EOS DIGITAL ASSET REPORT:EOS Review and Investment Grade

Crypto Briefing Research Department

July 2, 2019

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com

Project Profile ........................................................................................ 3

Fundamental Factors ............................................................................. 4

Grade ................................................................................................... 5

Introduction ........................................................................................... 6

Market Opportunity ................................................................................ 7

Underlying Technology ........................................................................ 14

Token Economics ................................................................................ 29

Core Team .......................................................................................... 32

Roadmap Progress .............................................................................. 34

Token Performance ............................................................................. 35

Conclusion ........................................................................................... 39

Contents

Ecosystem Development ..................................................................... 22

Disclaimer ............................................................................................ 40

EOS EOS $5.82

Key Metrics ICO Information

Market Capitalization

Top 10 Addresses Combined

ATH Price

30-Day Average Price

24H Volume

30-Day Average 24H Volume

$5,367,550,625

45.10 %

$22.71 (Apr 29, 2018)

$6.67

$3,216,442,537

$2,756,957,168

Jul 26, 2017 - Jul 01, 2018

Early bird price: $0.99

$4,197,956,135

N/A

920,837,267 EOS

1,017,563,627 EOS

ICO Dates

ICO Price

Public Allocation

Private Allocation

Circulating Supply

Total Supply

eos.io Whitepaper

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Fundamental Factors

Market Opportunity

Core Team

Ecosystem Development

Token Performance

Underlying Technology

Roadmap Progress

Token Economics

8

8

8

6.5

7

6

8

Combined Score: 7.4

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B-

One major progress indicator (tech development or ecosystem growth)

is typically advancing well in accordance with roadmap but the other is

lagging behind; no upcoming near-term catalysts strong enough to

signal potential for positive price trend. Project still retains significant

susceptibility to adverse conditions in the market and token price is

moderately volatile. Examples may include a technologically sound

project with little prospect of adoption due to shortage of marketing

resources OR a popular token behind on tech development because

there aren’t enough devs or projects in ecosystem.

Grade

Methodology

For a full description of our methodology, please click on:simetri.cryptobriefing.com/methodology

IntroductionEOS is a smart contract platform that aims to create infrastructure for decentralized applications, with high transaction speed and no gas fees.

The project currently holds the record for funds raised during the Initial Coin Offering (ICO). It conducted a year-long crowd sale that began in June 2017, attracting around $4.2B, while the platform went live in June 2018.

Soon after the launch of the mainnet, the project started to get traction. The number of dApps and user on its platform has grown dramatically, and EOS has become the number one platform in terms of on-chain transaction volume.

However, as EOS popularity has been growing, so have the number of controversies surrounding it. The project has been criticized for being too centralized, and too expensive for developers to build on; in addition, its public blockchain governance has faced several fundamental issues, including allegations of voting corruption.

Despite all of the controversy, EOS remains one of the most popular dApp platforms on the market. While its network is growing and evolving on the technological side, its financial resources should enable it to further foster development.

These factors should help the project remain competitive on the market, and to scale with the overall industry. B© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 6

To understand the growth potential of the dApps market we can look at the market for traditional mobile applications. Its revenue is projected to be around $188.9B in 2020, showing an increase of more than 45x since Apple opened its App Store in 2009. The dApp space could, in time, become similarly vibrant.

New DApps per Month | Source: stateofthedapps

Market OpportunityEOS positions itself as a global platform for commercial-scale dApps. The project is focused on building a blockchain that will incorporate three major principles: scalability, flexibility, and usability.

Although the market for decentralized applications is still relatively small, it has been growing (despite the bumpy 2018) and is expected to continue its uptrend movements with further adoption of blockchain technology.

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In the dApps space, EOS’ main competitors are Ethereum, Tron, IOST, and Steem. For the most part, these are rapidly evolving platforms that all have the potential to become an industry standard for distributed applications.

