EOS Peeking Under the Hood - 6 Months After Launch
The beginning of the year is a perfect time to review one’s investment decisions. Not the easiest task in those continuing bearish times, but all the more important. The rational behind my decision to invest in EOS before launch is best summarised in a series of articles i have written on Steem (which i had just discovered) last march. I basically addressed a couple of critical questions regarding the EOS launch and found generally quite positive answers to each of these question. So now i intend to take a new look at those answers and discuss if they are still valid or if any factors my decision is based on have changed.
Here are the links to articles and the main questions i tried to answer in the “EOS Peeking under the hood” series and a summary outcome of each article:
Q1: Is the EOS ICO legit? A: Although B1 has in fact waived any responsibility for launching the blockchain and switching coins, what they provide is the infrastructure for a community to use. So as this approach makes sense, the critical factors for success are an active community and a usable software product.
Q2: Is a successful EOS launch realistic? A: Simply said, yes! There were an impressive number of block producers ready to launch the chain and handle block production as well as a large active community, spearheaded by the EOSGo team, where invested to streamline governance and other important items to discuss.
Q3: Is the core software solid? A: Block 1 had kept announced timelines and features until then and the Alpha and other Test releases have been successfully implemented by the community well before launch.
Q4: Can EOS do better where Steemit failed? A: Steem, and in particular in its Steemit frontend, is well known for it’s whale issues and the relatively bad user experience. EOS had always put usability as it’s core, the strong technical performance aside, features like a reputation system, key recovery etc. are features to facilitate adoption.
Q5: Will EOS solve the governance issues of crypto? A: DPOS for once, but more so the idea of a blockchain governed by a constitution, in my view is the real strength of EOS, to remain versatile and flexible enough to address future challenges. Especially the concept of sidechains in combination with inter blockchain communication, provides users the opportunity to move to the chain that most suits their needs, and thus creates a pressure for each EOS.io based chain to remain attractive to users.
Q6: Is investing in EOS likely to be successful financially? A: Since i was able to answer all questions positively my assumption was, that EOS could be a very successful platform project, likely comparable to facebbok, amazon and others, that would make a long term marketcap similar to those companies reasonable.
Held back your objections until now?
Now let’s look at the current state of EOS and if those answers remain valid or if there are new questions to be raised.
Q1) Is the EOS ICO legit? & Q2) Is a successful launch realistic:
Well here we have the solid facts of historic events. The chain has launched, it is operating and investors who performed the required tasks have access to their EOS tokens proper . There is even a fallback solution for those who forgot to claim their tokens in time. Also the community has established a series of high quality infrastructure features like wallets, block explorers, identity management apps (Scatter), a token leasing platform (Chintai) etc. and there is more to come for apps, which are now mostly gambling dapps, but more and more high level projects are moving into beta or recently released their dapps. So these two points can easily be checked.
Q3) Is the EOS.io core software solid? So this is much more difficult question to answer. For one, the EOS blockchain already delivers high performance and has quickly surpassed all other blockchains as for TPS and scalability. Doing transactions on ETH or even worse BTC now feels like a return to the dark age. B1 is also still active in updating the code and implementing core features like REX contract and fixing the code for vulnerabilities. So this is easily a check.
Having said this, if you look at Dan’s announcement and claim that the EOS code was “feature complete” there are a series of critical features from the white paper still missing as of today:
- Inter Block chain communication (IBC)
- Referendum contract
- Worker proposal infrastructure
- EOS File storage
A few critical features have been developed by the community in the meantime, most notably voting facilities and wallets, which where critical for the launch and a basic use of the chain. Btw. the secure enclave hardware wallet, Dan announced to be around the corner in summer 2018 is still missing. (It’s not a core feature but i’d like to mention Steem 2.0 here, for another empty announcement). Whatever Dan was referring to by feature completeness, it was certainly not a comparison against the EOS whitepaper which clearly touched all those things.
Whereas multithreading might not be that urgent a feature, since EOS’ performance is still way beyond what is needed by the chain (and of course anything competing chains have to offer), IBC and referendum contract, especially the lack of both has really thrown back the project. Actual referendums are still not possible, although a group of BPs are working hard on finalising the referendum system, which is currently available as alpha version to be tested on the jungle testnet, so that eventually either the current constitution can be ratified or replaced by a version 2 (B1) or an alternative document as proposed by EOS Newyork (or EoS Alliance some day). So maybe, about 9 months after the launch, we will actually be able to use a core feature of EOS.
A new proposal for Ressource exchange (REX) is currently in alpha phase and also available via Chintai on the jungle testnet. Rex is meant to serve as a network resources leasing platform and at the same time as reward system for voting, because it will only be accessible to accounts that have voted for at least 21 bps. It is evident that B1 one has thrown a lot of their resources at this project, quite apparently they see that the current governance implementation needs improvement urgently. But that’s the topic of the next set of questions. If you want to learn more about REX and token leasing on EOS take a look here!
This is certainly a question for the upcoming year: Will EOS be able to deliver the outstanding technical features within a reasonable amount of time. We need definitely to avoid ETH like scenarios, where critical upgrades are postponed for years.
Whereas referendum and REX seem to be around the corner. Inter Block Chain communication and Mutlithreading will be critical for EOS future success, these need to be delivered within this year.
