The most important thing to effect a widespread use for blockchain applications is for the platform to be flexible enough, to be able to support millions of users in order to compete with businesses such as eBay, Uber, Airbnb, and Facebook who are capable of handling millions of active users daily. For this reason, a platform that can handle a very large number of users is of immense importance. Coupled with this, is the need for the flexibility to enhance their applications with new features, and that is where EOS has come to play a leading and innovative role.
EOS is presently the fifth leading cryptocurrency of the world by market capitalization. EOS is a blockchain platform for the development of decentralized applications (dApps) and it provides an entire operating system for decentralized applications — thereby supporting all of the required core functionality to allow businesses and individuals to create blockchain-based applications in ways similar to the web-based applications, like providing secured access and authentication, permissioning, data hosting, usage management, and communication between the dApps and the internet.
More importantly, it should be noted that the biggest problem that the blockchain-based space is facing is a scalability issue. Bitcoin manages just 3-4 transactions per second, Ethereum went up and fairs slightly better at 20 transactions per second. EOS are claiming that as a result of the incorporation of the DPOS consensus mechanism, they can conveniently complete millions of transactions per second.
The EOS ecosystem comprises two basic elements: the EOS.IO and the EOS tokens.
The EOS.IO which is published by Block.one is a complacent blockchain protocol that enables horizontal scaling of decentralized applications, allowing developers to create high performance distributed applications more efficiently. The EOS.IO software provides accounts, authentication, databases, and the scheduling of applications across multiple CPU lines and clusters.
Hence, the delegated Proof of Stake processes a significant proportion of blockchain transactions globally, and currently powers the EOS.IO software that was launched in June 2018. Block.one is fuelled by a mission to help close the gap between the idealistic romanticism of blockchain technology and the practical applications that distributed ledger technology (DLT) can provide. The Block.one team is set to create a more secure, free, and connected world through the building of platforms and tools that enable blockchain to support decentralized businesses, applications, and collectives.
Based on the statistical review of EOS tokens, Block.one received the equivalent of about $185 million in ETH over the first five days of its 341-day long token distribution, in exchange for 20 percent of the total supply of 1 billion EOS tokens. The EOS token distribution began on June 26, 2017, and quite unlike other token distributions, has an elongated timeframe. The essence of this innovation is to avoid the quick frenzy associated with a short token sale.
The elongated time frame also gave people ample time to have an in-depth knowledge of the project in order to make articulated and well-informed decisions. 70 percent of the total EOS supply has been splitted into 350 consecutive 23-hour periods of 2 million tokens each. The number of EOS tokens that was sold at the end of each period was distributed accordingly amongst all authorized purchasers based on the total ETH contributed during the period.
Furthermore, 100 million EOS tokens which are 10 percent of the total supply have been set aside for Block.one. A unique and outstanding aspect of this ICO is that the majority of tokens will be produced and sold at market value. After the distribution of the EOS token, the EOS blockchain will no longer have any connection to the Ethereum network.
The Ether to EOS conversion is represented in the following equation:
Number of EOS Tokens distributed to an authorized purchaser = a*(b/c)
a= Total ETH contributed by an authorized purchaser during the period.
b= Total number of EOS Tokens available for distribution in the period.
c= Total ETH contributed by all authorized purchasers during the period.
The fact that the team has not really revealed when the EOS blockchain will go full stream notwithstanding, the following are five things you need know about EOS right now.
- Elimination of transaction fees
EOS promises the elimination of transaction fees to be replaced with the ownership model. It must be noted that usually, trading crypto in crypto exchanges and withdrawing them into personal wallets or transferring it to another exchange attract high withdrawal fees. The reason is that a lot of factors come to play during a withdrawal. This is quite different from withdrawing money from an ATM machine.
Transactions in most of the blockchains require a compulsory transaction fee in the protocol level. The fee most often prevents people from spamming the network and can fluctuate depending on different conditions.
One of such situations is when there is a high network traffic, where a lot of people are carrying on transactions. The miners at such times give priority to transactions with higher transaction fees. A transaction with lower transaction fees might be secluded to the background and will take a longer time to be included in the next block.
Exchanges sometimes take the initiative to increase transaction fees in order to get faster block confirmations. The exchange will need to make an on-chain transaction and pay the transaction fees. It will also need to make a profit by charging you a percentage of your total transfer value and this may be referred to as the exchange fee.
