The EOS project fascinated me from the very beginning.
I first met the team at Consensus 2017. They went all out at the big blockchain event, hosting a bash that reminded me of the go go early days of the dot com boom and giving talk after talk.
But spectacle never interests me. I’m not fooled by pretty lights and pretty words. It’s the depth of ideas that matter.
And they had ideas in spades.
For the first time in crypto I saw a team trying to solve some of the real challenges facing the space, the ones I thought only myself and a few others had even remotely considered. With my Cicada concept project I spent a year at the whiteboard trying to find radical solutions to the hardest problems in crypto: scale, adoption, governance, identity, reputation, distribution and demand to name a few. I dug into old papers and ideas, hunting for hidden gems.
I also studied all the projects out there, mining them for their greatest solutions.
Yet more and more I found nobody solving the most pressing problems in crypto. Even worse, they didn’t even see the real issues.
As AI researcher Francois Chollet says:
If you can’t even see the problem, you certainly can’t create a real solution.
It’s like those long division tests you hated in grade school: If the first part is wrong, the rest of it is automatically wrong.
But the EOS team did see the big problems and the big picture.
For example, I’ve often said that for a crypto ecosystem to really flourish you need free transactions. It’s just a basic fact that some things in life have little or no value and they’ll never have value.
And yet everything on crypto platforms costs money.
It seemed so obvious to me and yet I hadn’t found a single team out there that understood that simple fact. Then I met the EOS team and they not only saw the problem they framed it better than I did.
“If you went to Amazon and it cost you three cents to load the page you’d never load the page.”
That’s it in a nutshell. If Amazon charged for everything, you’d never even get through the front door because you don’t know what’s on the other side!
You have to see the merchandise before you even consider buying it. Anything could be behind door number one. You might find Amazon’s beautiful cornucopia of products and elegant design or you find a disgusting scam site.
EOS was just one of the many projects at Consensus. It was an amazing conference all around, filled with incredible energy and possibility.
Go back and look and you’ll see that the real crypto buying boom started that very week, as projects announced innovation after innovation. Zcash rocketed to new heights as JP Morgan announced adoption of their privacy protocols. Dozens of other coins saw their valuations spike hard.
I left the conference drunk on wine and ideas, my head swirling with possibilities.
But it was EOS that loomed largest in my imagination.
And I was determined to buy into the project as soon as I could get my grubby little hands on their shiny digital coins.
Yes, yesssss, my precious!
The Bumpy Road to the Unfinished Future
But as so often happens on the road to glory things didn’t go perfectly smoothly.
The crypto community got too far ahead of itself, drunk on possibility but short on delivery.
And the bubble eventually burst.
But even before the bubble popped I saw potential problems with the EOS ICO. I started to dig deeper into the project and its founders.
Dan Larimer is a legend in the crypto community, having started Bitshares, a decentralized exchange, and Steemit, a social media publishing platform similar to Medium. But he’d also developed a reputation for leaving projects after only a few years.
Just like when you see a resume of someone who bounced around from company to company, it makes you nervous.
Will they stick around this time?
Do they get bored easily?
In truth, Larimer’s wandering heart didn’t bother me all that much.
I recognize the restless mind of a genius because I’ve known many in my life and people say I’m pretty smart myself. As such, I get bored incredibly quickly. I see a problem spinning out before me with a clear solution while others are still baffled and yet explaining to other people endlessly until they see it, dealing with tribal corporate politics, and managing other people becomes tremendously exhausting.
Pretty soon I’m thinking, why can’t they just see it? The world often seems to move in slow motion for me, like I’m an Olympic sprinter surrounded by zombies.
And so I lose heart and move on.
But some ideas are worth fighting for, the ideas you really believe in.
And as I studied more and more of what Larimer had to say, I saw a man who’d taken each idea as far as it could really go before becoming a maintenance project. The greatest coders in the world love solving novel problems, not changing the oil year after year. It’s no wonder he migrated to better and brighter pastures.
There was another factor at work here too.
Each of his earlier projects were stepping stones. It’s important to understand that we’re only eight years into the crypto revolution. As I said in The Five Keys to Crypto Evolution we know how to scale and build cloud systems because we’ve been working at the problem for thirty years but there is no O’Reilly book on the best practice for building a distributed, decentralized system that blows away Visa level transactions per second. There is no fully baked library set to download.
We’re still figuring it all out and creativity is messy.
There’s no way to know before you start out on a program whether you’ll code yourself into a corner. When you solve one problem you create new problems. Unfortunately, some of them can’t be solved without starting over from scratch.