Q1 Dapp Market Overview - User Analysis | Source: dapp.com

Q1 Active Users

Total Users

User Activeness

# Main Net Address

Dapp User %Compared to 2018 Annual Data

All

819,677

2,386,867Q1 New: +586,949

34.34%

64,568,513Q1 Now: +9,753,896

3.70%13%

ETH

186,544

1,151,657Q1 New: +114,122

16.20%

60,105,639Q1 New: +8,234,592

1.92%4%

EOS

262,450

334,480Q1 New: +163,310

78.47%

895,490Q1 New: +264,934

37.35%38%

Steem

66,936

542,777Q1 New: +23,396

12.33%

1,252,206Q1 New: +72,206

43.35%2%

TRON

303,747

357,953Q1 New: +286,121

84.86%

2,315,178Q1 New: +1,182,155

15.46%144%

Dapp Market Report Q1 2019 | 7dapp.com

Although EOS has become the largest blockchain in terms of transaction volume in 2018, its team will have to work hard to safeguard its leading position in the future.

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IF ETHEREUM SOLVESITS SCALABILITY PROBLEMSIT COULD PRESENTA SERIOUS THREAT TO EOS

In terms of competition with Ethereum, EOS has shown a higher number of transaction volume and overall dApp activeness on its platform. However, Ethereum, due to its first mover advantage has seen a greater number of dApps created on its platform.

According to the Dapp.com Q1 2019 Market Report, out of 504 dApps that were added to the website in Q1 more than half were built on Ethereum. This shows that although Ethereum has some major issues including scalability problems, it still attracts a larger number of developers around it and if it solves its scalability problems it could present a serious threat to EOS and other players on the market.

The other important competitor to EOS is Tron. In fact, Tron has been the fastest growing dApp platform in Q1 2019, which reflects growing interest from developers on its platform.

Similar to EOS, Tron has sufficient financial resources to aggressively invest in its ecosystem. In 2018 Tron launched the $2B Project Genesis to expand its ecosystem. In addition, Tron has allocated $100M to TronArcade, a blockchain game fund that will invest and promote games built on the Tron blockchain. In fact, Tron is a serious competitor for EOS from both the scalability and financial perspectives. It attracts a substantial share of developers and will continue to increase its market share.

TRON IS A SERIOUSCOMPETITOR FOR EOS

FROM THE TECHNOLOGICALAND FINANCIAL PERSPECTIVE

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Although IOST has launched its mainnet relatively recently, the project has excelled at growth hacking. It has experienced tremendous on-chain transaction growth and considers itself to be one of the “big-4”. It has implemented a strategy to generate user base growth using the Bermi application, and based on our conversation with the team, is targeting 5-10M DAU and a 100M ecosystem user base by the end of the year.

Although EOS and other bigger players, seem to dominate the dApp market, the still market remains small. While EOS may appear to currently have more clout, the dApp market is still relatively small. Therefore, the window of opportunity remains open for active projects such as IOST.

The competition with Steem is currently less intense. The rival has developed social applications, such as Steemit.com, which are popular within a large community. However, since then it has stagnated and currently has much less dApp activity and development on its platform.

Furthermore, the company behind Steem, Steemit Inc, is facing problems, and had to lay off almost 70% of its employees. The project is trying to reorganize by saving on costs and finding new ways to generate additional income to work on ecosystem development. So, at the moment Steem does not pose a serious threat to EOS.

STEEM DOES NOT POSE ASERIOUS THREAT TO EOS

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Competition in the Blockchain Space

Besides these four platforms, there are also many other smaller blockchains like IOST, NEO, Zilliqa, Qtum, Tezos, etc. These blockchains also have a chance to become market leaders in the future, but they currently have smaller ecosystems and do not pose an imminent threat to market dominance. In fact, from the developer's perspective, all of the blockchains above present some advantages and at least at this point, it is difficult to select a clear leader.

Currently, there is also a trend whereby developers start to develop their dApps simultaneously on several platforms. This helps to attract more users and diminishes the risk of building a good dApp on the “wrong” platform. This trend will most likely continue until we see a clear leader that will start to dominate market share.EOS has a chance to be that leader in the future.

Project name Ticker Launch date Key features Market cap

EOS EOS Started in 2017.Block producerselected in 2018

*Delegated Proof of Stake consensus.*Block time - 0.5 sec.*3,996 tps, no fees.

