ICO Review of: EOS (EOS tokens on Ethereum blockchain)
EOS is going to be one of the hottest ICOs on Ethereum network. Even though, Ethereum is just a place for EOS to fund (EOS will have its own blockchain like Omise Go), I expect Ether price will be supported because EOS will conduct its crowdsale for the whole year! Due to its crowdsale model, I expect that everyone who wants to buy tokens, will be able to do this. The most important promised feature of EOS is its scalability. The numbers are really amazing. Permission management is also very interesting feature of the EOS blockchain. I hope that the developers will be able to deliver promised features and we all will not have a situation when the founders underdeliver. As you know, its main competitor is Ethereum, so expect a huge ROI in case of EOS success, but it certainly needs time to prove itself. Let’s start.
Block.one will be responsible for writing all the code for EOS. Core team consists of well-known blockchain and software developers.
• Brendan Blumer is CEO. He was involved in the blockchain industry since 2014. Brendan has built businesses including trading of virtual currencies in MMORPGs in the US, okay.com in Hong Kong and 1Group in India
• Daniel Larimer is CTO. He is focusing on innovative technologies ranging from virtual reality simulators to second-generation crypto currencies, most notably BitShares. Dan is the inventor of the widely adopted “Proof of Stake” and “Decentralized Autonomous Corporations” concepts
• Brock Pierce is Partner. He is a venture capitalist and entrepreneur who pioneered the market for digital currency in games and has raised more than $200 million for companies he founded. Brock is the Chairman of the Bitcoin Foundation, and co-founder of Blockchain Capital, among others.
• Ian Grigg is Partner. He is a financial cryptographer who has been building cryptographic ledger platforms for over 20 years, Ian is the inventor of the Ricardian Contract and the co-inventor of Triple-Entry Accounting.
• Block.one is the company that will develop the EOS blockchain. This company is based on Cayman Islands. By the way, do not forget to read the terms of sale. As always, the law will not be on your side if the company underdelivers or create a fraudulent event.
• Fenbushi Capital, Blockchain Capital, Li Xia Lai, Michael Cao, Bitfinex, Yunbi, Aurora Investment advisors, Hyperchain Capital participate in EOS creation. All participate differently, some invest, some provide expertise or doing both as I understand.
EOS will be an open source platform for scalable decentralized applications. Yes, scalability matters a lot when it comes to mass usage of decentralized applications. As you can see, Ethereum network becomes congested from simple ICOs, imagine when DAPPs go mainstream. Scalability is the first place in agenda for every DAPP hosting platform now,
Block.one, the Cayman Islands company, is willing to solve the major drawbacks of DAPP platforms: scalability issues and high fees by creating its own blockchain, using up-to-date blockchain technologies.
EOS tokens will be the native cryptocurrency for its platform with limited usage. Why limited? I expand on it later, but to be honest, I was really disappointed on how EOS tokens are used. Maybe I don’t get it now and later this functionality will prove to be more valuable but for now it is a major turn off for me in terms of investment attractiveness.
Blockchain of EOS uses Delegated Proof of Stake consensus mechanism, which proved to be more scalable than POW. Basically, EOS tokenholders vote for the block producers, which mine blocks and decide on major events in the EOS ecosystem.
Using the technology of vertical and horizontal scaling, EOS is expected to scale to millions of transactions per second. This is a huge thing and it is crucial for the block.one to deliver on this promise.
ICO is conducted on Ethereum (ERC-20 tokens issued), but EOS will have its own blockchain. It is very important that Ethereum has become the place to fund not only for DAPPs but for other blockchains. Due to this, ether is becoming literally like Bitcoin in terms of currency functionality.
EOS wants to concentrate on mass adoption of its technology by large companies. Developers stated this multiple times in their whitepaper.
There is no transaction fee on EOS, developers will need EOS tokens to make DAPPs operational. Also, accounts need to have some EOS tokens to be operational and to interact with the network.
EOS is going to try to penetrate a new kind of a market. The market for DAPP hosting platforms.
Those are the current market numbers: ETH capitalization stands at $29 bln., ETH classic at $2 bln., Waves at half a billion, and Lisk at $335 mln.
EOS will compete with Ethereum, Ethereum classic, Waves, and Lisk platforms.
Timing is very important, because platforms could make a giant leap while EOS is being developed. Especially, considering how much effort Ethereum foundation puts into scalability research and implementation. During EOS development, Ethereum could become the largest and only player.