My sense is that’s what happened with Larimer and why he moved on to bring all of his ideas together under the EOS banner. And quite frankly, where the hell would he go now to get a better situation? With a gazillion dollar war chest and a hand picked team at his behest, I would bet all my Bitcoin he sticks around this time.
But it wasn’t just the wandering feet of the founder that had me nervous in the early days.
The ICO started to feel a little off.
It started as a nagging itch in the back of my mind and it wouldn’t let go. Others noticed it too. There’s really no other way to say it: It just felt scammy.
Token buyers were met with a variable price based on demand at each allocation drop. They didn’t know how much they’d get when they sent their Ether or Bitcoin. It was a roll of the dice.
If the demand was low that day you might get a deal, grabbing coins at a lower price point then they traded for on the exchange. If the demand skyrocketed you might end up with a worse price. That made you a bag holder unless you wanted to sell the coins for less than they cost you.
Even worse I started to hear rumors from friends who participated in the ICO that the demand always mysteriously seemed to get filled in the closing minutes of every auction. Every time they thought they might get a deal it slipped away at the last seconds and they suspected something nefarious.
I have no idea if that was true or just the illusion of perception. Lots of folks see phantoms and conspiracies in the markets when things go against them but it did leave me worried.
And then there was the seemingly endless nature of the ICO.
The neverending ICO!
While most crowd funding surges ended after thirty days, the EOS ICO kept going and going, with no cap, meaning the company could continue to raise billions if people kept wanting to give over their hard earned cash, all without releasing a single line of code.
And yet even with those fears I decided to invest on the very first day of trading.
I watched as the tokens I got for less than a dollar sky rocketed to over $6. I went to bed giddy with delight, dreaming of retiring early. I held on, believing that despite all the challenges the company stood a chance of delivering on their dreams.
But the price crashed and it crashed hard the very next day.
I ended up exiting at $2.45, still a nice profit but not even close to what I imagined it might reach if they got the platform moving in the right direction. I was a less disciplined investor then but I’m not even sure I would have held on today as the token dropped and dropped, losing nearly 90% of its value in a few weeks while an endless new supply of tokens flooded the market.
With no code and no timeline in sight, my faith flagged.
And yet I continued to keep an eye on the project.
Would they start writing code that worked or would they simply exit scam investors and disappear to the beaches of Dubai, racing their fleet of Lamborghini’s across the glittering sands, lost in wine, women and song?
Death and Rebirth
The endless cycle of the old and the new.
To my surprise and delight I saw a continual stream of updates, slow and scattered at first, but soon that trickle turned into a flood, their site and Github continually filled with a flurry of new posts.
It didn’t take long for me to get back into the coin, piling into it for my LTH (Long Term Hold) bag, hopeful that they might actually come through, a rarity in the crypto space that’s so far long on promise and short on execution.
Check out my podcast on the “mini-VC” strategy.
Still I kept my positions small. It didn’t necessarily merit a bigger stack than anything else for my mini-VC strategy.
Then in late March they delivered a brand new whitepaper and I dug in deep. What I found were ideas that didn’t exist anywhere else. It seemed clear that if they could deliver on even a fraction of those ideas they’d have a comprehensive platform on their hands.
And now with a month to go until the release of their mainnet (be sure to register those coins!), I’m more confident than ever that we’re seeing the beginnings of true decentralized internet platforms coming to market.
With Ethereum continuing to grow and develop, the Telegram team coming out with a massive technical whitepaper that blew my mind and now the EOS squad ready to release their own live system, the real age of decentralization finally feels within reach.
Oh and when it comes to Telegram, most folks didn’t read the real whitepaper. They just read the marketing whitepaper and dismissed it. I encourage everyone to read the big one before saying no way. My sense of the Telegram team’s paper is the same as I get from EOS: If they deliver on even a fraction of what they want to achieve it will dramatically move the space forward.
What EOS Does Different
There are a number of unique concepts threaded throughout the EOS paper so let’s take a look at the ones that stand to have the biggest impact.
First and foremost we have scaling.
The EOS platform appears capable of handling millions of transactions per second using parallel execution of many types of “actions and handlers”. There’s good reason to believe that’s potentially achievable, considering that Steemit already churns through thousands of transactions per second, while other platforms currently struggle with five or six per second.
That’s because the platform uses one of the fastest consensus methods on the planet: Delegated Proof of Stake (DPOS). It’s one of the only current methods that can scale like traditional centralized systems.
It’s not without controversy.
Ethereum creator Vitalik Buterin recently fired off a critique of DPOS on his blog called “Plutocracy is Still Bad”. I’ve generally agreed that government by property holders is an old idea that deserves to die. The Founding Fathers of the United States briefly considered letting only property holders vote but quickly realized that just because you owned a little land it didn’t make you any smarter or more capable than the people who didn’t own a damn thing.
