What is EOS?
EOS has always been one of the most hype over ICO and now a smart contract platform. When it was announced by founder Dan Larimer in New York City in May 2017, a giant jumbotron advertisement could be seen glowing over Times Square. In the first 5 days of their ICO token sale, EOS raised an unprecedented $185 million in ETH — all without having any kind of product or service yet.
EOS claims to be “the most powerful infrastructure for decentralized applications.” Basically, EOS is (or, rather, will be) a blockchain technology much like Ethereum. They plan to create their own blockchain with a long list of impressive features. Some are even calling EOS the “Ethereum killer.” But along with all the hype and excitement about EOS, there’s also a large amount of skepticism coming from the crypto community.
Traditionally, it is the business that pays for office space, computational power, and other costs required to run the business. The customer buys specific products from the business and the revenue from those product sales is used to cover the business costs of operation. Similarly, no website obligates its visitors to make micropayments for visiting its website to cover hosting costs. Therefore, decentralized applications should not force its customers to pay the blockchain directly for the use of the blockchain.
A launched blockchain that uses the EOS.IO software does not require its users to pay the blockchain directly for its use and therefore does not constrain or prevent a business from determining its own monetization strategy for its products.
A holder of tokens on a blockchain launched adopting the EOS.IO software who may not have an immediate need to consume all or part of the available bandwidth, can give or rent such unconsumed bandwidth to others; the block producers running EOS.IO software on such blockchain will recognize this delegation of capacity and allocate bandwidth accordingly.
Separating Transaction costs from Token Value:
One of the major benefits of the EOS.IO software is that the amount of bandwidth available to an application is entirely independent of any token price. If an application owner holds a relevant number of tokens on a blockchain adopting EOS.IO software, then the application can run indefinitely within a fixed state and bandwidth usage. In such case, developers and users are unaffected from any price volatility in the token market and therefore not reliant on a price feed. In other words, a blockchain that adopts the EOS.IO software enables block producers to naturally increase bandwidth, computation, and storage available per token independent of the token's value.
A blockchain using EOS.IO software also awards block producers tokens every time they produce a block. The value of the tokens will impact the amount of bandwidth, storage, and computation a producer can afford to purchase; this model naturally leverages rising token values to increase network performance.
State Storage Costs:
While bandwidth and computation can be delegated, storage of application state will require an application developer to hold tokens until that state is deleted. If state is never deleted then the tokens are effectively removed from circulation.
Every user account requires a certain amount of storage; therefore, every account must maintain a minimum balance. As storage capacity of the network increases this minimum required balance will fall.
A blockchain that adopts the EOS.IO software will award new tokens to a block producer every time a block is produced. In these circumstances, the number of tokens created is determined by the median of the desired pay published by all block producers. The EOS.IO software may be configured to enforce a cap on producer awards such that the total annual increase in token supply does not exceed 5%.
Community Benefit Applications:
In addition to electing block producers, pursuant to a blockchain based on the EOS.IO software, users can elect 3 community benefit applications also known as smart contracts. These 3 applications will receive tokens of up to a configured percent of the token supply per annum minus the tokens that have been paid to block producers. These smart contracts will receive tokens proportional to the votes each application has received from token holders. The elected applications or smart contracts can be replaced by newly elected applications or smart contracts by token holders.