Developers! That is the blood of decentralized applications. Ethereum has already accumulated critical amount of developers. And developers will be reluctant to change platform if Ethereum becomes scalable. There is simply going to be no demand for other DAPP hosting platforms. That must be taken into serious consideration by investors.
Market is still ready for new products, but they must outweigh the existing ones. Can EOS become better than ETH? If yes, I hope the developers of EOS will be able to deliver before Ethereum becomes the giant that cannot be taken down due to its advantages and critical mass of needed resources.
In case of success, ROI is forecasted to be lucrative but then it is important that this project do not get like a billion-dollar funding. Smart contracts-enabled cryptocurrencies are here to stay.
Profit generation comes from holding EOS tokens for now.
This is the table with possible valuations of EOS based on the main competitors. Assuming that there is going to be 1 bln. tokens. I hope EOS doesn’t get crazy valuation at least until the actual launch of the blockchain.
Profit generation comes from the value appreciation of EOS tokens. The more users and developers, the more valuation.
Platforms with similar functionality have huge valuation. As you can see, if EOS reached valuation of Ethereum, each token would cost $30.
Growth of the EOS network will impact the price of network tokens.
There are no transaction fees on EOS, so accounts and DAPPs need tokens to work. Holding certain amount of tokens is like having bought % in EOS computational power.
There is going to be no substantial growth until EOS blockchain is introduced. I expect market to be as crazy as it always is, but this project is simply not ready. Wait until it hits the exchanges and buy it when it dips. That’s not investment advice =).
Platform will have up to 5% annual inflation to reward block producers and DAPPS. 3 most popular smart contracts of the EOS network will get inflationary tokens as incentive. Take that into consideration. Also, it seems like this inflation is here to stay, it is a core incentive mechanism of EOS platform.
EOS is Delegated Proof of Stake blockchain.
Let’s cover the main points of EOS here. A little bit of Delegated proof of stake and main features of EOS.
First interesting thing is Continuous approval voting system. Basically, those who hold tokens select block producers and anyone may become one having enough capacity to do so. If block producer misbehaves, you can change him. By the way, block producers, having 81% votes, can freeze accounts, update smart contracts, and propose hardforks.
There is going to be 3 seconds block time (maximum 6 seconds).
21 block producers are chosen each round. Top 20 producers are automatically chosen and the last producer is chosen proportional to their number of votes relative to other producers.
Longest chain is chosen if the fork happens.
What about the features? You can upgrade smart contracts easily on EOS blockchain.
There is going to be free usage of the platform, you only need tokens on your balance to operate on this blockchain.
Users demand fast response from services they use, so EOS will try to make transaction confirmation in less than 1.5 seconds.
Sequential performance means that such applications as exchanges will be able to use EOS without any problems on chain.
Parallel performance gives the opportunity to divide workload across multiple CPUs and computers.
Project distributes the majority of tokens to investors.
EOS is ERC-20 token on Ethereum blockchain until EOS blockchain is created. Did I already mention that it is good for ether price? =)
ICO starts on 26th of June 2017, ends on 1th of June 2018, almost 1 year. Yep, they did that to avoid the network congestion and truly let everyone participate.
Project will distribute 90% of its tokens to investors. Quite generous.
ICO is divided into two phases, period 1 distributes 20% of EOS, period 2 distributes 70%. Strange ICO mechanism but effective, in my opinion.
Phase 2 is split into 350 consecutive 23 hours periods, selling 2 mln. EOS tokens each period.
Block.one will use ICO proceeds at its own discretion. It didn’t specify the areas they are going to concentrate on, but I guess it is mostly R&D, because, based on what I have read from their terms and conditions, they are protected against US laws and angry investors. BTW, US investors are restricted from participating in EOS ICO.
Team is advantage. The co-founder of BitShares and Steemit platfroms is a huge plus.
There is a big support from big digital asset exchanges and blockchain investment funds.
Existing market demand for scalable blockchains.
The biggest disadvantage is the time it will take to create EOS blockchain. Many things can happen in the meantime.
Ethereum is close to implement many scalability solutions that could really mess with the valuation of EOS. Also, blockchain developers are hyped about Ethereum now. Other blockchains are not that popular and it will be real pain in the ass to attract developers to other platforms.
BTW, soon there will be steemit post with my additional thoughts and analysis of EOS , be sure to subscribe https://steemit.com/@cryptoportfolio/