In the future... ICOs will run on EOS!

in #eos4 years ago (edited)

In the future... ICOs will run on EOS!

I wanted to post a quick follow-up to my post comparing EOS and Ethereum and focus on one specific issue: Initial Coin Offerings (ICOs). It's worth spending some extra time thinking about how platforms like EOS and Ethereum handle ICOs, since such coin offerings make up a significant portion of the demand for smart contract platforms (lately at least). If you are interested in a comparison of EOS and Ethereum that focuses more on issues related to running generic Decentralized Applications (DAPPs), feel free to check out my previous post. Here, I'm going to focus specifically on applying the different features and limitations of the two platforms to ICOs. Needless to say, this post is biased, but I like to consider myself pretty open-minded. Feel free to post any comments or criticisms in the comment section below! :)

Image source. AFAIK fair use under satire/parody aspects of copyright/trademark law.

EOS has all the features to be the dominant platform for efficient, reliable, and innovative ICOs.

Specifically, the key features that set EOS apart from Ethereum, especially with regards to ICOs are:

  1. Free for users
  2. Protection from denial-of-service attacks
  3. Opportunity for innovative ICO structures
  4. No need for placeholder coins (apps can run directly on the EOS network)
In my opinion, these four issues specifically make a very good case for launching your ICO on the EOS network as opposed to the Ethereum network. Hopefully after I elaborate slightly on each issue you will see the advantages of EOS too!

EOS allows startups to design ICOs that are completely free for users!

For me, as a potential investor, this advantage just makes sense. In order to make wise investments, we already have to do our due diligence and identify potentially valuable opportunities, judge the state of the markets, etc... There's no reason that we should also have to worry about whether or not the amount of fees we attach to our investment will be enough to convince miners to accept our transaction, or if our fees will be too small that we totally miss out on the opportunity to invest! This is a no-brainer! With EOS, a startup that wants to hold an ICO can simply purchase a modest amount of EOS, which entitles them to a certain proportion of bandwidth, storage, and computing power on the EOS network. With that bandwidth in hand, that startup company will never have to worry about any fees on the EOS network at all. They can design truly innovative ICO models, and ICO participants will never have to worry about paying fees to invest. In addition, because of the robust, reliable block production thanks to the delegated proof-of-stake consensus mechanism, ICO participants also have to worry much less about the timing of their transaction and whether or not it will be included in a certain block.

Compare and contrast these features to recent ICOs on the Ethereum network. There are several very well-known examples of recent ICOs where willing investors literally could not participate because of the fee structure surrounding the block production on Ethereum. When the Ethereum network becomes overloaded with transactions, only very wealthy investors can afford sufficient transaction fees to ensure that their ICO contributions are accepted. Of course, this failure is also partly due to the design of those ICO models, but as I will describe below, EOS also greatly improves the flexibility with which ICOs can be designed.

Protection from denial-of-service attacks

This issue is absolutely crucial, and it is one that can significantly sets apart EOS from Ethereum, especially in terms of ICOs. The simple fact is, the sheer network capacity of the EOS network will likely exceed that of Ethereum by several orders of magnitude. That makes it much more difficult to execute and sustain a denial-of-service attack against the network. Actually, this point requires some clarification: It is not possible to execute a denial-of-service attack against the network, per se, but only against certain applications. This will be more clear when we look at the Ethereum networks model for applications and ICOs in general. Because all applications, including ICOs, essentially have access to the same network bandwidth on Ethereum (subject to a dynamic fee market), if a denial-of-service attack is executed against a single application, it can effectively freeze the entire Ethereum network. In fact, it's not even required to have a malicious attack in order to freeze the network. Several perfectly legitimate ICOs have simple gathered so much interest, that those applications effectively bottle-necked Ethereum and froze out other applications.

However, on EOS, this is not a risk factor. In fact, multiple competing ICOs can launch simultaneously on the EOS network without any risk of impacting each others network bandwidth. Individual applications/ICOs may suffer bandwidth bottlenecks if they do not hold sufficient EOS tokens, but there is no risk to the network itself. With this in mind, it would probably be wise for those wishing to hold ICOs on the EOS network to acquire sufficient tokens before launch to guarantee sufficient peak bandwidth for the ICO. This extra, temporary investment in EOS tokens can then easily be resold, unlike the ETH tokens required for participation in ICOs on Ethereum, which are simply burned as fees to the miners.

