Will EOS Kill Ethereum? Part I

in cryptocurrency •  9 months ago 

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Introduction

Has EOS brought the Grim Reaper’s sickle upon the neck of Ethereum? This is a question stirring in the minds of many cryptocurrency investors and developers alike. For investors holding the Ethereum bag, they are wondering if the time has come to let go. And, I’m sure developers have started to wonder if they are creating a product using old technology.

Before you read on, note I am writing this analysis for an audience with at least a basic knowledge of ‘blockchain vernacular’ and a rudimentary understanding of how blockchain and crypto use cases are evolving. If you are not familiar with the EOS vs. Ethereum debate, it might help to read up on the concept of smart contracts and to check out the phrase ‘platform coin.’

In basic language, a platform coin is a coin that serves as a home base for many other coins running on its blockchain. Ethereum was the first coin to be called this name, at least as far as I know. The creation of Ethereum opened up an easy method for other blockchain projects to be developed without the burden of having to create a new blockchain network from scratch, and allowed the coins produced in these projects to be easily exchanged for Ether in decentralized exchanges and initial coin offerings (ICOs).

However, Ethereum is struggling to scale further as the network has become clogged and slow, allowing EOS, a new blockchain and coin, one free of such issues, to seemingly race ahead.

On a second note, I have to reveal my background, which some might feel may taint my analysis to some extent. I am currently a professional trader and analyst. Previously, up to late last year, I was a practicing designer and product strategist, mostly in hardware. I have no experience as a developer past editing a few lines of code. Yet, it is precisely my experiences in my two phase career that I draw on in this analysis, and hopefully this allows me to offer an unheard voice.

I’m going to weigh in on this debate in two parts: one from a product development perspective, and second as a trader. Also, I’ll bring my perspective to conclusion with my price forecasts to bear in the second half. I hope you find this interesting and thoughtful.

I’m sure no one would deny that Dan Larimer and Vitalik Buterin, the chief architects of EOS and Ethereum, respectively, have done much to push blockchain tech forward. Dan’s projects, namely Bitshares, STEEM, and EOS, account for a large share of blockchain transactions each month. Bitshares, the first meaningful decentralized exchange, and STEEM, the token that powers a social media network that pays users for content, are visionary in themselves.

Vitalik, I believe, was an important architect in moving the smart contract concept forward and arguably helped set the modern blockchain economy in motion.

Vitalik and the Ethereum team’s work on smart contracts sparked the initial coin offering market, and prompted a relook at modern securities law. Ethereum also advanced the concept of smart contracts and Decentralized Applications (DAPPs). Today, millions of dollars in transactions occur through smart contracts and DAPPs on the Ethereum blockchain. This work has spawned ‘decentralized organizations’ working in ‘trustless’ communities, meaning they no longer need to rely on trusting each other as the blockchain effectively makes everyone an honest player.

This debate, I hope, honors both Dan’s and Vitalik’s immense contributions and leadership to the art of blockchain.

Speed and its Twin: Usability

Why is EOS such a threat to Ethereum? In essence, it is speed. Currently, Ethereum can handle up to 15 transactions per second (TPS). The latest figures I’ve been able to find clock EOS at over 1200 TPS. Certainly this difference in speed is huge, but why does this matter? Chiefly, in my point of view, the speed of transactions affects the usability and user experience.

There are also some instances where speed is mission critical. For example, in online gaming, which has recently started to emerge on the blockchain. We saw CryptoKitties, the most well-used DAPP and game on Ethereum, elevate transaction costs and cut speed on the Ethernet with disastrous effects, sometimes even making the network grind to a near halt. So far, we’ve just seen the beginning EOS game development, but early reviews suggest it holds great promise.

I have interacted with a number of decentralized exchanges (DEXs) based on both chains while trading. In general, I have found the interaction with DEXs on the Ethereum chain a bit frustrating and cumbersome, while interacting with DEXs on EOS is faster and easier. To me, it seemed that Ethereum simply takes too long to receive deposits into a DEX smart contract. Actually, I found the EOS exchanges, such as dexeos.io, much easier to interact with than centralized exchanges, like Binance and Bittrex, though I have no real complaints about the latter two.

Based on my experiences, and watching CryptoKitties bring the Ethereum network to its knees, it appears Ethereum is not up to the task in such use cases. But, is this level of speed-driven usability always necessary? My thesis is no. If you are releasing an ICO on the Ether that will later be turned into a mainnet launch, is speed critical? It doesn’t seem so if your product will have its own mainnet later. If you are running a decentralized organization on the blockchain, are consensus actions, such as voting on expenditures or projects, speed critical? I don’t think they are, but perhaps there may be some special cases where they are.