It is reported that the top 10 exchanges are generating as much as $3 million in fees a day or heading more than $1 billion per year. The Tokyo-based Biannance and Hong Kong-based OKEx are reported to be handling the largest volume of trading equal to about $1.7 billion daily. For Binnance, they charge about 0.2 percent per transaction, and OKEx charges 0.07 percent.
In the EOS ownership model, users own and are entitled to use resources proportional to their stake, instead of paying for every transaction. EOS’s ownership model provides dApp developers with predictable hosting costs, requiring them only to maintain a certain percentage, and makes it possible to create freemium applications.
Inasmuch as EOS token holders will be able to rent or delegate their share of resources to other developers, the ownership model ties the value of EOS tokens to the supply and demand of bandwidth and storage.
- Consensus algorithm (BFT-DPOS)
The common consensus mechanism in the crypto world is Proof-of-Work. In this mechanism, miners solve complex cryptographic puzzles to mine a block in order to add to the blockchain. The process requires a huge amount of energy and computational usage. The reason for this is that the puzzles are designed in such a way that makes them extremely difficult and taxing on the system.
Once a miner is able to solve a puzzle, the block is presented to the network for verification. The verification is, however, a very simple process. The EOS has, however, revolutionized the whole process by introducing the Delegated Proof of Stake (DPOS). In other words, it is based on the DPOS mechanism.
The mechanism revolves around those who hold tokens on a blockchain by adopting EOS.IO software. They may select block producers through continuous approval voting system. Anyone may choose to participate in block production and will be given an opportunity to produce blocks provided they can persuade token holders to vote for them.
The software enables blocks to be produced exactly every 0.5 seconds and just one producer is authorized to produce a block at any given point in time. A block can be skipped if it is not produced at the scheduled time and 0.5 or more seconds gap is created in the blockchain.
Blocks are produced in rounds of 126 (6 blocks times 21 producers). The producers are chosen by a preference of votes cast by token holders, who are scheduled in an order, agreed by not less than 15 of the 21 producers.
A DPOS blockchain does not experience any fork because the block producers cooperate rather than compete. Where a fork occurs, consensus switches automatically to the longest chain. A blockchain fork with more producers on it will grow in length faster than one with fewer producers and this fork will experience fewer missed blocks.
Asynchronous Byzantine Fault Tolerance (aBFT) is added to traditional DPOS by allowing all producers to sign all blocks. Once 15 producers have signed a block it is deemed irreversible. Any Byzantine producer would have to generate cryptographic evidence of their treason by signing two blocks with the same timestamp or block height. Irreversible consensus should be reachable within 1 second under this model. The aBFT algorithm provides 100 percent confirmation of irreversibility within 1 second.
Transaction As Proof of Stake (TAPOS) is a feature of the EOS.IO software. Every transaction in the system is required to include part of the hash of a recent block header. This prevents a replay of a transaction on forks that do not include the reference block and also signals the network that a particular user and their stake are on a specific fork.
With time, all users end up directly confirming the blockchain and it thus becomes difficult to forge counterfeit chains as the counterfeit would not be able to migrate transactions from the legitimate chain.
In EOS, there is the presence of the legally binding constitution. Governance here is maintained by establishing jurisdiction and choice of law along with other mutually accepted rules. Since every single transaction in EOS must include the hash of the constitution to the signature, this innovation has effectively bound users to the constitution.
The governance model is a process by which people in a community reach consensus on subjective matters of collective action that cannot be captured entirely by software algorithms, carry out the decisions they reach, and alter the governance rules themselves via constitutional amendments.
The constitution and protocol can be amended by the following process:
- The change is proposed by the block procedure who obtains a 15 out of 21 producers approval rate.
- The 15 out of 21 approval must be maintained for 30 consecutive days.
- All users are required to sign off their transaction using the hash of the new constitution.
- Block producers adopt changes to the source code to reflect the change in the constitution and propose it to the blockchain using the hash of a git commit.
- Block producers again need to maintain the 15 out of 21 approval for 30 consecutive days.
- After that, the nodes are given one complete week to adapt to the new changes.
- Any node that does not follow the new protocol is shut down automatically.
An EOS.io software-based blockchain implements a governance process that efficiently and effectively directs the existing influence of block procedures. Without a defined governance process, blockchains relied on ad hoc, informal, and offer controversial governance processes that result in unpredictable outcomes.
With EOS.IO software, power is recognized to originate with the token holders who delegate that power to the block producers. The block producers are given limited checked authority to freeze accounts, update defective applications, and propose hard following changes to the underlying protocol.
