We recently reported on Bitfinex partnering with EOS.IO to create the latter’s first decentralised exchange, EOSfinex.
Bitfinex arrived at EOS after searching for a platform that would be fast and transparent. At the time of the announcement, Bitfinex CEO Jan Ludovicus van der Velde called EOS “fundamentally transformative”.
This is a vote of confidence for EOS, which is a platform that allows users to launch decentralised applications. As such, it is placing itself alongside Ethereum, Lisk and NEO in a very competitive market.
However, it is keen to differentiate itself from its competitors. How unique is it?
Unique token sale
EOS is still in its token sale stage, which is certainly unique because it is 350 days long. ICOs usually last for at most a few months, and are sometimes over in minutes. For example, Bancor, which partnered with EOS back in June, raised $153 million within a few hours in its own ICO in June.
The long duration is intended to be a way to avoid the feeding frenzy which ICOs often create. CEO Brendan Blumer said: “We felt an approximately year-long token distribution was the best method to ensure people receive fair market value for EOS Tokens. We anticipate that strong interest will continue throughout the year as the community continues to learn about the EOS.IO software and the benefits it can bring to their business.”
This offering began in June 2017 and raised $185 million within the first 5 days.
Another interesting point of this sale is that tokens are being sold in distribution periods of 23 hours. In the current period, according to the official website, 5,206 ETH has been raised, which is equal to just under $5 million at today’s price. It also displays that 788 million of 1 billion tokens have been purchased thus far.
The price of the tokens is set by market demand and not fixed. According to the website, this “mimics mining without giving potential unfair advantages to large purchasers.” The tokens are distributed at the end of each distribution period according to the amount of ETH provided by buyers.
It was created by block.one, a company based in the Cayman Islands and whose slogan is ‘Dentralize Everything’. Blumer is a serial founder, with a LinkedIn profile that lists no less than five different ventures that he has established, the first at the age of fifteen.
The stated aim of EOS is to develop a blockchain on a commercial scale by developing ‘decentralized autonomous communities’. The whitepaper calls the blockchain “a holistic blueprint for a globally scalable blockchain society”, enabling “vertical and horizontal scaling of decentralized applications” through an “operating system-like construct”.
In more understandable language, EOS.IO software is supposed to support distributed applications that benefit from blockchain technology while performing as web-based applications do, according to itbriefing.net.
The technical whitepaper opens with a disclaimer which says that block.one “does not guarantee the accuracy of or the conclusions reached in this white paper” and that it will “have no liability for damages of any kind arising out of the use, reference to, or reliance on this white paper or any of the content contained herein”, which doesn’t exactly inspire the reader with confidence. However, it is currently sitting at number 9 in the cryptocurrency rankings according to coinmarketcap.com, so this doesn’t seem to be a concern for the public.
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The document explains that the system will eliminate user fees, support millions of transactions per second, and make the launch of decentralised applications quick and easy.
The blockchain will support both “sequential” and “parallel” performance – the first refers to applications that progress in progressive steps, and the latter means that the workload can be divided amongst nodes. This could be what is meant by the words horizontal and vertical.
The whitepaper says towards the end: “The EOS.IO software will be first and foremost a platform for coordinating the delivery of authenticated messages to accounts.”
So this is key to what the blockchain will offer. The EOS blockchain will support “Any language or virtual machine that is deterministic and properly sandboxed with sufficient performance”.
By doing this, it will allow inter-blockchain communication. In this way, it has a similar aim to NEO.
By not using a mining-based blockchain, EOS avoids the pitfalls of centralisation of mining power and forks. It will run on a consensus mechanism called ‘delegated proof-of-stake’. This system is based on proof-of-stake, with a voting element added in – blocks will be produced by representatives according to a ‘continuous approval voting system’. New representatives will be selected after 21 blocks.
Interestingly, one block will be produced every three seconds, and only one producer is authorised to do so each time. If the producer fails to produce a block, that block is skipped: “When one or more blocks are skipped, there is a 6 or more second gap in the blockchain,” says the whitepaper. If a producer is vacant for 24 hours, he will be removed from the system so as to ensure smooth operation of the network.
One advantage of this system, as with NEO’s Delegated Byzantine Fault Tolerance, is that block producers cooperate rather than compete, which means that forks are less likely to happen. In contrast to dBFT, forks can occur, but the system offers several checks to warn users that they are on a minority block, and there should be no incentive to continue.
In another similarity to dBFT and NEO, changes to the system must be decided upon by a majority of block producers, and that approval must be maintained for 30 consecutive days.
EOS may indeed be filling a niche – Ethereum intends to be a world computer, NEO intends to be a world economy, and EOS intends to scale up decentralised applications to commercial size. The exchange opened with Bitfinex is the first example of such an application.
Bitfinex is the largest cryptocurrency exchange in the world by trading volume, so this partnership is encouraging for EOS and its fans. Zhuling Chen, co-founder of aelf, a cloud computing blockchain network, said to Finance Magnates: “One of the key benefits of blockchain technology is to enable each token holder to have secure and transparent ownership of their assets. This enhanced and decentralized ownership will greatly reduce the counterparty risk that an exchange imposes when dealing with billions of dollars of transactions. This has always been one of the key selling points of decentralized exchanges.”