So when I ask the question, “Will EOS ‘kill’ Ethereum?” I am asking whether EOS will bring Ethereum to zero- that is to a zero monetary value, and zero activity. With respect to EOS’s speed advantage, I don’t think it will ‘kill’ Ether. However, I do believe, unless these speed concerns can be repaired in future forks, we’ll see Ether scale more slowly, see less projects commence on its chain, and see some projects simply leave Ether to port over to EOS.

Vitalik has stated that Ethereum will eventually achieve 1M TPS through a couple of technologies he is working on, but many in the development community seem skeptical about this. I will hold back judgment as I am not qualified to weigh in on this concern.

Coins as a Product

In drawing on my product development background, I know that simply saying that most teams will leave the Ethereum blockchain to go to EOS is not a fair assumption. Developing projects and products requires time and resources. How you expend those resources is, of course, a key aspect of project management as these usually tend to be limited.

Whether a team decides to move from Ethereum to EOS, particularly if their project is already developed, depends on how critical this speed issue is. My examples above may be simplistic, but not every project needs speed in the same way. Development teams must pick their battles and should only pursue necessary wins when resources are tight.

I understand from what I’ve read that EOS has a different programming language (C/C++), while Ethereum uses Python, or can be developed in Python. So, any movement of a project would need recoding, so that could be a big consideration. Note, however, I may be incorrect in this understanding.

So finally, from a product strategy, I find the assumption that one coin will rule them all as unlikely. Just as for every Apple phone, there is a Samsung phone, and a Xiaomi phone, and for every Ford F-150 there is a Chevy Silverado and Toyota Tundra, every market is full of 1st tier, 2nd tier, and tertiary players. Why can this not be true with platform coins too?

In further building on my product strategy background, I can see that Ethereum has ‘first mover advantage.’ However, eventually being the first out diminishes in return. We have seen many market leaders eventually succumb to upstart competition. Yet this doesn’t mean they simply go away. Usually unseated leaders simply take less share.

This evolution of innovation is best for consumers and users at the end of the day. But it’s also true that first movers are typically hard to unseat. Currently, the projects on the Ethereum chain are more established. I looked for data on how large the ‘GDP’ of Ethereum and EOS are. By that, I mean how much economic value changes hands on each chain, not just in the coin itself but in terms of its smart contracts. While I could not find the data, I assume Ethereum currently has a higher GDP, but that may change in the future.

It’s notable that Block.one, the company that developed the EOS blockchain with Larimer, announced it is running a $1B venture fund to foster the development of projects. Certainly, this will chip away at Ethereum’s market share.

Conclusion

In the next article, to be released next week, I’m going to leave the product development and product strategy side of my brain behind and talk from a trader’s perspective. Just as the arguments are not cut and dry on the product development side, they are not on the trader side either. I hope you’ll find it interesting. Stay tuned until next week.

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Humm, this is quite superficial.

I think security, not speed, is critical for a smart contract platform.

Plus, in Ethereum, speed is already achieved through side chains.

For example: speed for games on the LOOM network.

Even a fast core chain like EOS will have to scale via 2cd layers in the long run, no single blockchain can process all the transactions in the world and Ethereum is well ahead in developing these L2 solutions.

While EOS is a great project, I think Ethereum has also the advantage in terms of development tools and size of developer community.

Check this out: https://medium.com/crypto-nyc/twelve-reasons-im-bullish-about-ethereum-today-809a234312b2

Finally, Ethereum is not the sum of all these BS ICO coins trading on Coinmarket cap, there are numerous projects that are being built on Ethereum which are critical to lay down a decentralized financial architecture but aren't listed on CMC (Dharma, Coumpound, KomGo, 0x).

In the long run, Ethereum will be able to do everything that EOS does and being decentralized.

Ethereum all the way.

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Eth exist longer then EOS and you say in the long run Eth will catch up with EOS... Does not sound like right logic. Maybe Eth is not designed well from the beginning? In fact there is already a race among many platform wanting to take over dapps, some of which already solved problems Eth didn't (scalability+privacy+having DEX) while being decentralized (as opposed to EOS). One such platform is already preparing a solidity interpreter to be ready to welcome Eth dapps escaping Eth for scalability :P and the one has scalability much much greater then centralized EOS.