For emergency changes, the block producers may accelerate the process if a software change is required to fix a harmful bug or security exploit that is actively harming users. It is absolutely against the constitution if accelerated updates are embarked upon to introduce new features or fix a harmless bug.
- Inter-blockchain communication
EOS.IO software is designed to facilitate inter-blockchain communication. This achievement is enhanced by the ease of generating proof of Action existence and proof of Action sequence. The proofs in combination with an application architecture designed around Action passing enables the details of inter-blockchain communication and proof validation to be hidden from application developers, enabling a high level of abstractions to be presented to developers.
The EOS.IO software enables lightweight proofs for anyone who has any irreversible block header after the point in which the transaction was included. With the use of the hash-linked structure of the Merkel proofs of Light Client Validation (LCV), it is possible to prove the existence of any transaction with proof less than 1024 bytes in size.
Given any block id for a block in the blockchain and the headers of a trusted irreversible block, it is possible to prove that the block is included in the blockchain. When the time comes to validate proofs on other chains, there are a wide variety of time/space/bandwidth optimizations that can be made. Tracking all block headers will keep the proof size small. Tracking only recent headers can offer a trade-off between minimal long-term storage and proof size.
A blockchain can also use a lazy evaluation approach where it remembers intermediate hashes of past proofs. The exact approach used will necessarily depend upon the percentage of foreign blocks that include transactions referenced by Merkel proof. After a certain density of interconnectedness, it becomes more efficient to simply have one chain to accommodate the entire block history of another chain and eliminate the need for proofs altogether. It is, however, ideal to minimize the frequency of inter-chain proofs for performance reasons.
The incorporation of both DPOS and aBFT provide rapid irreversibility when communicating with another outside blockchain and takes approximately 0.5 seconds. The EOS.IO software also facilitates the proof that there are no gaps in the transaction history when using Merkel proofs from outside blockchains by assigning a sequence number to every ‘Action’ delivered to every account. A user can use these sequence numbers to prove that all ‘Actions’ intended for a particular account have been processed and that they were processed in order.
The EOS.IO software permits all accounts to be referenced by a unique human-readable name of up to 12 characters in length. The creator of accounts chooses the name. The account creator must reserve the RAM required to store the new account until the new account stakes tokens to reserve its own RAM.
Each account can send structured Actions to other accounts and may define scripts to handle Actions when they are received. The EOS.Io software gives each account its own private database which can only be accessed by its own Action handlers. The automated Action handling scripts can also send Actions to other accounts. A combination of Actions and automated Action handlers is the way EOS.IO defines smart contracts.
Block producers will schedule transactions that enhance no conflict over memory access to scopes and therefore can be executed in parallel. EOS.IO software provides declarative permission management system that gives accounts fine-grained and light-level control over who can do what and when. This permission involves determining if an Action is properly authorized.
An example of permission management is checking that a transaction has the required signatures. A compartmentalized form of authority ensues and is bound to individual and groups of individuals. A hierarchical authority structure is created with a reflection of how permissions are organized in reality with the attendant result of making multi-user control over accounts easier than has ever been conceived.
The EOS.IO software allows accounts to define what combination of keys they use, and accounts can send a particular Action type to another account. With the software, accounts can define named permission levels each of which can be derived from a higher level named permissions. Each account can define a mapping between a contract/action or contract of any other account and their own Named Permission Level.
The EOS.IO technology allows all accounts to have an ‘owner’ group which can do everything and an ‘active’ group which can do everything except to change the owner group. All other permission groups are derived from ‘active.’
All keys and permission evaluation for all transactions can be executed in parallel, where changes to permissions made by transactions do not take effect until the end of the block. It also means that a rapid validation of permission is possible without starting costly application logic that would have to be rolled back, and that transaction permissions can be evaluated as pending transactions are received, and do not need to be re-evaluated as they are applied.
The whole process here dramatically increases performance. In the replay of the blockchain to regenerate a deterministic state from the log of Actions, there is no need to evaluate the permissions again. Inasmuch as a transaction is included in a known good block that is sufficient to skip this step. The load on computation associated with replaying an ever-growing blockchain is overwhelmingly reduced.
There is no gainsaying in the fact that based on experience with power concept and best practices, the EOS.IO represents a drastic and fundamental advancement and departure from the norm as is obtained in the hither known blockchain technology. The software represents a holistic approach to a globally scalable blockchain society that revolves around the application of decentralization that can be easily deployed and governed.