Q4: Can EOS do better where Steemit failed? So this is basically a power issue between the interest of whales and that of common users, who aren’t firmly in EOS as investment, but who want to use its features for actual applications and purposes. Whereas it is clear that whales are in control on EOS, not the least for deciding upon bp rankings, EOS usage is growing significantly, and eos dapps are now clearly used by more people than any other blockchain in operation. So up to now, i’d say the relation is healthy, and that is something noteworthy given that we are in a bear market and Steemit has become pretty dead lately.
Unknown at steem, there is a real CPU issue on EOS, that remains to be resolved. This is a technical issue, but it hampers adoption, e.g. just my own experience, in the height of the gambling craze it became impossible to play EOS knights, even if only doing a few transaction by day and having around 100 EOS staked. That is the indirect cost of using EOS, you need to hold it, and if CPU is rare, you need to lease EOS which is like transactions costs.
So EOS offers certainly the best user facilities in crypto, we are far off from things like, a user won’ t even need to care about keys and security to be able to use the EOS blockchain as underlying tech. And of course there is still no support for lost keys, and fraud protections that is now delivered by ECAF might go as well soon. On the other hand, a more centralised approach like worbli intends to offer just that.
This point is certainly something that needs to improve before it can be checked.
Q5: Will EOS solve the governance issues of crypto? Being a transparent and governance blockchain is in my view the most ground breaking promise of EOS. Whereas DPOS (existant in Steem and BTS implementations) already provides an implicit way of governing bps and software deployment , EOS’ constitution and referendum and arbitration idea (idea, since it wasn’t provided by B1 at launch) are certainly revolutionary. What most crypto anarchists don’t realize is that the problems they criticise originate from regulations and rules that are not democraticaly legitimated. What Bitcoin does, is to provide one seemingly immutable structure, but in reality, that it has remained so stable, is due to a community of devs and miners, who on the other hand have prevented any real update of the tech, which is again is overdue to facilitate adoption. A structured human governance model would be able to make rules on-chain, inherent to the needs of blockchain which is decided by the community of holders, and not an obscure elite. In this sense, BTC is not so different from the financial shadow government that dominates global policy making, just not that important currently.
It should be apparent, that i am in favour of a strong constitution (or whatever you want to call that ruling document) as well as base layer arbitration, otherwise decisions and enforcement will remain in the obscure. Unfortunately, Dan and b1 have moved away from the strong governance ideal and replaced the war cry from “the law is the law” to “the intent of code is the law”, which is of course ridiculous, since an intent of code, if at all, requires interpretation, and if you don’t have base layer enforcement, e.g. a dapp can just leave the Riccardian contract empty, as just many dapps do, so there is no intent present at all to decide upon. I just don’t understand their position in this regard, as Dan has always promoted a social system of checks and balances, just take Dan’s response to Vitalik’s criticism not long before the launch. The recent focus on REX seems to be an effort to somehow counter-play via the system and replace actual governance with a code base intended to incentivise participants to behave well. Of course this won’t solve EOS’ governance systems, as they again can be played easily. E.g. an exchange can offer their clients a rental reward slightly around the one provided by REX, and in the contract request to vote on their behalf. This way the exchange will be able – to even legitimately under the current constitution to vote as they please with their clients tokens. Don’t get me wrong: I do like REX, but it will not be the feature to save EOS:
Why the rant at this point? Because it reflects the current governance discussion on EOS.
Of course all these debates on how to structure governance on EOS are in the end completely irrelevant as long as they remain mere speculation and as there is no implementation where you can see how governance plays out. What we don’t need is a EOS-governance-telegram-chat-like discussions incessantly reiterating its circle of arguments, without accomplishing anything. What we do need are different implementations of the EOS.io software, that compete with each other and demonstrate how different approaches play out and which one is the most effective one. This would also be the realisation of Dan’s original concept.
In this regard we are well underway, with now a good set of side- or sister-chains already established, that follow different governance approaches and different degrees of centralisation etc.
Yet for this whole ecosystem of governance to play out its strength, holdings and accounts need to be as fluid and interchangeable as possible, we do need a working IBC for this competition in governance to become possible. Unfortunately we haven’t heard anything from B1 regarding IBC, and aside the REX, they don’t seem to develop much. The last news in that regard came from WORBLI, but this was well before their chain launch and they now seem to have a lot of things in their backlog to be covered before they are able to ramp up with IBC.
So this is the second question for this year to be answered: Will we see a healthy competition between different governance model and will they reinforce and drive improvements between each other?
Q6: Is EOS likely to be a financially successful investment? AKA What to expect for 2019?
Evidently EOS was not a rewarding investment in 2018, and although it was a solid launch, didn’t manage to decouple from BTC and the overall crypto space, as i was hoping for, and rightfully so, as there are a lot of its core features not in place or at best in formation.
I think the most important factors will be effective technical improvement of the core software, as well as a lively governance ecosystem, with different approaches. Especially the latter will be a hard nut and i expect a lot of disruptions here, especially if effective governance, which has been dormant until now becomes active via the referendum systems and things might not play out as one or another party have assumed, and thus might cause much unfriendlier fork scenarios than we have witnessed (or enjoyed) so far.
But if this plays out well EOS could be quite disruptive in the crypto scene and effectively detach from the valuation of BTC, which btw. i believe has left the valley of tears and head for an at least moderately healthy market in the upcoming years.
To sum it up: There might clearly be lot of issues with EOS that requires a solution, but the overall story remains well intact. Code and community remain strong, likely well ahead of any CASPER emerging i believe EOS will have removed so many obstacles already. But who knows which new tech will have emerged by then.