EOS Token Sale – Why I’m Not Investing In It
It has been about a month since block.one launched its EOS token sale and now is a good time to evaluate the project.
The last couple of years has seen a dramatic increase in the number of ICOs and token distributions. With that rise also comes the largest capital increase the crypto markets have ever seen. The EOS project is one of the most anticipated and popular token sales to date, and is currently the largest capital-raising exercise in the crypto world.
The EOS software is a new blockchain platform that enables easy creation of decentralized applications. EOS is often referred to as a possible Ethereum killer because it enables easy DAPP development and offers superiority in scalability and block confirmation time.
My concerns for the EOS project
Overpriced
The token sale is a one-year token distribution with an end-number of 1 billion EOS tokens in total. The current price for EOS tokens on the exchanges is about 1.7 US Dollars, and with a total end-supply of 1 billion tokens, this gives EOS a future market cap value of 1.7 billion US Dollars. This makes EOS massivly overpriced in regards to all of its competitors, besides Ethereum.
It is hard to say whether this evaluation will hold true in the future seeing that an increase in supply could deflate the price. Regardless of this, I still think that EOS is overpriced at the moment, seeing that it has not yet fully developed the platform and there aren’t any DAPPs running on it.
Volatility
I don’t think that a token sale lasting a year makes sense. EOS might be doing this to try to stabilize the price and gain a foothold in the market, but I see it as being unnecessarily greedy. I don’t see how the developers are going to develop the tech any faster just because they raise a shit load of money.
The EOS tokens are released for purchase in stages. Block.one will keep a reserve of 10 percent of the tokens, which cannot be traded. 20 percent was sold during the first five days and 70 percent is being split into 350 consecutive 23-hour periods of 2 million EOS tokens each.
Because the sale has been divided into so many stages, many investors will end up paying a lot more for their tokens when demands are high than the investors that buy when demands are low. This makes the price of the tokens susceptible for speculation and incentivizes price volatility, which is a bad thing for long-term investors which should be EOS’s core customers.
EOS is not a cryptocurrency yet, it’s a tradeable token
EOS tokens are meant to be used as gas/transaction fees to run the DAPPs built on top of the EOS platform. The only problem is that EOS doesn’t have these DAPS built on it yet, and as an investor you have to wait and hope that someone will develop something on the EOS platform, otherwise the tokens will be useless.
EDIT: @lukestokes has been so kind to remind me that EOS won't have gas/transaction fees. Thanks for clarifying :) I was aware of this, but I somehow managed to forget it when I wrote this piece lol.
This fact isn't making me reconsider my outlook on EOS as it simply gives the token even less possible uses.
Here is what the faq says on EOS website:
5. What features, uses or attributes do EOS Tokens have? Can the EOS Tokens be used on a blockchain adopting the EOS.IO Software?
block.one is building the EOS.IO Software but it will not configure and/or launch any public blockchain platform adopting the open source EOS.IO Software (the “EOS Platform”). Any launch of an EOS Platform will occur by members of the community unrelated to block.one. Third parties launching the EOS Platform may delete, modify or supplement the EOS.IO Software prior to, during or after launching the EOS Platform.
The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.
These are the reasons why I won’t be investing in EOS any time soon, even though it’s a project of the highly esteemed Dan Larimer. I might buy EOS in the future but as for now there are simply to many uncertainties and the valuation is simply to high for me.
What are your thoughts on EOS and have you invested in the token sale?
Sources
Picture: https://twitter.com/eos_io
Faq: https://eos.io/faq.html
upvoted ive seen your link form PAL
Thank you :)
It's difficult to say who will win the race. The project sounds interesting but i've not yet read enough about it to make a good statement. Thanks for posting more info. What i can say for sure is that there's too much coins/cryptocurrencies around.
J
I completely agree, most of the coins and tokens barely try to solve any problem. But who can blame them for trying to make an easy couple of million dollars lol :)
@jjb777 There is no such thing as too much tokens. It’s like saying there is too many electronic gadgets, phones, furniture, books, restaurants etc. Those that solve (are useful for the customers) something will strive, those that do not will perish. Saying "too much tokens" is totally irrelevant. Go and seek those that solve something and invest, or sell for FIAT. The amount of tokens now is totally minimal compared to what the market will look like in few years if the crypto-world prospers.
