A Comprehensive Guide To EOS
By on ALTCOIN MAGAZINE
The acronym EOS was confined to Canon DSLRs for a long time. However, today, it has changed and transitioned into the realm of blockchain and decentralized applications. EOS, as the last two letters imply, is an operating system that intends to support large-scale decentralized applications.
This revolution might seem like yet another step in the evolution of blockchain if not for two groundbreaking claims made by EOS.
- EOS has the capacity to conduct millions of transactions per second. This restriction of scalability was considered as one of the limitations of blockchain.
- EOS states that they can completely remove transaction fees.
How are they going to affect this and how exactly will these two claims make practical sense? Read on!
Effecting Millions of Transactions Per Second:
Scalability has been one of the biggest issues that hampered the progress of blockchain in being adopted globally. However, with EOS, the issue of scalability is effectively addressed by utilizing the Delegated Proof of Stake consensus (DPOS) mechanism. It is a little different from the traditional proof of stake.
Traditionally, validators lock up some coins as stake and then they begin validating the blocks. When they discover a block that they think can be added to the chain, they will validate it by placing a bet on it. If the block gets appended, the validators will get a reward that is proportional to the bets that they had placed.
However, in DPOS, any person who holds tokens on a blockchain which is integrated into the operating system can select blocks for validation. It is done through a continuous voting system. Everyone is eligible to participate in the election and they will be given an opportunity to produce blocks that are proportional to the number of votes that they receive relative to other producers.
How Does it Work?
- Blocks are produced in multiples of 21.
- At the start of every round, 21 block producers are chosen. While the top 20 chosen automatically, the last of them is chosen proportional to the number of votes that they receive relative to other contenders.
- The producers are randomized using a pseudo-random number that is derived from the block time.
- This process is in place to ensure the maintenance of balanced connectivity to all the other producers.
- To ensure a continuous supply of blocks, a producer has to produce at least one block every 24 hours.
- DPOS also eliminates the instances of forks because the producers will not complete but rather co-operate to find blocks.
Removing Transaction Fees
EOS works by a model where users, rather than paying fees for every transaction, will be entitled to use resources proportional to the number of tokens they hold. While it mandates that users should hold tokens to affect transactions, it also makes transaction fees essentially zero on the paper.
This presents a clear cut advantage over Ethereum. It is known that the cost of running and hosting applications in Ethereum could be deterring for a novice developer. However, in EOS, the developers get ownership of the resource-based on the stake that they hold, rather than just the experience of renting.
The Latest EOS:
The latest testnet version of EOS is Dawn 4.0. This new dawn brings with it, a lot of new changes.
Some of them are:
- Changing of the current time from ‘time of head block’ to ‘time of current block’.
- The RAM marketplace
- Future parallelism DPOS
- Header-only validation
- Block producer awards
- Vote decay
While the first point is quite self-explanatory and is expected to put an end to all the time-related issues, every other topic deserves detailed discussion.
The RAM Marketplace
We have seen that the resources in the EOS blockchain are available to a user proportional to the number of tokens that they possess. However, the resources are scarce and it is one of the reasons that you can only process the tokens and not use them for a period of three years. A user who uses the tokens will have their accounts terminated.
Tokens can also be used as instruments of transaction. Resources like CPU and network bandwidth can be sold to acquire tokens proportional to the volume that was sold. However, it might not be the case with RAM.
RAM is one of the resources that rank high when it comes to demand. The early EOS adopters will get their RAM for a very cheap price. When more developers enter the blockchain to build their applications, the demand for RAM increases proportionally. This is classically how any business is supposed to work. However, since the number of tokens is always proportional to the resources, early adopters will not have any economic incentive.
This was untangled by the RAM marketplace. A user who wants to buy or sell RAM will be charged a 0.5% fee. The collected fees are burnt, curbing the possibilities of marketing and inflation. This ensures a steady availability of RAM and also complies with the demand and supply equation. It is expected that the EOS block producers should be able to upgrade to four terabytes or even 16 terabytes of RAM.
Future Parallelism
Scalability is one of the biggest challenges that the blockchain community intends to take on, and EOS has addressed it by bringing in parallelism. The equation sounds pretty simple conceptually. For the applications to scale properly, RAM usage needs to be maximized. One of the best ways to approach this maximizing is by using parallel chains with independent memory regions, aptly named as sidechains.
A sidechain is a parallel chain that runs along the main chain and is attached to the main with a two-way peg. The sidechain not only scales up effortlessly but also creates a sense of competition between two sidechains. They are expected to obey the protocols of EOS. The sidechains can communicate with each other by using Inter-Blockchain Communication (IBC). Communication is of vital importance when it comes to scalability and utilizing all the available resources.
IBCs use Merkle Trees/roofs to speed up the process of finding if a data belongs to a particular block or
Header-only Validation
As the name implies, instead of validating the whole block, EOS validates only the header. It makes the process more efficient and facilitates simple communication. It also prevents a lot of attack vectors.
Block Producer Rewards
The concept of 21 block producers and the DPOS has an indigenous reward system. The inbuilt inflation system increases the overall supply by 5% every year and these surplus tokens are distributed accordingly. 1% goes to the producers and 4% goes for worker proposal systems. This ensures that the producers are not only paid but also incentivized. Everyone who qualifies is bound to get the minimum payment per day. This ensures that wealthy individuals who do not intend to produce blocs never attempt to earn interest on their producer-candidate by voting on themselves.
There are two kinds of rewards called the block rewards and the vote rewards, distributed at 0.25% and 0.75% in that order. The 21 block producers are entitled to 0.25%. The remaining 0.75% gets distributed among the block producers and standby producers in line with the votes that they get. It is essential that producers who want to qualify for this reward must process at least 100 EOS tokens.
The remaining 4% is used for research and development on the EOS blockchain. It can also be used for charitable and relief purposes.
Vote Decay
It is quite known that in a democratic and decentralized ecosystem, voting is of vital importance. However, just like beneficiaries from taxpayers, there are freeloaders in the EOS ecosystem as well. The ‘My vote won’t change anything’ mindset is quite likely to pervade to EOS users as well.
To ensure that democratic participations do not diminish, the creators of EOS introduced the concept of decaying vote. The power of each vote diminishes every year and the user must recast their vote every week to ensure so that the diminishing does not occur. If a person does not vote, their power in the blockchain reduces and this eliminates free-loader problem.
The Conclusion
It is quite evident that EOS is heralding the B2C revolution of blockchain. With the decentralization and the capacity to infinitesimally scale, it could well be the Panacea that will bridge large scale industries and blockchain applications.
There might have been a few hiccups that have tarnished the progress and image of EOS. However, the way in which these issues are addressed makes the future look bright and promising!
