What Is EOS? Everything You Need To Know

NOTE: At the end of the article, we have a GetSmart Quiz for you. If you correctly answer all the questions, you will receive (1) entry to win $4,000 CAD of Bitcoin! Draws are held at the end of every calendar month.
what is eos

In Brief:

  • Founded by Dan Larimer and the Block.One team, EOS was built to create industrial-scale dApps.
  • EOS  had a record-breaking year-long ICO that raised $4.1 billion.
  • EOS.IO is the underlying system that powers the EOS blockchain.
  • EOS works using an ownership model that provides resources to token holders.
  • The underlying consensus mechanism is delegated proof-of-stake (DPoS).


Back in October 2018, EOS made a lot of noise by closing their year-long ICO and raising a whopping $4.1 billion. Back then, this project was perfectly poised to take over the mantle of the next great “Ethereum Killer.” Not only was the project backed by a solid team headed by BitShares and Steem founder Dan Larimer, but they also had a significant capital base and media coverage. Three years have passed, let’s take a look at what EOS has been upto.

EOS – A Brief History Lesson

Stop us if you have heard this one.

Ethereum has a scalability and speed problem (*gasp*).

The same problems Ethereum is suffering from now are the exact same problems it has been facing for the last 3-4 years. Dan Larimer and the Block.One team created EOS to build a decentralized operating system that can support industrial-scale decentralized applications. Overall, EOS has two main goals –

  1. Provide a platform that can conduct millions of transactions per second
  2. Charge 0 fees for its transactions.

EOS vs EOS.IO: Do You Know The Difference?

Alright, so before we go any further, let’s understand the differences between EOS.IO and the EOS tokens. Simply put, EOS.IO is the core operating system that controls the EOS blockchain network. EOS.IO utilizes the innovative delegated proof-of-stake (DPoS) consensus mechanism. Its role-based permissions concept allows dApp-developers to make critical decisions like “protocol-freezing” which freezes the blockchain and prevents token loss during a hack.

On the other hand, EOS is the utility token of the EOS ecosystem. The EOS tokenomics forms an integral part of the EOS network.

EOS Tokenomics

Initially, EOS had a total supply of 1 billion, with an annual inflation rate of 5%. Back in February 2020, the inflation rate was reduced to 1%. The EOS protocol incentivizes developers to hold on to their tokens by employing an ownership model.

What do we mean by that? Well…let’s compare it with Ethereum.

Ethereum works on a rental model. You can think of Ethereum as a decentralized, global supercomputer that rents out its resources to users from all over the world. The users need to pay rent, aka, gas fees to use the network.

However, EOS flips this system on its head. When you own a certain amount of EOS tokens, the network will grant you an equivalent amount of computational resources and power. To visualize this, check out the EOS resource planner here.

What Is EOS?

So, if you want to create an application that requires 500 MiB of RAM, 200 MiB/day of Network Bandwidth, and 100,000 us/day of CPU bandwidth, at the current market rate, you will need to stake 60,282 EOS (~$361,692) in the network.

What is DPoS – The Heart and Soul of EOS

Alright, now let’s get into the meat and potatoes of EOS.

DPoS is one of the most controversial elements of EOS and is a modified version of the proof-of-stake algorithm. Before we go any further, we highly recommend that you read up on PoS here.

To give you an idea, PoS is a staking-based consensus mechanism that randomly picks validators for the list of stakers and gives them the power to validate blocks. The validators are either chosen based on the size of their stake or coin age, aka, how long they have been staking their coins in the network.

You can buy EOS at Coinsmart.com!

However, in EOS, the DPoS system works like this:

  • 21 block producers are elected by the token holders. These block producers are responsible for overall network health and future block validation.
  • Up to 30 block producers are chosen in the initial election. The voting system is continuous. As such, the top 21 are continuously selected from this top 30.

According to a September 2019 article by CoinDesk, the majority of the block producers were within China.

When it comes to revenue distribution, the top 21 earn the most significant amount, while another 50 earn some rewards as standby BPs. They are rewarded from the aforementioned 1% annual inflation.

By relying on the top 21 block producers instead of the entire network, EOS can unlock extremely fast and cheap transactions. The block time in EOS is just 0.5 seconds as opposed to Ethereum’s 15 seconds. However, this speed comes at the price of decentralization. You need to ask yourself if that’s a fair price to pay for achieving faster transaction speeds at the end of the day.

EOS Three Years On. What’s Going On?

Since reaching an all-time high of $22.89 in April 2018, the EOS price has spent most of the last 3 years hovering around $2.50-$2.60, before the recent crypto market rally took it up to ~$6. However, it is hard to debate against the fact that EOS has had a bit of a fall in public sentiment over the last few years. Back in June 2019, Decrypt reported that as many as 75% of transactions on all EOS dapps are bot-made! In fact, half of all the EOS accounts using dapps were bots.

This was once a top 10 coin and now it is languishing around rank 27. EOS had a lot to live up to. From its multi-billion dollar ICO to its crypto rockstar co-founder Dan Larimer (who has since left the project). The rise of DeFi and Cardano has taken some of the sheen away from EOS, however, write them off at your own peril.

Alright, it's quiz time!

Before you take the quiz, make sure that:

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EOS GetSmart Quiz: Answer All The Questions And Earn An Entry To Win $1,000 CAD of Bitcoin

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By staking EOS tokens in the network, I will get:

The inflation rate of EOS is:

Upto how many block producers get rewarded through EOS?