$5.3B

Ethereum ETH Started in 2014. Frontier Launched in 2015

*Proof of Work consensus.*Block time - 14 sec., 25 tps.*Turing Complete smart contracts.*Biggest dApp ecosystem.

$30.0B

TRON TRX Started in 2017 *Delegated Proof of Stake consensus.*Block time - 3 sec.*2,000 tps, no fees.

$2.0B

Steem Steem Started in 2016 *Delegated Proof of Stake consensus.*Block time – 3 sec.*10,000 tps., no fees.*Steemit, social media and bloggingplatform, Smart Media Tokens.

$109.8M

IOST IOST Started in 2017 *Proof-of-believability consensus.*JavaScript SDK.*ATH 1,010 tps, gas fees.

$145.9M

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NVT Comparison | Source: Сoinmetrics.io

The NVT Comparison reveals that EOS transactions are, on average, priced similarly to Ethereum transactions, and lower compared to transactions on Tron, which shows that the project is not overvalued on a relative basis.

NVT or Network Value to Transaction Ratio (market cap/on-chain transaction volume) is often called the “crypto PE ratio.” This is a simple way to compare how the market prices one unit of on-chain transactions across different chains.

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The traditional market players also offer their platforms for dApp developers and directly compete with decentralized platforms such as EOS. Traditional players, in general, are well funded and have much higher network effects than rivals from the blockchain space.

For example, IBM has offered its own solution for application developers. Users can start developing their blockchain applications with the open source Hyperledger Fabric and IBM Blockchain. In similar vein, Microsoft is offering its own platform for blockchain applications development: Microsoft Azure.

So far, the solutions discussed are more applicable for enterprise use, and are not oriented for B2C use cases (games, finance, etc), but with further development in the sphere, large players will be

able to expand focus and start promoting the development of games and other entertainment applications on their blockchains - which will, in turn, increase competition in the market.

Presently, EOS is neither dominant nor dominated, when compared to its chief rivals. The platform has shown good results in terms of adoption growth, and its network is expanding.

However, its rivals are also evolving and taking advantage of growing market opportunities.

From a market opportunity perspective, EOS has all the chances to succeed, as long as it continues to expand the network and attract developers to its platform.

Project name Ticker

CompetingProduct Key features Market cap

IBM IBM IBM BlockchainPlatform

*the company is operating in over 170 countries*world's largest employers with over 380,000 employees*several thousand customers worldwide*+500 blockchain engagements

$124.0B

Microsoft MSFT Microsoft Azure *# 30 in the 2018 Fortune 500 rankings *more than 134,000 employees*more than 110B in Revenues in 2018

$1.0T

Competition in the Traditional Space

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EOS is a blockchain for scalable distributed applications. It utilizes a Delegated Proof of Stake (DPOS) consensus algorithm. It enables the selection of block producers through a continuous approval voting system. Anyone may choose to participate in block production, provided they can persuade token holders to vote for them.

Block production happens exactly every 0.5 seconds, with blocks produced in rounds of 126 (6 blocks each, times 21 producers). At the start of each round 21 unique block producers are chosen to participate in the block production. If a producer has not produced

any block within the last 24 hours they are removed from consideration until they notify of their intention to start producing blocks again.

Although only the top-21 nodes directly participate in the consensus, there are many more standby producers that can secure the network if something happens with one or more of the top block producers. Such systems do not experience any forks, because rather than competing to find blocks, the block producers cooperate to produce them.

EOS ENABLES THE SELECTIONOF BLOCK PRODUCERSTHROUGH A CONTINUOUSAPPROVAL VOTING SYSTEM

Underlying Technology

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Overall, the EOS blockchain utilizes three network resources, that represent raw materials in its economy and dApp development:

CPU Bandwidthis a time-denominated resource and is measured as average consumption in microseconds over the last 3 days. The longer your transaction runs, the more CPU bandwidth it will consume. CPU bandwidth is temporarily consumed when you send an action or transaction but decreases over the 72 hours returning to 0.

Network Bandwidth (NET)is a space-denominated resource and is measured as average consumption in bytes over the last 3 days. The more tokens you stake for net bandwidth, the more you get to use. Net bandwidth is temporarily consumed every time you send an action or transaction but decreases over the 72 hours returning to 0.

