Apps of all types rule our lives today. From paying bills to personalising a fitness programme, we know we can find an app for it. But, apps have taken on a whole new meaning with the advent of blockchain technology and a new breed of apps – dApps, or decentralised applications. Unlike conventional applications, these apps are based on a distributed server-client model. They are open source, with an algorithm defining the overall network governance, in most cases.
Increased security and greater transparency are just two of the potential benefits of these apps, which is why they are so popular. Over 2,551 dApps have already been created and are being used by over 96K users daily. The market for dApps is worth over $21 million per day, which is why the infrastructure for their development and maintenance is a highly competitive arena nowadays.
EOS is one of the few public protocols that have been instrumental in the development of high functioning dApps. It is the world’s seventh largest cryptocurrency by market cap, at over $3 billion, as of September 19, 2019. While we usually associate Ethereum with the creation of smart contracts and applications, EOS promises much more.
Meet the EOS Blockchain
EOS, or Exponential Operating System, is a relatively new project in the blockchain ecosystem. It went live in June 2018, after a year-long ICO, which raise $4.1 billion for its parent company, Block.one. In June 2019, the open source EOSIO software was released and around a billion tokens were sold on the Ethereum platform by the company, giving rights to use the platform after its launch.
EOS, like Ethereum, allows developers to create decentralised applications via smart contracts. But the unique aspect is that the technology will eventually enable the creation of industrial-scale applications, by eliminating transaction fees and supporting millions of transactions per second.
WOW FACT: EOS supports about 4,000 transactions per second, which is significantly higher than Ethereum’s 15 transactions per second. But why is EOS faster than Ethereum? The answer lies in its smarter consensus model.
Ethereum Works Hard, EOS Works Smart
EOS follows a Delegated-Proof-of-Stake, or dPoS, consensus protocol. Here, a higher throughput is achieved by employing lesser number of nodes for validation. A set of master nodes, also known as ranked delegates, validate transactions, with only 14 such nodes needed per transaction.
EOS is designed to work with nodes that validate partial state. This means you don’t need all the nodes to run every contract. This is in stark contrast to the Ethereum blockchain, which still uses the Proof-of-Work protocol. PoW is an extremely energy intensive and calculations-heavy protocol, where 18,000 nodes work simultaneously to validate each block. Ethereum mining is, hence, an extremely expensive and energy intensive process.
EOS aims to become the first operating system that can be decentralised. EOSIO could offer better development infrastructure for decentralised applications, something like Steemit, a social networking platform that offers monetary incentives.
EOS is the native token, which provides both storage rights and bandwidth access on the blockchain. Owning up to 1% EOS tokens gives users the right to use 1% of the network bandwidth. These tokens also allow voting rights to users, with respect to on-chain governance of the blockchain.
Scalability vs Decentralisation
Censorship resistance is one of the many positive aspects of cryptocurrencies. This can only be achieved by allowing participation of a large number of nodes or participants, in block validation. The more participants, the better. But the problem is that these participants have to continuously sync their blockchains with each other. In the case of smart contract platforms, block creators need to code every single smart contract, regardless of the consensus mechanism. This affects the network’s scalability.
In EOS, only 21 parties, otherwise known as Block Propagators (BPs), handle such tedious tasks. They store the entire blockchain and execute the smart contract code. They use robust hardware and sync their blockchains with each other, rather than the entire network. This allows EOS faster transaction output than other cryptos.
Transactions are Free – But are They Really?
The top 21 BPs earn good revenues, and an estimated number of 50 standby BPs also earn rewards for mining blocks. This is what allows EOS to offer free transactions. But experts say that the coins minted for these rewards will amount to a total yearly inflation rate of 5%. The fee could, therefore, actually be hidden, since it is accounted for in the BPs’ rewards.
We cannot say that transactions are completely free, since users need to a stake in EOS tokens to be able to use the blockchain. But, for most operations, users don’t need to pay. It is the owner of a dApp who will create smart contracts and pay for transactions here. This is different from Ethereum, where the fee needs to be paid by the individual who runs operations on smart contracts.
A User-Friendly Blockchain
One of the greatest aspects of EOS is that it allows flexible usernames, unlike the ones usually seen in public addresses. You can also include readable messages in a transaction, just like you include remarks in bank transfers. The network also supports asynchronous communications, which means that all parties don’t need to be present at the same time to enable communication.
So, while Ethereum has positioned itself as a decentralised super-computer, EOS is focused on a decentralised operating system. This allows it to impart many user and business friendly applications and why it has been used successfully in many projects.
Take, for example, the Ubuntu Energy Ledger, a clean energy marketplace, developed on the EOS blockchain. The project aims to power over 4 billion households by 2030. The EBT virtual card, launched by All EBT, is another such project, which aims to solve problems of financial inclusion and access to healthy food in disadvantaged communities.
There are significant drawbacks in the Ethereum blockchain, with respect to transaction costs and scalability. Also, the Ethereum community hasn’t been able upgrade its source code without the possibility of dividing the community into two separate projects. This is why most dApp developers switched to EOS in early September 2018. It’s possible that EOS might emerge as a stronger alternative to Ethereum in the future, for blockchain developers.
Who do you think will win – the platform for smart contracts or the platform for smarter dApps? Connect with us on Twitter, at @DSX_uk, and tell us what you think