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No mate I am afraid you got me wrong, what I meant is in the long run both EOS and ETH will be equally scalable but right now Ethereum has a huge head-start in terms of development where EOS (and all the other smart contracts platforms ) is still very barebone.

In fact there is already a race among many platform wanting to take over dapps, some of which already solved problems Eth didn't (scalability+privacy+having DEX)

I don't agree with this, Ethereum has layer 2 solutions for scalability, many DEXes (0x, IDEX, Airswap, Bancor, Kyber) and a privacy roadmap with zk-snark.

Again, given time Ethereum and EOS will both have the same features in terms of scalability, privacy, exchanges etc, but Ethereum will be decentralized and EOS controlled by block producers (look what DPOS did to LISK).

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Mind posting some articles on those projects that you mentioned? I will obviously also google for some :) Thanks

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Sure, I forgot to mention many other great financial projects who never had an ICO so aren't listed on CMC but are building the basic blocks of a decentralized finance network.
https://dharma.io/
https://compound.finance/
https://www.trusttoken.com/
https://dydx.exchange/
https://0xproject.com/

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Thanks will look into it. Is there a tag lr subreddit that you follow for this kind of stuff?

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No, just lots of research

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I see Thusttoken is TrueUSD curious to see how that would trade against the dollar. This reddit thread got me interested in trading thether: https://www.reddit.com/r/Tether/comments/7j3iyi/how_to_earn_profit_trading_tether/

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Hey man, TrueUSD is the first tokenized asset issued by Trusttoken, it's a stable coin pegged 1:1 agains the USD.
Check this podcast out:
http://unchainedpodcast.co/harbor-and-trusttoken-on-why-they-dont-mind-being-unsexy-ep77

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Thanks.Mind if i add you in discord. Im also on the /r/bitcoinmarkets slack

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Not at all, go ahead @roloyolo :)

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EOS doesn't have to fork its blockchain if a smart contract has a bug in its code. You can stop the contract and redeploy it with a patch. Making it easy for new developers to write code with a commonly understood programming language is much better than an Application-specific language.

With regards to scaling, EOS will implement Inter-Blockchain Communications which will allow for infinite horizontal scaling through communications through different implementations of the same code, EOSIO.

Ethereum is dead in the water in regards to transaction fees because the EOS does not have any. Instead EOS uses a staking scheme to limit the blockchain resources to those who can stake tokens in the system.

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EOS doesn't have to fork its blockchain if a smart contract has a bug in its code.

Neither does Ethereum, what are you talking about? Forking the whole blockchain to update one smart contract is ludicrous. Beside have you heard of the Open Zeppelin framework, they allow for updating smart contract on Ethereum. Here's some links:
https://epicenter.tv/episode/220/,
https://openzeppelin.org/

With regards to scaling, EOS will implement Inter-Blockchain Communications which will allow for infinite horizontal scaling through communications through different implementations of the same code, EOSIO.

Ethereum will implement sharding which will allow it to scale. Truth is, in the long term both chains will be roughly as fast although I admit EOS has a considerable head-start here but even EOS will bump into scalability issues eventually.

Ethereum is dead in the water in regards to transaction fees because the EOS does not have any.

Well users of EOS will pay fees in terms of staking ever diluting in value EOS tokens to maintain their account. Plus EOS development is expensive because of speculation on the RAM / CPU market, deploying a dapp on Ethereum costs around $50 (not counting development of course, just the deployment).

It's okay to support a project but at least do your homework on the competition @dappcast

I believe projects like EOS and ADA will be the industry leaders soon....

yes i agree with you .

@mguru

I'm more of an ETH fan (not an expert in anything). The reason is because of time and battle testing that ETH has gone through. So much is being built on ethereum and I think it would be hard for EOS to take much away from it. Plus EOS had such an embarrassing launch with all kinds of vulnerabilities. I think they could theoretically kill ETH but the odds are very slim.

  ·  9 months ago (edited)

Like @kp33 mentioned, I think there's enough space for both projects to coexist. With a simple research without going deep into the technicalities, EOS blows Eth outta the water. But the space is also relatively new, and allows enough time for improvements.
However, if I were to choose, I'd go with EOS. Scalability is a serious concern for dapps and Ethereum has only proven even more costly to use when it is lagging.

Glad you're a trader, you'll know a good opportunity when you see one. Do check out Trade.io exchange. They're huge, and they're permitting commission-free trading for this period up till October. I have loved it so far there. There's also a liquidity pool that allows you earn daily cryptocurrency rewards for life, just by holding and leasing their TIO tokens.

