EOS is a digital platform for the development of decentralized applications (dApps). The team, led by Daniel Larimer, has boasted that the project’s ability to scale will ultimately lead to the “killing” of Ethereum.
Few other cryptocurrencies in the past year have seen the levels of volatility that EOS has experienced.
A year-long Initial Coin Offering (ICO) helped the EOS team raise a record-breaking $4 billion and saw the price of one EOS token fluctuate between $1 and $23.
The blockchain officially went live on June 14, two weeks later than scheduled, following a rocky transitional period of network stability testing and the swapping of the EOS ERC20 Ethereum-based tokens — which used as placeholders during the ICO phase — for the official native EOS tokens.
The EOS platform is still in its infancy stage but has seen considerable adoption by dApp developers migrating their applications from the Ethereum blockchain and creating new applications specifically tailored to the EOS network.
According to Block.tivity and dAppRadar, EOS is currently the second most actively transacted blockchain on the market and has more than 50 active dApps available.
At the time of writing, one EOS coins are trading at $5.50, but we at BeInCrypto believe that — with continuing dApp development — EOS could double in price and return to the $10 level in early 2019. As such, investing in EOS could be a profitable investment.
EOS has had a fair share of controversy and fundamental concerns in its ICO phase and the short time the blockchain has been live. These issues, coupled with a huge trading price range in 2018, put EOS in a category of increased risk and reward.
A Controversial Consensus Protocol
Let’s first analyze the brunt of the negative concerns circling the EOS project and team from a fundamental perspective — focusing strictly on issues from the time of network launch to the present day.
The majority of the negative concerns about EOS all come down to the consensus protocols which govern this particular blockchain.
Nearly all blockchains in existence are governed by one of two consensus models, proof-of-work or proof-of-stake.
Proof-of-work blockchains such as Bitcoin or Ethereum, require computing power provided by miners which is used in securing the network. These miners act as nodes that facilitate transactions on the network and are rewarded in cryptocurrency for mining new blocks.
Ethereum, which is currently proof-of-work, will soon be shifting to a proof-of-stake model in which all wallets on the network that hold the particular currency are eligible to “stake” or lock away a particular amount of their coins to then act as a node. The more coins that are staked, the more the individual can earn in transaction fee rewards.
How Decentralized is it?
Criticisms of these two systems revolve around consolidation of wealth and power on the network, wherein the rich get richer and opportunities are created for two or more entities to join together and take majority control, allowing for unintended and harmful alterations and manipulation on the network.
The EOS blockchain, however, operates on a slightly modified version of the proof-of-stake model known as delegated proof-of-stake. In this system, individuals who own EOS tokens are able to stake their tokens for the ability to cast votes for up to 30 different block producers.
The 21 highest voted block producers on the EOS network are the ones who act as consensus representatives and have the responsibility of verifying on-chain transactions. These block producers are then rewarded in a weighted percentage of EOS tokens based on their position.
According to Eostracker.io, at the time of writing this article, the top block producer is rewarded with 831 EOS tokens daily. This equates to $4,570 per day or more than $1.5 million per year given the price and producer position remains static.
Accusations of Collusion
It comes as no surprise that with millions of dollars per year up for grabs, these block producer positions are highly sought after.
With such a small centralized pool of producers, many people in the blockchain industry criticize EOS for being the antithesis of the decentralized future that other blockchains are working towards.
A criticism which was recently reignited among accusations of collusion between Chinese block producers who were allegedly voting for one another. This spreadsheet on Eosauthority.com documents the co-relation of each of the block producer’s votes based on voting weight.
Block.one (EOS’ parent company) CEO Brendan Blumer has neither confirmed nor denied these allegations at the time of writing this article.
All of this negative attention came only days after news that several founding Block.one executives and software developers had left the company to form a new venture called StrongBlock.
Another minor factor keeping some investors away is the fact that any investor who had not purchased any EOS before the mainnet launch needs to purchase an account to be able to hold their tokens — and only an existing member can create a new account.
At the time of writing, the cost of one EOS account is currently USD 7.39 when paid with cryptocurrencies, USD 10.02 when paid with credit card and 0.8 EOS when paid with EOS on Eos-Account-Creator.com — if you don’t have an EOS holder to help you to create one.
Despite these flaws, EOS still has plenty of positive notes to be considered.
One feature, in particular, that could prove to be quite valuable for investors in EOS is the token airdrops that can be received from dApps that launch on the EOS chain. This gives EOS holders the opportunity to receive free cryptocurrency tokens simply for holding EOS tokens.
Two such tokens that have already been released are eosDAC (EOSDAC) and Everipedia (IQ). EosDAC tokens were airdropped to holders of the ERC20 EOS token at a rate of 1:1 and are currently worth $0.02 apiece, while the decentralized encyclopedia project Everipedia airdropped its IQ token at a rate of 5 IQ:1 EOS and are currently worth just under $0.01 per token.
This could prove quite lucrative for EOS holders if and when any projects on the chain becomes highly successful.