@cryptodan Most of the tokens don’t try to solve anything? I only know about few dozens yet to be honest (minimal knowledge I guess), but those that I know about definitely at least try to solve something. Truth is though that I seek tokens by finding out what they are trying to solve first, therefore I might miss the "most of the tokens" that do not solve anything:)
I agree to the point that it will be difficult for every 23h token sale period to keep up that amount of investment over one year. therefore it is highly likeable that the price will drop under 1$ even to 0.50$ or 0.1$.
http://eosscan.io/
Either way that is only a matter of entry point, where we have learned that you will never find the perfect timing...
In general I think it is great to be invested into this project with wathever you can effort. I am thinking if I could have invested into iOS for 1$ 15years ago, that would have been awesome....
As soon as they start building anything that works based on EOS it is going to the moon^^
Good one about the entry point, its almost impossible to predict when the price is at its best. All we have to go by are estimates, historical data and our own risk tolerance in regards to the price.
For me personally, there are just to many uncertainties and the price isn't right at the moment.
agree with you. what do you think is a fair price atm?
what do you think where EOS will be once they start releasing dapps... 2018 '19 '20? I will hodl my 1000 EOS until 2020!
Sorry for the late reply.
Based on my loose calculations I would say EOS should cost about 0.50 $.
That's if you compare it to Stratis and how many coins stratis have.
Stratis have rougly 100 million coins, and EOS will have 1 billion coins.
By using a relative model for evaluation the price of EOS should be 1/10 of Stratis, currently priced at $4.90
It's to hard to guess about the price in 2018-2020, it depends on many things like the general outlook on the market (bear or bull), and also how EOS stack up against the competion at the time
Yes, I think you have to take a risk... But EOS is not the only coin out there. I think best rule is to diversify
You are so right, I try to balance my portfolio as well trough diversification and value investing :)
Haven't invested in EOS yet and also think the initial or current valuation is too high.
That's a smart move @morkrock :)
I think that high valuation, in some part, is because people see Dan Larimer's name on it and correlate that with EOS being a quality product without doing the necessary homework on the project before buying in.
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Dan, As always I love your insight into the cryptomarkets. Some points I agree with and one I disagree with. I believe you are correct that the total market evaluation is too high. $1.7B is an insane entry point on speculation should all the coins continue to sell at the current rate. However, Can you teach faster if you have more money. No an individual can not, however you can hire others to reteach your knowledge. Like a train-the-trainer concept. I do agree with your overall view and therefore I will accept the token (as you mentioned not a true crypto) as bounty or gift but I will not be investing personal assets into EOS at this time.
-IceBurst
Thanks for the compliment @iceburst, I'm glad you find it useful :)
You have a valid point my friend. Sure, they can hire bigger team and train each other and bounce ideas and such and that's a great thing, but people have done that up til now with a lot less raised capital, and I don't see why EOS need that much more capital than any other startup have ever needed.
The main thing I'm concerned about is the code writing. I'm not a programmer, but from what little I have learned about it, there is no immediate correlation between more money and writing the code faster or better.
Interesting comments. You're right about people jumping on things which don't yet have any utility. Can you imagine this in the offline business world "so - how many customers do you have? - None. How many products do you have? None. - Ok, go away and come back when you have something we can invest in."
A lot of people like to jump in just from seeing one person involved who they think they can back, but the 'build it and they will come' mentality has kicked in with these ICOs and people are cranking them out just because they know there are enough gullible speculators that someone will throw money at them. Actually getting to the point where you have a real product with some users seems to be irrelevant for some people.
You really hit the head on the nail with this comment @andyhenry!
It's almost like everyone is in a frenzy about all the ICOs comming out.
People saying everything will go to the moon, and not very many people thinking critically about this and seeing the bigger picture.
Thanks for sharing your insights, it's very much appreciated :)
There are too many pump and dump coins on the market.
I'm standing on the sidelines for now but having lived through and profited handsomely from two of Dan's startups I will jump in at some point. Hopefully my timing will be good!
I may get on board at some time in the future as well. I have planned to wait it out til the sale has ended and then see how things shape up. I could also end up buying some if they become ridiculusly cheap, but only if it's because of a bear market, not as a result of EOS inflation. I wish you best of luck entering your position :)