Opportunity for innovative ICO structures

EOS also opens the door for significant innovation in providing equitable, fair, and unique ICO models. This type of innovation is somewhat limited on the Ethereum network by the slower, less reliable block production and by the dynamic, unpredictable fee model that goes along with block production. For example, suppose you want to hold an innovative ICO model that rapidly auctions off individual tokens using millions of micro-transactions. Or suppose you want to dynamically distribute tokens based on some non-trivial, computationally intensive process. As far as I understand, it would be very costly, inefficient, and/or impossible to implement these types of ICOs on the Ethereum network. The requirement for gas fees makes it prohibitively expensive to innovate in the computational distribution of tokens, and micro-transactions are simply non-viable during the peak of an ICO when required fees could be orders of magnitude larger than the ICO contribution itself. However, because holding EOS tokens entitles the ICO application to a certain amount of network bandwidth and computation, ICO models on EOS can be designed with innovative, computationally intensive algorithms, and they also make possible ICO distribution models that rely on micro-transactions. Disclaimer: This is pretty much speculation on my part, but I think I'm probably pretty close to correct... haha.

No need for placeholder coins (apps can run directly on the EOS network)

Finally, one more slight speculation on my part, but I believe the EOS network can eliminate the need for placeholder ICO tokens. Many ICOs, such as the EOS ICO, have chosen to adopt a model in which the ICO is held using a placeholder token on the Ethereum network. For example, the EOS ICO has an ERC-20 placeholder EOS token on the Ethereum network, the distribution of which will be frozen at the end of the ICO period. The reason a startup might do this is that they want to ensure a fair, auditable distribution of tokens, but they don't want to actually USE the Ethereum network to run their application/business. For example, EOS is using the Ethereum network to manage the ICO distribution because they want an extended, fair, and auditable distribution, but the actual EOS network obviously cannot exist on Ethereum because the block production is far to slow and unreliable, and because of the fee structure.

However, with EOS, the network is so powerful, reliable, and scalable, that blockchain startups that choose to launch their ICOs on EOS can also confidently build their entire application directly on the EOS network by simply purchasing a certain amount of bandwidth and computing power. They never have to worry about the network freezing from denial of service attacks or failed applications (i.e. the DAO), and they never have to worry about a dynamic fee structure pricing them out of business. In fact, as far as I can tell, Ethereum itself could be run on the EOS network.

Perhaps I have not stated these four points as clearly as possible, and I'm sure there is a lot more to be said on both sides of the argument, but I believe it's safe to say that EOS offers several innovative features that simply are not available on the Ethereum network. Feel free to comment below with comments or criticisms!

All the best,
Trogdor :)


Really hope to see that happen in the near future but before that we must see the actual EOS going live first. If not everything is just a fantasy.

Agreed. It is possible to run some test codes on the testnet right now, as far as i know. I think I'll gove that a try sometime soon and post some feedback. Thanks for posting.

Thanks for the info, I been slowly accumulate some EOS so fingers crossed that it will be a great success.

Exactly @trogdor! I'm also heavily invested in EOS, the fact that it's so superior to ETH in almost every aspect will make it more appealing to build ico's on. Dan Larima is going to strik gold with this one that's for sure. Also NEO is going to be a huge deal, already ico's are starting to build on this. What do you think will happen after the EOS ico ends next summer? upvoted and folowed you my friend 🙌

Thanks for posting. It will definitely be exciting to see how things shape up after the ICO is over. I would hope we see a huge amount of applications being developed quickly!

Will all the ICO's utilizing EOS also have a contribution period of 50 billion years like EOS itself ;)

Haha , who knows? Good things to those who wait?

The future is going to be insane. I truly hope a lot of the cryptos on the market make it in the long run tbh

Agreed, there are so many cool projects going on right now I can't even keep track of them.

which are your favourite projects going on at the minute? @trogdor

Favorites are probably bitcoin, monero, bitshares, steemit, eos. There are so many others that are interesting too, like mysterium, golem, etc... I wish I had more time to keep up with all of them.

the whole industry is moving very fast it is hard to keep up. iv just been looking at golem it looks interesting. I have allocated about 25% in the iconomi fund icnx (not the iconomi coin) they have holdings in a few you mentioned above. I know its risky letting a fund make deacons on my investment but they can put in a lot more time than I can. Then any tokens I like that they don't have holdings in I buy myself.

Great info, I went all in on EOS. I love the fact that ICO's are going to need to have EOS lock up to have bandwidth, this will eliminate any chances of ICO dumping the EOS like they do with ETH.

Thanks for posting. The financial incentives surrounding the EOS network are definitely one of its great features

Thank you! Following you here now :)

Thanks, i appreciate it!