EOSfinex & Activity Valuation Index / Capacity Utilization Index
Cryptocurrency exchange Bitfinex also recently launched a new decentralized exchange (DEX) on the EOS blockchain called EOSfinex, which offers a platform for trustless peer-to-peer cryptocurrency trading.
EOS has taken over Ethereum in terms of blockchain activity as illustrated by the Activity Valuation Index, which is the ratio of blockchain activity compared to its respective blockchain market cap, and Capacity Utilization Index, which is the ratio of daily blockchain activity to its total blockchain capacity.
The movement of the EOS market price from its ICO debut in July 2017 to the present has been nothing short of fascinating and can be broken up into 4 distinct phases to analyze.
Phase 1: ICO Launch (July 1, 2017 – October 31, 2017)
The EOS ICO launched at the beginning of July 2017 at $1 per token, quickly spiking to $4 per token days later and returning back to the $1 mark — which is common among token prices after a new ICO launch.
From that point, the price slowly slipped down to a low of $0.50 where it remained stagnant until the end of October 2017.
Phase 2: Bitcoin and Altcoin Bull Run (November 1, 2017 – March 17, 2018)
Throughout the months of November 2017 and December 2017, cryptocurrencies across the board saw enormous percentage gains — and EOS was no different.
At the beginning of November 2017, EOS was trading at slightly over $1 and steadily climbed to a new high of more than $16 on January 18, 2018. At this point, Bitcoin had reached nearly $20,000 before a sharp marketwide correction began. The EOS price followed this correction and slipped back to $4.50 on March 17.
Phase 3: Pre-Mainnet Launch Hype and Sell-Off (April 10, 2018 – July 14, 2018)
During the end of March and the beginning of April 2018, the price of EOS made a small bounce before trading sideways for a few weeks. Then, on April 10 — less than two months before the scheduled mainnet launch — the price of EOS defied the rest of the sinking market and exploded to the upside nearly 300 percent, from $5.50 to $23 per token. This EOS rise was nothing short of extraordinary.
This price spike was based solely on hype over the upcoming mainnet launch but was unsustainable without anything official actually being released. This became apparent as many investors decided to take their profits and get out before the imminent correction would happen.
By the time the mainnet went live on June 14, the price was back under $10 and continued on a downward trend to a then yearly low of $6.70. We can call this nothing short of an EOS crash.
Phase 4: Rejoining the Altcoin Decline to (August 6 – Present)
At the beginning of August, EOS broke under its $7 support level and entered a sideways channel where it has since been trading between $4 and $7.
Looking at a chart comparing the price action of Bitcoin with EOS, we can see that historically, EOS has followed the movement of Bitcoin fairly closely, except exaggerated peaks and valleys — as is often the case with digital coins.
The price of Bitcoin has been stabilizing the past few months and it seems plausible that the next time Bitcoin rallies, EOS could follow and return back to double-digit prices.
Specialists’ Perspective (EOS Price Prediction)
Tone Vays — a Wall Street veteran, former VP at JP Morgan Chase, and well-known Bitcoin-focused technical analyst — told BeInCrypto that he thinks EOS will one day be worth $0, stating:
“EOS IS A USELESS SCAM TOKEN OF A CENTRALIZED WORTHLESS PLATFORM. MY PRICE PREDICTION IS EVENTUALLY ZERO AS WITH NEARLY ALL OTHER ICOs, SCAM TOKENS AND USELESS PROJECTS.”
Tone Vays (@tonevays)
Some popular cryptocurrency price forecast websites can help give more insight into making long-term predictions and EOS forecasts. It should be noted, however, that many such sites use algorithms and machine learning to analyze past prices and other market trends and do not take fundamentals into account when making a prediction.
WalletInvestor gives EOS an A+ rating in terms of a one-five year price forecast. In one year, it predicts the price of EOS will be $11.23 and its five-year forecast predicts prices slightly over $39.
MegaCryptoPrice is far more bullish, predicting that the price of EOS in one year will be $60, while its five-year forecast is a staggering $360 per EOS token.
EOS has seen some of the largest gains during 2017 and 2018, but past rarely if ever predicts future in the cryptocurrency or traditional markets.
EOS’s blockchain has great aspirations and it certainly has a lot of potential, but it is important to keep in mind that its blockchain governance model is experimental and still in the infancy stages of development.
EOS could be a great investment for those looking to add higher risk and reward assets to their portfolios, while those looking for safer bets might have greater success elsewhere.
The success of EOS as a blockchain and its worth as a cryptocurrency will depend on the success and quality of the dApps built on it as well as the team’s ability to remain transparent and listen to the community’s wants and needs.
What do you think of our price prediction for the EOS cryptocurrency in 2019? Let us know your thoughts in the comments below!
Images courtesy of Shutterstock, TradingView.
[Disclaimer: The contents of this article are not intended as financial advice, and should not be taken as such. BeInCrypto and the author are not responsible for any financial gains or losses made after reading this article. Readers are always encouraged to do their own research before investing in cryptocurrency, as the market is particularly volatile. Investing in EOS is risky.]