EOS (EOS) is one of the third-generation blockchains looking to redefine the way we access and use decentralized applications. The goal is to create a robust infrastructure where developers can launch and run permissionless applications.
Notably, this is similar to how Ethereum operates. Like Ethereum, EOS relies on smart contract technology to eliminate intermediate processes and enable self-executing services.
However, while EOS and Ethereum share some similarities, the former has integrated functionalities that optimize performance and offer developers more flexibility. As a third-generation blockchain, EOS focuses on performance and user experience.
This is evident in its network speed and that transacting on EOS does not attract exorbitant fees. Users can enjoy near-zero fees even as EOS can process up to 4,000 transactions per second. The possibility of providing these functionalities is one of the factors responsible for the impressive EOS price movements witnessed at the early stage of development.
Moreover, EOS owes its optimized performance to its decision to implement the delegated Proof-of-Stake (DPoS) consensus protocol that offers high scalability without requiring validators or participants to purchase expensive hardware.
As its name implies, the DPoS protocol is the variant of the popular Proof-of-Stake (PoS) algorithm that involves delegating votes and stakes to validator nodes, also known as block producers in the EOS ecosystem.
Holders of EOS tokens are awarded governance power equivalent to their stake in the system. Token holders get to vote for block producers by delegating their stake to them. There can be 21 block producers at any given time, and the ones selected for the validation and block production task may change from time to time.
EOS owners also get to vote on proposals for upgrading or modifying the protocol the same way and are free to delegate their vote to someone else if they deem fit. Unlike in the case of Bitcoin and Ethereum, the EOS Network block miners earn new tokens only from the block production activity. There is no transaction fee model in EOS Network per se.
Like most crypto projects, EOS's consensus mechanism adopts an incentivized method for enabling a sustainable and secure blockchain. This means that block producers receive crypto-denominated rewards when they add new blocks of transactions to the EOS blockchain.
Specifically, block producers receive EOS tokens, the native cryptocurrency of the EOS ecosystem, as incentives. These EOS tokens are also vital to the governance mechanism of the EOS blockchain as holders, depending on the number of coins in their possession, can vote on development and governance proposals.
EOS price and tokenomics
The EOS token sale lasted for a year, during which 900 million EOS tokens were sold. At the end of the token sale, the initial coin offering (ICO) had raised $4.2 billion worth of Ethereum tokens, making it the largest ICO to date.
Another 100 million EOS was set aside for Block.one, the company that developed EOS and the EOSIO blockchain framework. These tokens were subjected to a vesting period. In total, 1 billion EOS tokens were created during the ICO stage.
Another noteworthy fact about EOS was that it first existed as an ERC-20 token since the EOS blockchain was still under development when the token launched. However, in June 2018, the ERC20 version of EOS became redundant as holders began to swap their coins for the new EOS token native to the EOS blockchain.
EOS has an inflationary emission mechanism, as its supply is not capped. Instead of imposing transaction fees as part of the validator's reward mechanism, the EOS ecosystem generates new EOS tokens to pay block producers. Initially, the annual inflation rate of EOS was capped at 5%.
About the founders
The EOSIO blockchain framework used as the building blocks for EOS was developed by Block.one, a blockchain development company co-founded by Daniel Larimer and Brendan Blumer in 2017.
Larimer is popular within the blockchain ecosystem as a serial entrepreneur and influential developer. He introduced the delegated PoS consensus mechanism and served as the CTO of Block.one until 2020. Before his involvement with EOS, Larimer founded the decentralized crypto exchange BitShares and a blockchain-based social media platform called Steemit.
On the other hand, Blumer is currently the CEO of Block.one. Before his stint in the blockchain industry, Blumer launched Okay.com, one of South Korea's largest real estate agencies.