RAM

is required to store data on the blockchain and must be purchased. You get a set number of bytes of storage based on the current RAM market price.

Current RAM Price

0.10221271 EOS per KiB

~ $0.756 USD per KiB

Cost to persist 1 KiB of data in RAM

Current Network Price

0.00037106 EOS/KiB/Day

~ $0.003 USD/KiB/Day

Cost to reserve 1 KiB/Day Network Bandwidth

Current CPU Price

0.00201127 EOS/ms/Day

~ $0.015 USD/ms/Day

Cost to reserve 1 MS/Day CPU Bandwidth

Source: eosrp.io

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CPU and NET are needed for ordinary users to interact with applications and the blockchain. They require no upfront payment from the user side and can be acquired by simply staking EOS tokens.

RAM is used exclusively by developers building dApps and needs to be purchased. It’s a price set by the Bancor algorithm. RAM is not regenerative and cannot be transferred from user to user. However, users can sell RAM if they no longer need it, realizing profit or loss depending on the market price at the time of the sale.

With RAM, CPU, and NET, EOS is taking a completely different approach when it comes to application development. On Ethereum, users have to pay a transaction fee every time they make an action: whereas on EOS, for the most part, application developers cover all associated transaction costs.

Developers have to stake EOS in order to run their dApps, and also have to buy a certain amount of RAM in order to onboard new users. These network, CPU and RAM resources are used to reserve minimum network capacity and are not consumed.

However, getting them could be costly. A popular dApp could cost hundreds of thousands of dollars, with user onboarding (creating EOS accounts) costing approximately ~2.26$ per user at present RAM price.

In fact, creating an account on EOS is not free and developers usually have to bear these costs in order to make the user on-boarding easier. New accounts can only be created by someone with an existing account and sufficient RAM balance. This creates additional barriers to entry for potential developers since they have to pay to onboard new users.

ON ETHEREUM USERS HAVE TOPAY A TRANSACTION FEE EVERYTIME THEY MAKE AN ACTION

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EOS RAM prices | Source: eosio.stackexchange

EOS developers, therefore, have to think upfront about their business model, and how they will be acquiring additional RAM if their dApp suddenly gets popular.

RAM in itself has been a problem for developers, due to the high volatility of its price. Right after the mainnet launch, it skyrocketed as speculators bought most of the available RAM to make profits by selling it at a premium to dApp developers. The price of RAM shot up to over $4M per gigabyte. The expensive

RAM makes the blockchain unviable for many business applications since they become economically inefficient.

To solve this problem EOS came up with a solution to increase RAM supply by 1kb a block, or 64GB a year until a 128GB limit is reached. This helped to substantially decrease the RAM price - but this is rather a short term solution, and with a substantial increase in the adoption levels, RAM could again become a source of speculation.

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EOS blockchain has also faced spamming issues, due to the fact that users can get an outsized amount of CPU time for a relatively modest stake. CPU measures the amount of time an EOS block producer should dedicate to transactions from an account. In 2018, a single account, Blocktwitter, was able to consume a significant amount of network CPU resources, making it difficult to use other applications on the blockchain. Some users reported that they had to stake up to $500 in order to simply play the game EOS Knights.

Moreover, EOS dApps have faced many security breaches which negatively affected the whole network. Smart contracts on EOS are built using C++, which is an extremely complex programming language that represents a clear barrier to entry for developers. Its complexity is also directly correlated with the number of vulnerabilities EOS dApps are having.

THE OTHER PROBLEM THAT EOSBLOCKCHAIN IS GROWINGAT A VERY FAST RATEAND ALREADY EXCEEDED IN SIZE

However, in our conversation with the top-21 block producer, EOS New York, their team did not share this concern, stating that C++ is more widely accepted by developers than Solidity. The team also thinks that the amount of media coverage on EOS hacks tends to be over exaggerated, while the other platforms experience similar problems.

One more problem that EOS is facing is the fact that its blockchain is growing rapidly and already exceeds 4 TB in size. The large blockchain size makes it expensive for node operators to maintain the full history of the blockchain.

As a result, currently, there are only five full history nodes, that all the dApps depend on.

