EOS’s dreams of reaching mass adoption as the home of dApps are obstructed by the inefficiencies of the EOS resource economy. The EOS blockchain replaced gas fees with three network resources: CPU, NET and RAM.
CPU and NET are regenerable resources that can be acquired by staking EOS tokens, while RAM is purchased from a smart contract at a price set by the Bancor algorithm. Users have become increasingly frustrated with RAM, a non-regenerable resource trading in a free market that has been especially susceptible to hyperinflation by market forces. Furthermore, the severe scarcity of RAM has hampered the expansion of dApps on EOS with complex data storage requirements. Remedying the RAM issue would ensure EOS’ place as the leader in the race towards Web 3.0.
Dreaming of dApps
In the beginning, there was Bitcoin, the sole blockchain designed as a digital, peer-to-peer alternative to cash. Ethereum went one step further by introducing the smart contract. With this technology, not only would the entire network agree on the updated balances of each node on the network, but they would also reach a consensus on the state of computations done by each node. Smart contract technology enables us to reimagine an internet based on applications that run without a centralized server. However, decentralized applications have been prevented from scaling by the poor transaction processing capacity of the underlying blockchain protocols.
Launched in June of this year, EOS is a scalability upgrade on existing blockchains with significantly better block production statistics such as transactions per second and daily active users. Yet the RAM markets severe limitations are preventing sophisticated dApps, such as ride-sharing services and social networking sites, from materializing at scale on EOS.
The Current RAM System is Broken
Instead of storing smart contract state data, such as account balances and user profiles, directly on an enormous blockchain, EOSIO uses RAM to store the account information required for the development and production of decentralized application. Users and developers can purchase RAM from the system contract in exchange for EOS, selling their excess RAM back to the system at a price determined by the unique Bancor algorithm. While a free market for RAM facilitates more efficient price discovery, it is also likely to entice speculators into the system, causing dramatic spikes in the price of EOS RAM.
In July, following the mainnet launch, the price of EOS RAM shot up to over $4 million a gigabyte, while ordinary RAM purchased elsewhere a mere $11 per GB. Since all the information needs to be replicated across every node on the network, the cost of adding a gigabyte of RAM has to be multiplied by the number of nodes. Furthermore, precious RAM resources are limited in supply, with a current total of 93GB available for the entire network. All it takes is a handful of dApps needing gigabytes of RAM and the supply becomes completely drained while the price of RAM skyrockets, making it inaccessible to most dev teams.
The Sidechain Solution (Horizontal Scaling)
Many developer teams believe that the promise of side-chains could solve the current RAM issues. Side-chains present an opportunity for dApps to spin up their own blockchain parallel to the main chain, with a two-way peg connecting them to the mothership and each other. Sending tokens across chains involves sending a transaction to a smart contract address on chain 1, and receiving the corresponding value in on chain 2. The smart contract on chain 1 would need to send chain 2 a cryptographic proof that the action happened and is irreversible. That two-way peg connecting a side chain family, known as Interblockchain Communication (IBC), is yet-to-be developed. As of now, side chains exist as isolated silos while the EOS vision of a mesh of chains connected by IBC remains unrealized making sidechains currently not a true horizontal solution.
BP Hardware Upgrade (Vertical Scaling)
Another option to overcome RAM limitations is to simply add more RAM to the system. This is known as vertical scaling and has already been implemented by the Block Producers, who have voted to increase RAM supply by 1kb a block, or 64GB a year. This is still not enough for many dApps with complex data storage requirements to materialize on EOS. Moreover, as RAM increases, the costs of maintaining a block producing node rise, pricing out smaller BPs and harming network decentralization in the process
In its current iteration, the RAM market is a major obstacle standing in the way of EOS reaching 1 million daily active users. Finding a solution for the prohibitive cost of RAM would open up the EOS blockchain for a rich set of complex, interactive dApps to materialize and scale.
At LiquidEOS, we believe that onboarding millions of users onto EOS dApps is the surest way to increase the value of EOS. To that end, we have been working tirelessly to craft solutions that will allow EOS developers to overcome network resource limitations and build scalable dApps. Very soon, every single dApp developer will be able to scale their applications in ways previously deemed infeasible, there will be no more excuses.
More information coming very soon
The LiquidEOS Team
