EOS is a case study in how the “best” technology doesn’t always win. When compared to Ethereum on several metrics, EOS is far superior, it has processed up to 3,000 transactions per second compared to Ethereum’s 15. It already utilizes a more eco-friendly delegated proof-of-stake consensus mechanism.
Block.One, the originators of the EOSIO software, raised over $4 billion in the largest initial coin offering ever. At one point the market cap of EOS was over $17.7 billion–EOS had a lot going for it.
Of course there are other factors and market participants in a free market ultimately determine what technology is the “best” based on what factors (or perceived factors) they most highly value.
The creators of EOSIO, the software that powers EOS, Dan Larimer, Chief Technology Officer at Block.One and Block.One in general managed to alienate the cryptocurrency community. EOS was put forth as an Ethereum killer or “Ethereum On Steroids”. This likely ticked off a lot of whales who were heavily invested in Ethereum. There were also some decisions made that led people to think EOS is not very decentralized.
EOS had a chance to supplant Ethereum, but seems to have blown it. Now the Ethereum community is planning several major upgrades to the network in the form of Ethereum 2.0 (also known as eth2, also known as Serenity). The main changes includes transitioning to a more energy efficient proof-of-stake consensus mechanism and side-chains that are purported to increase the transaction per second capacity of the network to upwards of 100,000.
If this can be pulled off, Ethereum 2.0 would in my opinion be well positioned to capitalize on superior technology and lead the distributed financial sector forward.
I also think it is possible for Ethereum to overtake Bitcoin. One of the reasons I was initially drawn to Ethereum back in 2015 is that it has non-monetary use whereas Bitcoin does not. However, because of its technological limitations, I didn’t see Ethereum in widespread use. Ethereum 2.0 could change that.
Transactions Per Second
EOS is currently superior to Ethereum in terms of transaction throughput. EOS has processed as many as 4,000 transactions per second (TPS) and can theoretically handle more. Ethereum meanwhile, putters along at 15 TPS. Ethereum 2.0, using side chains in a process called sharding, could increase the throughput to 100,000 transactions per second, or roughly 4 times that of Visa.
As of writing this article, EOS has a market cap around $1.2 billion. It is rarely mentioned in “Ethereum Alternative” articles. While EOS was once a top 10 cryptocurrency by market cap, it has fallen down to 29. Ethereum in contrast has long been the number 2 cryptocurrency second only to Bitcoin. Ethereum accounts for just under 20% of the total cryptocurrency market (compared to ~46% for Bitcoin. Ethereum has a total market capitalization of $355.7 billion.
Distributed cryptocurrencies need a consensus mechanism so that the various nodes can agree on the current state of the system. Ethereum 2.0 is in the process of moving to proof-of-stake. EOS was designed from the beginning with a delegated proof-of-stake (DPOS) consensus mechanism. The difference being that with eth2, anyone with enough Eth can be one of the validators eligible for random selection to add blocks whereas in DPOS, one must be elected to one of 21 block producers.
One of the appeals to cryptocurrencies is they are not controlled by a small group of actors with oligarchical power. With validators numbering in the thousands and assigned pseudorandomly, Ethereum 2.0 does seem to be much more decentralized than is EOS.
Technologies like Ethereum and EOS allow for distributed apps or dAPPS. In order to have apps you need developers to create and maintain them. According to this report, EOS is losing developers, while other dAPP platforms like Ethereum and Polkadot are gaining developers. So EOS developer community is getting smaller.
No cryptocurrency can complete with Bitcoin for name recognition, but Ethereum is strongly in second place. Big names in the financial world will mention Ethereum whereas projects like EOS are relegated to those inside the cryptocurrency community.
Summing it All Up
As I wrote above, when EOS came onto the scene Block.One had a lot of money and EOS had a lot of momentum. But poor decisions and perception has blown the chance. Now, developers are dropping and the price going no-where. EOS’s technological advantages don’t seem to matter. Plus once eth2 is released, those advantages won’t exist.
In order to for eth2 to launch a lot of things have to go right. However, there are a lot of folks working to make sure it does. If there are delays or issues, those could result in selloffs that will represent buying opportunities.