What is EOSIO? (EOS)
A Beginner’s Guide
EOSIO is a blockchain designed to facilitate the operation of a new kind of program called a decentralized application (dapp).
Its technology attempts to solve historical issues in using blockchains to run dapps, as popular applications have even clogged capacity on larger, more developed blockchains like Ethereum (ETH), resulting in performance issues for all users.
One of a number of new blockchains that have prioritized dapp performance, EOSIO has made design choices meant to confirm more transactions per second while eliminating fees charged to users making transactions.
However, there are other notable differences that set it apart from competing blockchains.
The first is that EOSIO programmers can develop dapps using WebAssembly languages like C++, Java and Python, as opposed to a new project-specific programming language.
Also, on EOSIO, software updates are decided through voting using EOS. EOS is the native cryptocurrency on EOSIO and is needed to pay for the costs of operating its blockchain.
EOSIO is perhaps best known for holding the largest-ever initial coin offering (ICO), raising over $4 billion by selling 1 billion EOS over the course of a year-long sale.
Since then, EOS.IO has continued to keep users updated on the status of its roadmap through its official website. For more regular updates, you can bookmark the EOS blog, which includes tips and tutorials on the network and its evolving technology.
Who created EOSIO?
Founded in 2017 by Dan Larimer and Brenden Blumer, Block.One is the private company that developed the EOSIO protocol. Larimer is a notable name among blockchain developers. In addition to EOSIO, he architected the first decentralized exchange, BitShares, and the first crypto social media network, Steemit.
As the Chief Technology Officer for Block.one, Larimer is the lead architect behind the EOSIO software. He is also known for having created the delegated proof-of-stake (DPoS) consensus mechanism used in the operation of the EOSIO blockchain.
How does EOSIO work?
The EOSIO blockchain is designed to emulate the performance of a real computer, and the software itself uses some familiar computing concepts in its operations.
For example, there are three types of resources that power the EOSIO blockchain.
- Bandwidth (Disk) – needed for relaying information across the network
- Computation (CPU) – the processing power it takes to run a dapp
- State Storage (RAM) – used to store data on its blockchain
EOS is needed to purchase all three of these resources on EOSIO, meaning developers must buy EOS to run dapps they launch.
Notably, dapps built on EOSIO don’t require users to pay for transactions, making EOS free to transfer for dapp users. These costs don’t disappear on EOSIO, though, they’re simply passed on to dapp developers who must pay for network resources.
Delegated Proof-of-Stake (DPoS)
To secure its blockchain, EOSIO uses a system called delegated proof-of-stake (DPoS).
DPoS uses a real-time voting and reputation system to decide who can create the next block on its blockchain. This means anyone who owns EOS can help operate the network, however, the more tokens you own, the more likely you are to be chosen by the software.
Each EOS token can be locked, or “staked,” to represent one vote that can be used to support development of the platform.
EOSIO takes a more active approach to governance, with features enabling its users to vote and carry out decisions to alter the software’s rules.
Owning EOS gives a user the ability to vote on decisions, and block producers are responsible for carrying out decisions that are approved. Both groups can vote to change the “EOS Constitution,” a governing document that codifies the rules between all EOSIO users.
This gives EOS block producers extensive powers over network users.
As an example, EOS block producers have the ability to freeze accounts. (Freezing an account only requires 15 of the 21 EOS block producers to vote to lock funds.)
This has led to criticisms that the design of the EOSIO blockchain could become victim to centralized control and abuse.
Why does EOS have value?
EOS is necessary to power dapps and governance on the EOSIO blockchain.
Smart Contracts and Dapps
To build and launch new dapps, EOSIO developers must use what are called smart contracts.
Smart contracts are bound by certain requirements and execute on the blockchain when those requirements are met. Grouped together, smart contracts can form more complex dapps.
Examples of dapps on EOS include Upland, a property trading game and EOS dynasty, a role-playing game in which actions are powered by cryptocurrency.
Like all dapps, these programs need to buy and stake EOS to pay the blockchain to perform the computation needed by its smart contracts.
Staking and Voting
There are restrictions on what developers running dapps can do with any EOS they stake.
For example, the EOSIO software enables dapps to consume a percentage of the blockchain’s available capacity, proportional to how many tokens they have had staked for 3 days.
If a particular dapp developer holds 0.5% of its tokens, then they would be able to use the equivalent amount of its CPU. This incentivizes developers to continually buy and hold EOS.
Of these, RAM is perhaps the most important resource in driving value to EOS, as developers storing information on EOSIO need to hold tokens until that data is deleted.
When that data is deleted, EOS locked in staking contracts is removed from circulation, raising the value of the remaining EOS supply.
Users should note, there is no limit to the number of EOS tokens that can be created. Additionally, every time a block is created, new EOS coins are released to the market.
According to the software rules, the amount of EOS coins can be increased by 5% each year, which may put downward pressure on the price of EOS.
Kraken's Crypto Guides
- What is Bitcoin? (BTC)
- What is Ethereum? (ETH)
- What is XRP? (Ripple)
- What is Bitcoin Cash? (BCH)
- What is Litecoin? (LTC)
- What is EOSIO? (EOS)
- What is Stellar? (XLM)
- What is Cardano? (ADA)
- What is Monero? (XMR)
- What is Tron? (TRX)
- What is Dash? (DASH)
- What is Ethereum Classic? (ETC)
- What is Zcash? (ZEC)
- What is Basic Attention Token? (BAT)
- What is Algorand? (ALGO)
- What is Icon? (ICX)
- What is Waves? (WAVES)
- What is OmiseGo? (OMG)
- What is Gnosis? (GNO)
- What is Melon? (MLN)
Why use EOSIO?
EOSIO may be of interest to developers seeking to build or use decentralized applications.
Developers who have already launched dapps on other blockchains may find that the user experience offered by EOSIO makes switching to its blockchain preferrable, as EOSIO doesn’t pass costs to users making transactions.
Investors may also seek to add EOS to their portfolio should they believe in the long-term promise in running programs on a blockchain, and that dapp developers will continue to use EOS to bring new and novel creations to market.
Now you're ready to take the next step and buy some EOS!