But the analogy is admittedly imperfect. DPOS feels a lot like Nassim Taleb’s Skin in the Game, meaning unless you have something to lose you won’t play fair.
Larimer blasted off a response to Buterin a few days later.
Both men’s posts are respectful of each other’s ideas. Frankly, they’re both great reads by two brilliant men. I don’t know who’s right but I know how it will work out:
The market will decide.
Either Ethereum comes up with a powerful way to scale that rivals the speed and flexibility of DPOS or it dies a slow death. However I’m confident Ethereum’s sharding and hybrid Proof of Work/Proof of Stake proposals will help it reach similar scaling heights. After that it will boil down to competition.
And competition is good.
We need different philosophies and ideas at this stage in the game, not one giant monolith to rule them all before we figure out the best practices for decentralized systems.
But with all that said the initial June EOS release will launch rate limited and single threaded. It won’t scale to the mythical heights of Visa level transactions from the very start.
The reasons are simple: Security and bugs.
Parallel execution of transactions in decentralized systems have very little precedent. It’s brand new tech. In distributed databases like Cassandra or distributed state systems like etcd used by Docker clusters we have well established shared locking methodologies. That hasn’t carried over to the first waves of decentralized consensus technology. We’re still learning how to do this effectively so I applaud the team’s desire to turn on these kinds of features very slowly, after battle testing them in the real world.
Even though the system launches single threaded the paper notes that “the data structures necessary for future multithreaded, parallel execution” already exist in the code. That’s a clever way of saying they’re part of the way there but still have some work to do. Either way it’s a good start. An upgrade will bring parallel execution to light in the coming months most likely.
Luckily, the EOS devs worked to build in a better upgrade process.
Smooth upgrades are severely lacking in this realm.
That’s most likely because we’ve largely seen the same mistakes as early software platforms in the past:
Lack of abstraction.
What does that mean? It means the application layer and the protocol code are hopelessly intermingled and upgrading it all is a messy nightmare because everyone across the system has to agree on the biggest changes.
Eventually I expect to see platforms that seamlessly abstract all discreet aspects of the stack into fine grained components. Why shouldn’t the coins, apps and their various rules be nothing but a virtual instance on top of an agnostic network?
But before we get there we need to develop far enough along the decentralized evolutionary timeline to know what those discreet components are in the first place. We’re not there yet. We’re still figuring it all out.
In the meantime a robust upgrade procedure that rapidly integrates new features that ripple through the entire ecosystem is absolutely essential. That’s why the EOS whitepaper hints at the promise of a strong upgrade process:
“By default, configuration of the EOS.io software, the process of updating the blockchain to add new features takes 2 to 3 months, while updates to fix non-critical bugs that do not require changes to the constitution can take 1 to 2 months…The block producers may accelerate the process if a software change is required to fix a harmful bug or security exploit that is actively harming users. Generally speaking it could be against the constitution for accelerated updates to introduce new features or fix harmless bugs.”
The platform also looks to bring a number of powerful developer features to the table. Without developers you have no platform.
Developers, developers, developers.
Laugh all you want at sweaty and bald Steve Ballmer but a focus on devs made Microsoft the dominate force in operating systems and back office servers for decades.
The first dev centric feature is that end users don’t need to pay to use the platform. That’s big.
That goes back to the idea that nobody wants to pay Amazon to load their page. Currently, we don’t have a strong microtransactions ecosystem in place and it’s very difficult to bootstrap from zero.
There’s another problem with pay to play crypto apps:
If the apps of the future require someone to go to an exchange, sign up, get KYCed, learn about wallets, wire in fiat, buy crypto and download crypto to an app all before they do a damn thing with that app it will never, ever, ever, ever happen.
It just will not work that way. Don’t believe me?
Try walking your non-techie relatives through buying crypto on an exchange. If it takes less than a week, congratulations you’re a rockstar.
This process is a non-starter. It has to work another way.
And just because you airdrop a bunch of tokens on users doesn’t mean they feel like spending them on a service they traditionally got for free. You have to build new incentives to keep the money circling.
That leap to a new way of doing business will take time.
That’s why it makes sense to have a system that gives developers the flexibility to enable “user pays” applications or “sender pays” applications.
Today it’s the business that pays the cost of doing business and the user only pays them for goods and services, not for keeping the lights on, ordering supplies, hosting costs, pizza parties and bandwidth. There is no reason to think that paradigm won’t continue to dominate in the short term, so it’s best to cut with the grain rather than against it.
