EOS Guide: The Business-Focused Blockchain Platform
EOS aims to bring blockchain technology to mainstream business by solving issues of scalability and usability. This guide explains how EOS works, its unique features, and how you can trade EOS tokens on LeveX.
What is EOS?
EOS is a blockchain platform designed specifically for businesses and developers to build decentralized applications (dApps) that can operate at commercial scale. Launched in 2018 after raising $4.1 billion in its initial coin offering (ICO), EOS was created to overcome limitations that earlier blockchain platforms faced with transaction speed, cost, and developer accessibility.
Unlike Bitcoin, which focuses primarily on being a digital currency, or Ethereum's general-purpose approach, EOS was built with a clear focus on business applications. The platform aims to function as an operating system for blockchain, providing the fundamental tools and resources that developers need to create practical applications for real-world use.
The EOS platform is powered by its native cryptocurrency, also called EOS. These tokens play an essential role in the ecosystem, giving holders access to network resources and a voice in governance decisions.
What makes EOS distinctive is its approach to several key challenges in blockchain technology:
First, the platform was designed from the ground up for scalability, with a goal of processing millions of transactions per second. This ambitious target dwarfs the capacity of earlier blockchains and aims to match or exceed traditional payment networks like Visa or Mastercard.
Second, EOS uses a different resource allocation model than many cryptocurrencies. Rather than spending tokens to pay for transactions (like gas fees on Ethereum), EOS token holders simply need to hold their tokens to access network resources proportional to their holdings. This creates a more predictable cost structure for businesses.
Third, the platform prioritizes developer experience with tools designed to make building blockchain applications more accessible, including familiar programming languages and development frameworks. This approach aims to lower the barrier to entry for businesses wanting to leverage blockchain technology.
The History of EOS
EOS emerged during a period of rapid expansion in blockchain technology, with a development story marked by ambition, controversy, and evolution.
Creation and Launch
EOS was developed by the company Block.one, co-founded by Dan Larimer and Brendan Blumer. Larimer brought significant blockchain experience to the project, having previously created BitShares and Steem, both innovative blockchain platforms in their own right.
The project began with a year-long token sale from June 2017 to June 2018, which raised a record-breaking $4.1 billion. This unprecedented fundraising reflected both the market's enthusiasm for blockchain technology at the time and the ambitious vision that EOS presented.
The EOS mainnet officially launched on June 14, 2018, after a series of delays and technical challenges. The launch introduced the EOS.IO software, which serves as the operating system for the EOS blockchain.
Evolution and Challenges
After its launch, EOS faced both technical and governance challenges. One significant controversy centered around its block producer system. Unlike fully decentralized blockchains where anyone can participate in validation, EOS uses a delegated proof-of-stake system with only 21 block producers active at any time.
Critics argued this approach created too much centralization, particularly when large token holders (often called "whales") in certain geographic regions appeared to have outsized influence in block producer elections.
In 2021, the EOS community took a significant step by establishing the EOS Network Foundation (ENF) to guide the platform's future development. In December of that year, citing lack of support from Block.one, the community voted to stop the vesting of 68 million tokens that had been allocated to the original development company. This move represented the community asserting control over the platform's direction.
Throughout these challenges, the EOS ecosystem continued to develop, with various applications being built on the platform across gaming, finance, social media, and enterprise solutions.
How EOS Works
EOS operates through a unique combination of technical architecture and economic design that sets it apart from other blockchain platforms.
Technical Architecture
At its foundation, EOS runs on the EOS.IO software, which functions similar to an operating system. This software manages the EOS blockchain and coordinates the network's resources across applications and users.
The platform's architecture includes several key components:
Delegated Proof of Stake (DPoS): Unlike Bitcoin's energy-intensive Proof of Work system, EOS uses a more efficient consensus mechanism called Delegated Proof of Stake. Token holders vote for 21 block producers who are responsible for validating transactions and maintaining the network. This approach significantly increases transaction speed but introduces trade-offs in terms of decentralization.
Parallel Processing: EOS achieves high performance through parallel execution of transactions and asynchronous communication. This means multiple transactions can be processed simultaneously rather than sequentially, dramatically increasing throughput potential.
Authentication and Permissions: The platform includes built-in user account management with various permission levels. This feature allows for more complex permission structures than many other blockchains, making it suitable for business applications where different users might need different levels of access.
WebAssembly (WASM): EOS smart contracts can be written in familiar programming languages like C++ and then compiled to WebAssembly, making development more accessible to mainstream programmers.
Resource Allocation
One of the most innovative aspects of EOS is how it handles resource allocation:
Ownership Model vs. Transaction Fee Model: Instead of charging fees per transaction like most blockchains, EOS allocates resources based on token ownership. If you own 1% of all EOS tokens, you're entitled to 1% of the network's computational resources.
Three Key Resources: The EOS network manages three types of resources:
- CPU: Processing power for running applications
- NET: Network bandwidth for data transfer
- RAM: Storage space for application data
Staking for Resources: Users stake (temporarily lock) their EOS tokens to gain access to CPU and NET resources. Unlike spending fees, these tokens remain the property of the user and can be unstaked later.
Market-Based RAM: While CPU and NET are allocated through staking, RAM must be purchased through a built-in marketplace. This design creates a sustainable market for storage resources.
This resource model creates a more predictable cost structure for businesses, as they can acquire the EOS tokens needed for their anticipated usage rather than paying variable transaction fees that might fluctuate wildly based on network congestion.
