Once hailed as one of the most promising blockchain projects, EOS has faced significant challenges in meeting its early expectations. Community members often attributed its struggles to a lack of ongoing development and investment from its founding team. However, recent efforts led by the EOS Network Foundation (ENF) aim to reverse this trend and reposition EOS as a competitive Layer 1 solution.
This article explores the technical advancements, tokenomics restructuring, and ecosystem development initiatives that could potentially spark a new era of growth for this blockchain platform.
Background and Historical Context
The open-source EOSIO blockchain protocol was created in 2017 by Block.one (B1), a blockchain software company led by CEO Brendan Blumer and CTO Dan Larimer. The company conducted a year-long initial coin offering on Ethereum that raised approximately $4.1 billion, making it the largest ICO in history at that time.
Following the launch of the EOS network in 2018, B1 gradually reduced its involvement in core protocol development and maintenance, instead directing resources toward other projects including Voice social network and Bullish exchange. This lack of commitment frustrated the EOS community, leading to decisive action to reclaim control of the project's development.
In August 2021, the non-profit EOS Network Foundation was established by Yves La Rose, former CEO of EOS Nation. With funding from network block producers, ENF began conducting comprehensive reviews of EOS technology and ecosystem, identifying improvement areas and proposing solutions through working groups and grants.
A pivotal moment came in December 2021 when EOS block producers voted to freeze B1's EOS token release contract, effectively separating EOS from its founding team and returning control to the community. This was followed by a hard fork from the EOSIO codebase to the new Antelope codebase in September 2022, maintained by the Antelope Coalition comprising teams from EOS, WAX, Telos, and UX Network.
Technical Architecture and Innovations
Consensus Mechanism
EOS operates on a Byzantine Fault Tolerant (BFT) blockchain using a Delegated Proof of Stake (DPoS) consensus model. Token holders delegate their tokens to block producers (BPs) who validate and produce blocks. The top 21 ranked block producers become "active BPs" who participate in each consensus round lasting 126 seconds.
Unlike some other PoS systems, delegates don't stake tokens to specific block producers but rather to the system itself, then vote for up to 30 BPs. Each active BP produces 4.76% of blocks per round regardless of stake amount, preventing excessive centralization of block production.
Resource Management Model
EOS employs a unique resource model that separates network costs into three components:
- NET: Measures network throughput in bytes
- CPU: Measures transaction processing time in microseconds
- RAM: Measures data storage capacity in kilobytes
The current PowerUp model allows users to pay a small EOS fee for 24-hour account bandwidth instead of staking tokens, significantly improving user experience. Many wallets now offer daily free PowerUp subsidies, abstracting resource management away from users.
Account Security Features
EOS accounts feature two key types of keys: owner keys (which manage account permissions) and active keys (which sign transactions). This system allows for sophisticated permission settings, including custom activity keys with specific capabilities and multi-signature requirements with time delays—functionality similar to account abstraction efforts on other blockchains.
Antelope IBC Implementation
A significant technical achievement has been the implementation of Antelope Inter-Blockchain Communication (IBC), based on work by UX Network's 0rigin team. This allows Antelope-based blockchains to securely communicate and scale horizontally, enabling dapps to launch their own sidechains while maintaining ecosystem connectivity. Antelope IBC went live on the EOS mainnet in January 2023 with successful pilot transactions between EOS and UX Network.
Tokenomics and Economic Model
Current Token Distribution and Inflation
The native EOS token serves dual purposes: network security (validator and delegate staking) and resource allocation (CPU, NET, and RAM fees). The current inflation rate stands at 3% annually with no burn mechanism.
Of this inflation:
- 1% is allocated to block producers
- 2% is allocated to the EOS Network Foundation
The initial distribution included:
- 90% sold during the year-long ICO
- 10% allocated to B1 with a 10-year linear release schedule
The community froze B1's remaining tokens in December 2021, with approximately 68 million EOS remaining locked after B1 had received about 32 million tokens.
Historical Economic Changes
At launch, EOS had a 5% inflation rate with 1% going to block producers and 4% to a system savings account. Block producers eventually burned all tokens in this account (approximately 68 million EOS total) and eliminated the savings allocation, reducing inflation to 1%. The savings account was later reinstated at 2% in August 2021 to provide ongoing funding for ENF.
In November 2022, block producers approved creating EOS Network Ventures (ENV) with approximately 68 million EOS to invest in ecosystem projects and launch accelerator programs.