Upvoted & RESTEEMED!

Great write-up!

I want to do a token distribution to raise funds for my theatre, and I have been wondering if this is something I will be able to do on EOS. @dan ?

That will definitely be possible! Thanks for posting.

you are a lot more knowledgeable than I am on this subject so could I ask what's your opinion on Tezos?

This is just my opinion, but I think tezos is a little over hyped. I'm just not sure that there are that many specific use cases that actually benefit from the specific features of tezos. Just speculation though, and I've been wrong a lot!

sorry to keep asking questions but I like to talk to people who are more knowledgeable than me, learn from them and take their advice on board. what do you think of IOTA with the tangle technology and what are your thoughts on how quantum computing will effect tradition blockchain tokens?

Honestly I've barely heard anything about iota except that there's a lot of hype. As far as I know, Bitcoin can be upgraded to quantum resistant hashing algorithms if quantum computing really comes on the scene, which is probably going to take some time anyway.

@paulanthony. IOTA has a great platform of Tangled right now. Its quite an innovative concept to say. But IOTA overall depends on IOT devices for its success. Basically, one cutting edge technology relying on the growth of another cutting edge technology. The way I see it, first IoT needs to go mainstream for adoption. This is atleast 3 years away. Post that or in parallel, Distributed systems will need to get adopted. To me this seems a bit longer on the horizon.
In terms of Quantum, not yet mainstream. While its a great area to invest from a hardware perspective from ICO or actual usage perspective, its further away than IoT, but coming for sure. Both the above technologies will grow for sure, but will IOTA or QRL or QTUM be there / sustain to take the benefits, is questionable.

@trogdor So on Ethereum the sender pay the fees. ( so there is a cost involved with DDOS attack )

But on EOS the contract must have enough EOS tokens to handle traffic. And the attacker could very quickly use all the traffic for "free". Raising considerably cost of running DAO.

Please correct me if I am wrong.

Good point, thanks for commenting. So I guess ICO participants must also hold some minimal amount of EOS tokens in order to have bandwidth to send their transactions, but at least they could turn around and sell it afterwards if that was their only interest in the platform. In that sense participation is still "free" (subject to short term market swings). I guess it depends on how they want to design the ICO. Dan had emphasized that apps should be free for users, so I guess I was thinking that like Steemit, the ICO could delegate a small portion if their EOS to every account creation to allow participation. I think there are multiple solutions.

From my understanding, EOS network is always free for users. The ICOs are responsable for staking enough EOS to provide adequate bandwith, memory usage and disk storage for a smooth ICO. From the user perspective, the network is free and they can use it (participate to any ICO) without holding any EOS

Good article @trogdor. I am learning a lot from you. I will share it with my followers.
Upvote and resteem.

Thanks for reading!

hey, you came across my post with the slippers. Thank you so much for coming by, i appreciate it!

I have some EOS right now, but I also hope for ethereum success!

Thanks for reading! I'm pretty sure we will see success for both.

Very good artical to read through although I am still in the progress of learning the difference between EOS and Ethereum. What your write provides me so many meaningful message. thank you so much.

Thanks for reading!

Amazing info, great post trog! EOS helping ICO's, that will do wonders for ICOs and also help EOS boom overtime a new coin hits the market. Love it!

EOS is currently trading in a very narrow range, looks like it is getting ready to make a breakout and fly.

Hi. Hope you can follow me. Help me to coment and upvote. Thanks @trogdor

My boyfriend is heavily investing in EOS and I also invested a little amount of my own money :-)

Definitely EOS will be at peak !

Wow this post is very exciting. Lots of powerful insight I got from this.
I am very interested to see what your thoughts are now a month later?
You need to post more!

Thanks, I will try to post more often, my friend!

Will try and check up on you from time to time and see.

Best Regards~*~

I did as much research into EOS as I could and I still didn't understand it but I came out knowing one thing, it will dominate the future of blockchain.

Hi i read your blog and its nice. Welcome to steemit and I'm Sakib from Bangladesh. I'm also new in steemit. I'm also vote and followed you. So can you please vote and follow me also ?? Best of luck.

friends visit my block. because I really need your visit

Anyone know how EOS compares to Hashgraph or DAG technology?

I just saw your postings. If you have time please write again for updated STEEM, BTS and EOS. thanks. followed
Merry Christmas

Nice post

Hi ,trogdor,can I translate your post into Chinese and repost it on steemit?

Sure, go ahead.