EOS Tokenomics
Understanding how EOS tokens function within the ecosystem reveals the economic framework supporting the platform.
Supply and Distribution
EOS has a somewhat unique token supply structure:
Initial Supply: When EOS launched in 2018, 1 billion tokens were created, with 10% (100 million) allocated to Block.one, the company that developed the EOS software.
Inflation: The system was designed with an annual inflation rate of 1%, which creates new tokens that fund the block producers who maintain the network.
Current Supply: As of early 2023, the circulating supply is approximately 995 million EOS tokens. This number reflects the initial distribution plus inflation, minus any tokens that have been removed from circulation.
Vesting Controversy: In December 2021, the EOS community voted to halt the vesting of the remaining 68 million tokens that had been allocated to Block.one, citing concerns about the company's support for the platform. These tokens, held in the eosio.stake account, remain outside the circulating supply.
Token Utility
EOS tokens serve several important functions within the ecosystem:
Resource Access: Holding EOS tokens gives users access to network resources proportional to their holdings. The more tokens you own or stake, the more CPU and NET bandwidth you can use.
RAM Purchase: Tokens are used to buy RAM (storage space) on the network through a built-in marketplace. Unlike CPU and NET, which can be reclaimed by unstaking, RAM must be sold if no longer needed.
Governance Participation: Token holders can vote for block producers and on other governance proposals, with voting power proportional to their token holdings.
Value Transfer: Like most cryptocurrencies, EOS can be transferred between users as a form of payment or value exchange.
This multi-faceted utility creates ongoing demand for EOS tokens beyond speculative interest, as anyone wishing to develop or use applications on the network needs tokens to access resources.
Real-World Applications of EOS
Despite challenges, EOS has seen adoption across various sectors for practical applications beyond speculation.
Decentralized Applications
The EOS ecosystem hosts a variety of decentralized applications:
Gaming: Several blockchain games have been built on EOS, taking advantage of its free transaction model to provide a more seamless gaming experience than platforms where users pay for each action.
Social Media: Platforms like Voice (initially developed by Block.one) explored using blockchain for social media, aiming to create more transparent content monetization models.
Finance: Decentralized exchanges, lending platforms, and other financial applications operate on EOS, benefiting from its transaction speed for time-sensitive operations.
Enterprise Solutions: Some businesses have explored EOS for supply chain tracking, digital identity management, and other commercial applications that benefit from immutable record-keeping.
Corporate Developments
Beyond individual applications, EOS has seen significant corporate interest:
Bullish Global: In 2021, Block.one announced the creation of Bullish Global, a subsidiary focused on launching a new cryptocurrency exchange called Bullish. This venture attracted $10 billion in funding and investment from prominent figures including Peter Thiel, Mike Novogratz, and institutions like Nomura.
EOSIO for Business: The underlying EOSIO software has been adopted by various enterprises and projects outside the main EOS blockchain, including the Telos and WAX blockchains, which modified the software for their specific use cases.
Government Pilot Projects: Some governmental organizations have explored EOSIO for specific use cases, though most of these remain in exploratory or pilot stages.
These real-world applications demonstrate EOS's potential utility, though the platform continues to face competition from other blockchain ecosystems for developer and user attention.
Trading EOS on LeveX
LeveX offers multiple ways to trade EOS based on your experience level and strategy:
Spot Trading
Spot trading allows you to buy and hold actual EOS tokens. This approach is suitable if you:
- Want to own the underlying asset
- Are interested in EOS's long-term potential
- Prefer straightforward buy/sell trading
Perpetual Contracts
Perpetual contracts let you trade EOS price movements with leverage without owning the actual tokens. These derivatives offer:
- Leverage of up to 100x to amplify potential returns
- Ability to profit from both rising and falling prices
- No need to manage wallet security or token storage
LeveX provides competitive fees and an intuitive interface for both trading options, making it easy to incorporate EOS into your trading strategy.
Advantages and Challenges
EOS's Strengths
Performance Capabilities: EOS can process thousands of transactions per second with confirmation times of less than a second, making it suitable for applications that require high throughput.
Developer Accessibility: The platform provides tools and resources designed to make blockchain development more accessible, including support for popular programming languages.
Cost Predictability: The resource allocation model based on token ownership rather than per-transaction fees makes costs more predictable for businesses building on EOS.
Governance Framework: The platform includes built-in voting mechanisms and a constitution, creating a framework for resolving disputes and making network-wide decisions.
Challenges to Consider
Centralization Concerns: The limited number of block producers (21) raises questions about decentralization, particularly when large token holders can have significant influence over elections.
Community Governance Challenges: EOS has experienced governance controversies, including disputes over protocol decisions and the relationship with Block.one.
Competition: EOS faces strong competition from other smart contract platforms like Ethereum, Solana, and Cardano, all vying for developer attention and application adoption.
Adoption Hurdles: Despite its technical capabilities, EOS has seen slower-than-expected adoption for business applications, in part due to the general challenges of blockchain implementation in enterprise settings.
Getting Started with EOS
Whether you're interested in EOS for its technical capabilities, business applications, or trading potential, understanding this blockchain platform provides insight into approaches to scaling blockchain technology for commercial use.
For traders, creating a LeveX account gives you access to both spot trading and leveraged perpetuals for EOS, with competitive fees and an intuitive interface.
If you're new to cryptocurrencies, our Help Center provides resources to help you understand trading basics and platform features. For more information about other cryptocurrencies, check out our Crypto in a Minute series.