Ethereum (price at time of writing ETH 1,213 USD) is currently the most popular smart contract platform in the market. There are dozens of decentralized applications that are being developed using their ERC20 token.

However, that does not mean that they are perfect. EOS is running on the Ethereum Virtual Machine, and aims to solve the problems that Ethereum faces currently.

EOS (price at time of writing EOS 10.83 USD) is a decentralized operating system based on the blockchain technology, and is coded by block.one. It aims to allow for commercially-friendly, decentralized applications (DApps) to be created. Daniel Larimer, CTO of EOS, recognized that while DApps are a novel concept that has received much attention in the past year, there is little practical use for them until they are as competitive as the current centralized applications in the market.




The transaction throughput for Ethereum is about 20 transactions per second, which is nowhere near enough for DApps aiming for a large user base. Compared to a centralized payment platform like VISA, which can handle more than 56,000 transactions per second, DApps have some way to go in order to be competitive against existing systems. It is not feasible for payments to take more than a few seconds to process when it comes to commercial usage of blockchain technology.


Another issue for the existing smart contract platforms is the transaction fee. Under Ethereum’s Proof of Work, each transaction has a gas limit and gas price. The gas limit is used to pay for computational power to execute the code, and the gas price is the payment to miners to validate the transaction. If the gas price is set too low, it takes a much longer time for the transaction to be added to the block, as miners would prioritize transactions with a higher gas price.

Another fee would be the micro-payments required for Ethereum-based DApps to function, which means that no service can be provided completely free of charge. Imagine an Apple Store where every application is paid-for: it would be a hindrance to widespread and rapid adoption.


The EOS Solution


EOS adopts Horizontal Scaling to allow for thousands of transactions per second. When a network demand increases, there are two main options available to meet the new demand.

Vertical Scaling: Increase the processing power of the server
Horizontal Scaling: Link the server to other servers

Using horizontal scaling means that there is higher number of transactions that can be processed per second, which is something increasingly needed by blockchains. This has the added advantage of allowing the network’s processing power to be increased more easily when called for, rather than having to suspend services to upgrade the server.

EOS also relies on Graphene, which is the same as what Steem uses. This is a technology that has been proven to run at more than 10,000 transactions per second, which makes it much more commercially viable.


EOS has minimal transaction fees by using a Delegated Proof of Stake system (DPOS). In this method, rather than miners contributing computing power to validate transactions, users who have a stake in the form of EOS tokens are constantly ‘vote’ for witnesses. These witnesses provide transaction validation, and are paid in EOS tokens. Only the top 20 witnesses are paid, and this number can be changed if voters feel that it is not decentralized enough. A block is produced every 3 seconds, and witnesses who miss a block and have not produced any blocks within the last day will be removed.

With this method, EOS ensures that the system remains decentralized, and flushes out bad actors. Any witness who is considered a ‘bad actor’ would be removed by the voters in the community for not acting in the best interest of the network.

In contrast to Ethereum, where each action requires a gas fee, EOS employs an ‘ownership model’, where the amount of EOS tokens owned determined how much computational power would be allocated. This is ideal for small businesses, as they can easily scale to meet their needs. As transactions increase, they can simply purchase more EOS tokens to gain a larger bandwidth, rather than paying higher and higher gas fees.


Catered to Commercial Use

All of these solutions that EOS bring to the table are based on its design philosophy: they want to bring DApps up to commercial standards that users have grown accustomed to with centralized systems.

To this end, they have also introduced many functions to make smart-contract creation more accessible. For one, EOS uses C++, which is much more accessible than Solidity, which is a newer and much less resources for coders to become proficient in it.

For commercial usage, EOS offers many basic tools that are required for companies, such as account recovery. Companies would be more comfortable using a blockchain if the account was not lost the moment the private key went missing.

EOS also has the ability for developers to ‘freeze’ their application to fix it, rather than forcing a hard fork (such as with the DAO fork).



EOS has entered the market with a very clear goal: to bring DApps up to the level of current centralized applications that consumers have gotten used to. Regardless of how revolutionary blockchain technology is, it will have little practical use until its services become indistinguishable from current systems, which is what EOS aims to do.

While the source code for EOS has not been released, if it is able to achieve all that it promises in its whitepaper, it will become an operating system that could achieve market dominance.


Safe investing!