is like an on-chain identifier that has access permissions associated with it.
EOS accounts can be owned by several people depending on the permissions. An EOS account has two inherent permissions by default:-
- Owner – This permission indicates the owner of the account.
- Active – This permission is used for funds transfers, producers’ poll and other top tier changes.
There is no inherent relationship between accounts and wallets.
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, accounts consume three types of resources:
- 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. It includes data such as order books and account balances.
- Network Bandwidth
Network bandwidth is temporarily consumed every time a user sends a transaction. It is calculated as the average consumption in bytes over the preceding three days.
- CPU Bandwidth
CPU bandwidth is temporarily consumed every time a user sends an action or transaction. This is calculated as the average consumption in microseconds over the preceding three days.
- 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. The consumed Network and CPU bandwidth free up automatically with time and you can use the same staked tokens again.
RAM needs to be purchased at the market price, which follows the Bancor Algorithm.
Bancor Algorithm was established on the Bancor Protocol for tokens on smart contract blockchains for an autonomous liquidity mechanism and automatically determined prices. Network and CPU bandwidth get freed up automatically. But, RAM only gets freed up when data is deleted from the account state, after which you can resell the RAM at the market price.
- Network, CPU — Staking
What are the EOS dApp use cases?
The blockchain community has adopted EOS positively. Numerous applications have 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 microloans 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, aiming to help low-income communities solve problems around financial inclusion and access to healthy food. 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 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 is leading in terms of the development of gaming and gambling applications/software and a wide range of other applications for purposes such as ride-hailing, music sharing, fitness tracking, digital payment and more.
EOS dApps have quickly 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 EOS/EOSIO blockchain technology’s various aspects. 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.
Facebook has recently announced about its Libra Coin that will be launched in the first half of 2020 and it will be called as a digital stablecoin.
Consumer Token Offering is a new fundraising mechanism based on the blockchain that allows users to use the consumer token to purchase product or services.
The term Initial Exchange Offering implicates execution of token sales on the crypto exchange rather than conducting it on the issuer’s website.