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It appears you need to trade with a bot. I trade by hand.

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Yes, it's required to code your strategy in pinescript.. Trading by hand is boring and requires a lot of time to backtest :P

It is really too early to make such claims, you are talking about a project that just launched their main-net couple of months ago and we both know what happened at launch, you have a lot of good points in your article but that is just not enough to back up this claims! How many projects successfully run an ICO on EOS at this moment!

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Which claims are you referring to? I have not made a lot. TPS is pretty well documented. Most of my articles is personal insight, experience and inference, not claims. And, I actually don't draw a conclusion as to whether EOS will kill Ethereum. I don't think it will or we cannot assume it. So, I'd love to know what you consider a 'claim'.

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Nice article, looking forward to one that will compare ADA

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"EOS, a new blockchain and coin, one free of such issues, to seemingly race ahead." This in itself is a claim. Is EOS tested probably? For god sake, they failed once launched nothing can guarantee that they will not fail again. I can keep go on and on and continue to quote a lot of similar things from your article. Let's get this down to one thing to make it simple.

I am not against EOS, but to stat that something is free of issues while it has been just launched a couple months ago and there launch was horrible, is really too early to stat that they are free of issue Ethereum have.

And to be honest, even asking such questions without any claims is too early!

I think they will both co-exist at least for now.There is room for both. Kind of like Coca-cola vs Pepsi or Apple vs Microsoft. These giants battle it out but can't really finish the other out. Its probably better to have a competitor in order to force everyone to keep improving!

My money is still on NEO (literally). Be that as it may, I think that there is sufficient space for multiple platform coins, perhaps each with its own niche market e.g ETH - cheaper apps, EOS - Western World, NEO - Eastern World, ADA - scholars etc.

Those who get in first (i.e. those already up and running, will no doubt continue to enjoy the first mover advantages into the future. Right or wrong, it's not really about which coin is better or has better support or a better plan. If that was the case then BTC would have been toppled long ago.

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Excellent points here.

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I like that!

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Bullish on all those based and yes ETH based on the Elliott Wave Theory. Will post the fractals for EOS and ETH next week. But bullish on ADA and NEO as well.

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The Elliott Waves can only ever show a representation of the underlying fundamentals. I think that in terms of project scope, development and market positioning, some of these platform coins have got smoking futures ahead of them!

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thank you for the tips:)

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No idea

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  ·  9 months ago (edited)

The biggest problem of the ethereum is in a pile of unnecessary ICO. This will ruin him. The EOS initially left this problem, now there really are a lot of inter-projects related to this platform. I feel that in the next 2 years, we can forget about ethereum. Then we will talk about the contest of EOS and bitcoin

Don't think EOS has the capability to do so, especially in the area where WAN is improving its functionality day by day. But this is a good article, liked it.

  ·  9 months ago (edited)

sir your analysis is great but who is best between EOS vs RIPPLE?

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ripple is best ;)

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Very interesting article. Hmmm EOS now is very active against other cryptocyrrencies more famous like ethereum etc then will hit this market and can become in the top trending coins and used for a lot of projects.

I don't think so, but interesting perspective!

I dunno if anyone read about the Trybe airdrop, but I read somewhere that the airdrop went wrong and they were able to take back Trybe tokens that they had sent to people? Was this an EOS issue or an issue with the smart contracts that were used with the Trybe token creation and distribution. Ethereum is much more mature than EOS and there are so many examples of dapps on Ethereum and ERC tokens that are making a big difference

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I don't think so :)

No way. Ethereum will be reduced but not killed off.

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good analysis from a personal perspective

I find this question to be very selfish and ammature. Beside wishing to kill Ethereum, what else can EOS do? Focus on that. Focus on improving the crypto evolution. IMHO. Peace y’all!

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Wait a bit before crowning EOS. I've seen this thing be hyped up for over a year and yet all the news I really hear are negative news. I'll stick to ETH when it comes to security.

Thanks for the article, very interesting. I am a firm believer that Vitalik will surprise us once again. #ethereum #ethersquad

never , eth the future is now .

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think the same

I believe EOS will have a higher MC than ETH by this time next year. In five years? If ETH hits 1 mil TPS and EOS was at the same level, both would be monsters in their own right. I do not believe either of them could kill one another, I believe the only way one of these blockchains dies is by it's own doing.

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Nope EOS cant kill Ethereum because its his parent. Its murder