EOS - Spotlight by Bybit



EOS, which is often referred to as an “Ethereum Killer,” is a smart contract platform that runs commercial-scale DApps (decentralized applications).  

EOS is the cryptocurrency that powers the EOS network. One billion EOS tokens were minted in a year-long ICO before the public launch of the EOS mainnet back in June 2017. Backers raised more than $4billion, making it the most successful ICO campaign ever. 

This spotlight will discuss everything from the EOS network to the EOS token and the technology that powers the EOS ecosystem. 

What Is EOS?
EOS is a high-performance blockchain infrastructure that provides a fast, cost-effective and secure environment for commercial-scale DApps. EOS blockchain is Ethereum’s competitor, built for both public and private use cases. 

The EOS ecosystem has three main components: 
  • EOS.IO — The underlying software, is more like an operating system that runs and manages the EOS blockchain network. It provides a tool kit for developers to simplify DApp development. 
  • EOS Blockchain — The main EOS blockchain, is governed by the Delegated Proof-of-Stake (DPoS) consensus algorithm that hosts and runs DApps. 
  • EOS Tokens — The EOS blockchain has an underlying currency, EOS tokens, which are responsible for on-chain staking, governance, and other economic activities on the network.

The architecture of EOS allows for fast and cheap transactions, with the ability to host and run smart contracts in a robust execution environment. EOS has a half-second block time that is ultrafast compared to some other blockchain platforms, where the average block times range between 2–10 minutes. 

EOS has introduced the EOS VM WASM (web assembly) engine as part of the EOSIO 1.0 version, which increased the transaction speeds by a factor of 12x. It also stores the state of the network in multi-index tables, which makes it much more responsive than other blockchains where users are confronted with frustrating delays while performing everyday activities on DApps. 

The EOS blockchain is not only robust but is designed to be highly flexible. Unlike some other blockchain platforms, developers can easily upgrade their EOS-deployed smart contracts and add extensions to enhance their scope and functionality. The network behavior on the EOS platform is defined by system contracts that are highly configurable, which makes it easy to perform system upgrades without making changes to the core consensus. 

Smart contracts on the EOS blockchain are written in industry-standard C++, with a wide range of software development (SDKs) and a plethora of various development tools provided by the EOSIO library. These tools and SDKs facilitate developers in building and launching their DApps on the EOS blockchain in a frictionless manner.

How Does EOS Work?
EOS blockchain brings a paradigm shift in the programmable blockchain space with its unique approach to solving one of the most fundamental problems in the crypto ecosystem: scalability. 

To help achieve the required scalability, it uses a customized variant of a Proof-of-Stake consensus algorithm called Delegated Proof-of-Stake (DPoS). The DPoS consensus algorithm was the brainchild of Dan Larimer, CTO of the EOS project and the founder of Bitshares (an early crypto exchange) and Steem (a crypto-based publishing platform). DPoS was first tested in Bitshares and Steem before becoming a part of the EOS blockchain. 

Before getting into the mechanism of the DPoS consensus algorithm, we first need to understand the concept of ‘Block Producers.” In any PoS-based network, there are stakers (or validators) responsible for block production and overall network security. 

In the EOS blockchain, there are block producers who are the custodians of the network and are chosen by the community voting process. The top 21 selected block producers are called the Delegates. They verify all the transactions on the network, construct blocks, run different processes for smart contracts, and secure the network.  

Block producers stake their EOS tokens on the network to ensure the security and proper functioning of the ecosystem. If they act maliciously, they’ll lose their stake and an alternative block producer will take over. Community voting also selects alternative block producers, and a total of 84 alternative block producers are chosen to be on standby mode. If delegates can’t handle the processes due to a machine failure, alternative block producers take their place.

Block producers use an algorithm known as Asynchronous Byzantine Fault Tolerance (ABFT). It functions as a secondary construction for the EOS consensus algorithm for block creation to achieve finality and a single source of truth. Block producers in the DPoS and the second layer of the ABFT consensus mechanism allow for much faster block confirmation times and transaction throughput.

The EOS mainnet has achieved an all-time high throughput of 4,000 TPS (transactions per second) to date. However, the network can handle up to 10,000 TPS with EOSIO 1.0, and with more updates in the development roadmap, the transaction throughput and system efficiency will increase.

Another exciting and innovative aspect of the EOS blockchain is feeless transactions. Unlike other smart contract platforms such as Ethereum, there are no fees when using a DApp or interacting with a smart contract. These feeless transactions are possible because of prepaid network resources that the developers pay for with their stake when they deploy a smart contract on the EOS blockchain. 

In the traditional Web 2.0 world, developers pay for resources required for their application, such as servers, network bandwidth, and domain,  to deploy and run their application. The users can access these applications free of cost using their browser. 

The same model is being applied here on the EOS blockchain, where the developers stake their EOS tokens in order to secure an equivalent amount of resources for their DApp. There are three resources that the developers can use on EOS: 

1. CPU — The amount of CPU time necessary to process transactions. 
2. NET — Network bandwidth required for transactions (data transfer). 
3. RAM — Used by smart contracts to store data on the blockchain.
Based on the size of the stake, the developers can secure an equivalent amount of resources from the EOS network to host and run their DApps. Users can use the DApp without any transaction fees. Since the developers can unstake their tokens from the network, the EOS protocol substitutes inflation for transaction fees. 

The Bottom Line
EOS had a successful launch, but over the years it has had a bumpy ride. Part of the reason is the lack of institutional interest in building decentralized applications and the lack of a robust developer community. 

For this reason, Proof-of-work (PoW)-based blockchains that are not well-suited to building large-scale DApps, such as Ethereum, have been the mainstay computing platforms and operating systems. Now that we are witnessing the growth of DeFi, in the near future, the EOS blockchain may well become a legitimate competitor to Ethereum as the number one smart contract platform.  

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