The second solid developer feature is the app creator needs only hold a fixed number of tokens to get guaranteed access to databases, bandwidth (and eventually storage) on the network.
Why is that important?
Because today’s cryptos are very volatile.
If the developer has to constantly monitor prices on an exchange and top off their application or it shuts down on them it’s not going to work. A fixed token fee, decoupled from fluctuating market rates, makes it easier for developers to sleep at night.
Lastly the platform delivers some novel features that protect the network and the users on it.
The first is account freezing.
I know what you’re thinking. Freezing accounts sounds totalitarian.
Didn’t we just try to get away from that kind of thing?
This is a bit different. Smart contracts can run away with resources and bring the network to its knees with bugs and race conditions. EOS allows the supernodes that run the network to use a 2/3rds majority vote to freeze a runaway account. And unlike the system we have today, if the bank decides you’re out, you’re out and that’s that but on EOS if the nodes abuse their power we can vote them off the island.
I’m cautiously skeptical of the feature to be honest but agree that some level of governance is necessary for these systems. We can’t have complete chaos when a smart contract runs wild, crippling the network.
A second end user feature will prove incredibly welcome to everyone in crypto:
Hacked account recovery.
If someone jacks your coins you can get them back!
That’s right.
Every platform absolutely needs these kinds of features in the future.The way it works is pretty simple. EOS allows someone to designate a “recovery partner.” If you get hacked, your recovery partner and you can “turn” your keys together to get your account back within thirty days.
It’s not perfect but it’s infinitely better than anything we have today. Right now if you lose your Bitcoin keys or someone drains your account it’s gone with nobody to cry to and no service department to call. It’s just gone.
I expect to see more and more solutions like this in the future. A recovery partner is a step in the right direction. Ultimately I think we need an even better idea but it will do for now.
The reason we probably want something else is that relationships change. We might want more than one recovery partner or we might want to delete a recovery partner, like when we get a divorce and no longer trust our significant other with the keys to our kingdom.
From the paper it’s unclear how EOS deals with situations like that or how it protects itself from people gaming the system to cheat merchants but it’s still a much better situation than what we have today which is nothing.
There’s more packed into this powerhouse of a paper that I won’t have time to cover here, like layered RBAC (Role Based Access Control) permissions, inter-blockchain communication, smart contract terms of service, a votable proposal system, non-micropayment “free” storage based on the interplanetary file system and more.
As always I encourage everyone to go the source instead of just interpretations of the source. Read it yourself. Read it with an open mind. Reflect. Imagine how you could use each and every feature if you had a business and an app you really wanted to share with the world.
Ask yourself questions.
Does it make sense? Why? How would you put it into action?
Only then can you know the truth of any given project’s designs.
The Rosy Fingered Goddess of Dawn
Despite our best predictions nobody really knows exactly how this all plays out in the coming years.
We don’t know the ideal way to do distributed consensus or the best way to solve the countless problems that will inevitably develop as we solve all the current ones facing the space. With each step, as we hack our way through the dark woods a new monster awaits us.
It’s impossible for any one group or person to have all the answers to all of these challenges. That’s why it’s exciting for us to finally have a real challenger to the Ethereum throne.
Maybe now we can finally stop building the train tracks of the future and start building the cars that run on top of them. That’s when things really get interesting.
The platforms themselves are only the foundation.
Cars that surge along the rails, carrying people and goods from near and far are the real reason all of this work is happening now. It’s the things that run on the platforms that change the game and how we play it.
In Greek mythology EOS was the Goddess of Dawn “who rose each morning from her home at the edge of Oceanus.” Homer memorialized her in the undying epic of the Odyssey with the famous line:
“When the child of morning, rosy-fingered Dawn, appeared, we admired the island and wandered all over it, while the nymphs Jove’s daughters roused the wild goats that we might get some meat for our dinner.”
It’s fitting that the EOS project borrowed the power of the sun to light the way into the decentralized future.
Right now we’re in the early twilight hours of decentralization. It’s still dark everywhere, with only a few scattered lights to show the way. The roads remain mostly unpaved. The streetlights are still going up. The maps are blank with only a few distant markers, like the maps of the old world with nothing beyond the fabled borders of Europe but mist and dragons.
Yet with each passing second the day draws closer and closer.
And with the launch of the EOS mainnet in June we may finally witness the dawn of the new era of decentralization.
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DISCLAIMER: Be a big boy or girl and make your own decisions about where to put your hard earned money. I am not a financial adviser and this is not financial advice and if I really need to tell you this then it’s best to keep your money under a mattress anyway because when you lose it you’ll only blame other people for your mistakes rather than yourself.
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