Network Activity and Ecosystem Development
User Metrics and Trends
Despite challenges, EOS has maintained notable network activity:
- Year-to-date average: 1.3 million daily transactions and 38,000 daily active addresses
- Total staked EOS: 317 million (27.6% of total supply) from nearly 100,000 addresses
- Approximately 66% of staked tokens participate in voting
While daily transaction volume declined 65% from early 2021 levels, it has increased 218% since October 2022, suggesting renewed activity from advanced users.
DeFi Ecosystem
EOS DeFi total value locked (TVL) has declined 62% in USD terms over the past year but only 32% in EOS terms, indicating price depreciation significantly impacted dollar-denominated metrics. Defibox dominates with over 75% of TVL across its decentralized exchange and lending protocols.
Notably, EOS is one of 11 blockchains officially supported by Tether for native USDT minting and redemption, with over 85 million USDT tokens currently circulating on the network.
ENF has launched two key DeFi support programs:
- Yield+: A liquidity incentive program distributing EOS to qualified DeFi protocols for liquidity mining rewards
- Recover+: An insurance program offering bug bounties, white hat rewards, and crisis management framework
NFT and Gaming Landscape
Upland, a play-to-earn digital real estate game, remains the most popular dapp on EOS with approximately 20,000 daily active addresses. Other gaming applications include Prospectors, Crypto Dynasty, and Wombat, though Upland maintains significantly higher activity levels.
AtomicHub serves as the primary NFT marketplace with over 5,000 collections, though daily sales volumes remain modest at approximately $1,400 as of March 2023.
Development Funding and Grants
Pomelo Grants Platform
Modeled after Gitcoin, Pomelo is an open-source crowdfunding platform using quadratic funding mechanisms. Across four seasons, Pomelo has raised $2.6 million for hundreds of projects through matched funding pools.
Direct Grant Framework
ENF provides milestone-based grants for protocol development categorized into Antelope upgrades, developer tools, UI/backend development, and cryptography. The program has approved 11 of 52 applications, distributing $211,000 with an additional $444,000 pending milestone completion.
EOS Network Ventures
With approximately 68 million EOS (around $80 million as of February 2023), ENV invests in ecosystem projects while planning accelerator and incubator programs to spur growth.
Future Roadmap and Development Plans
Technical Upgrades
ENF has outlined significant technical improvements through its working groups:
Consensus Mechanism Upgrade
The Antelope Coalition is implementing a modified variant of HotStuff, a BFT-based protocol originally developed for Libra (now Diem) and currently used by Aptos. This upgrade will enable:
- Expansion beyond 21 validators
- Near-instant finality (addressing the current 3-minute transaction process)
- Enhanced cross-chain messaging capabilities for Antelope IBC
Testnet deployment is scheduled for summer 2023 with mainnet launch by year-end.
EOS EVM Implementation
Similar to Aurora on NEAR, EOS EVM will operate as a smart contract on EOS while using EOS as its native token. After successful auditing and testnet launch in January 2023, mainnet deployment is planned for April 2023.
Growth Strategy
ENF continues to drive growth through its established funding mechanisms, supported by 2% network inflation (approximately $26 million annually at current valuations). The Antelope Coalition has committed $8 million annually for ongoing protocol development.
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Frequently Asked Questions
What caused EOS's initial struggles?
EOS failed to meet early expectations primarily due to insufficient development investment from its founding team Block.one. The community responded by freezing the team's token allocation and establishing the EOS Network Foundation to redirect development efforts.
How does EOS's resource model work?
EOS uses a unique system separating resources into NET (bandwidth), CPU (processing time), and RAM (storage). The current PowerUp model allows users to pay fees for 24-hour resource access rather than staking tokens permanently.
What makes Antelope IBC significant?
Antelope IBC enables secure communication between Antelope-based blockchains, allowing horizontal scaling through sidechains while maintaining ecosystem connectivity. This interoperability could significantly expand EOS's capabilities.
How is EOS addressing its DeFi ecosystem?
Through Yield+ liquidity incentives and Recover+ insurance programs, EOS aims to attract and protect DeFi protocols. The platform also benefits from native USDT support and recent listing on major exchanges.
What are the key upcoming technical upgrades?
The consensus mechanism upgrade will bring instant finality and expand validator numbers, while EOS EVM will enable Ethereum compatibility. Both developments aim to significantly improve user experience and developer accessibility.
How is development funded on EOS?
Multiple grant programs including Pomelo, Direct Grants, and EOS Network Ventures provide funding across different stages of project development, supported by network inflation allocation.
The EOS community has undertaken substantial efforts to reposition the platform through technical improvements, economic reforms, and ecosystem development. While significant challenges remain in competing with established smart contract platforms, recent momentum and planned upgrades suggest potential for renewed growth and adoption in the evolving blockchain landscape.