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vRAM is an alternative to RAM and offers additional storage for the EOS dApp builders; vCPU is an alternative to CPU, a solution for the offloading of CPU intensive processes from the main chain to child chains; vAccounts - free virtual accounts, a way to create RAM-free accounts on the EOS.

Dapp Network will be working directly through its own token. Developers would have to purchase the token to access the network. Similar to EOS it has a year-long ICO, which will last until January 2020.

With growing adoption the size of its blockchain will grow at an exponential rate and EOS will have to figure a way to incentivize block producers to store full history nodes. Right now, they represent a single point of failure for the network.

However, EOS has been actively working trying to solve some of the above problems and is now planning several important updates.

EOS REX (Resource Exchange) was proposed by Daniel Larimer (founder of EOS), in August of 2018. The exchange offers a rental market for EOS resources (NET and CPU) It also opens a new revenue stream for users that have not been interested in building dApps but have been holding EOS on their wallets. This will allow dApp developers to rent network resources instead of acquiring them upfront and will lower capital costs needed to use the network.

The other important project that should lower the costs of the resources on EOS blockchain is DAPP Network, proposed by LiquidEOS, an Israel-based R&D center, and EOS Block Producer.

“The DAPP Network can make the development of dApps more affordable, efficient and scalable through a range of products for developers, service providers and users committed to scaling the blockchain.”

It will also provide an alternative revenue for active and standby block producers outside of the normal on-chain block rewards, by creating DAPP Service Providers (DSP).

DSP functions as a second layer on top of EOS Mainnet and will allow dApps to plug into the DAPP Network instead of the direct connection to the EOS blockchain. DSPs through the DAPP Network are able to provide additional resources to dApp builders such as vRam, vCPU, vAccounts, etc.

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Although its ICO is not over yet, the project has already launched vRAM and vAccounts, while vCPU is planned to be released in the H2 of 2019. In the future, it should also be able to offer full history, file storage, oracles, and many other important features for the EOS blockchain.

However, it could also happen that dApps will start to be overly dependent on certain DPSs, increasing centralization. Developers are already working on this problem, and most likely there will be decentralized DPSs, or dApps will have to connect to several DPSs, to decrease centralization.

Nevertheless, despite all of its technological issues EOS has been successful at attracting developers.

One of the main reasons has been transaction speed. In fact, from a scalability perspective EOS remains one of the top blockchains,

Project name Ticker Consensus Protocol TPS Time to Confirmation

EOS EOS DPoS 3,996 5 sec

Ethereum ETH PoW 25 6 min

TRON TRX DPoS 2,000 3 sec

IOST IOST PoB 1010 ~1 sec

Steem Steem DPoS ~10,000 3 sec

Scalability Comparison

for developers that need high-throughput capabilities for their distributed applications.

Absence of transactional fees is another attractive factor for dApp developers. This reduces development time and cost for new projects and enables engineers to deliver better UX for end users.

Furthermore, developers are attracted by EOS dynamic pace of development, which instills faith that the network will overcome its present shortcomings in a timely fashion. The project has launched its mainnet a little over a year ago, and it’s still relatively young, while the continued rapid evolution is a good sign for long-term longevity.

Although the activity of the main repository in EOS GitHub has dropped significantly since the launch of the mainnet, the other repositories have remained active. In fact, the project is periodically

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GitHub Activity | Source: cryptomiso.com

releasing new updates to its protocol, that improve its security, stability, and functionality.

Like other dApp platforms, EOS is still far from being a perfect blockchain for distributed applications. However the platform is evolving, and there are plenty of promising solutions that could

potentially solve its bottlenecks, and improve the technology.

This should make the network more affordable for dApp developers, more convenient for dApp users, and help EOS compete with its rivals in the market.

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EOS is a blockchain platform for distributed applications that utilizes delegated proof-of-stake consensus algorithm and relies on the distributed set of nodes (block producers). There are two types of block producers that help secure the EOS network:

Ecosystem Development

Top-21 block producers play a crucial role in the EOS ecosystem since they are not only validating the transactions on the blockchain but also participate in the governance of the network.

They also have the authority to propose updates to the protocol, freeze accounts, and update applications.

TOP-21 BLOCK PRODUCERS

Standby block producers (outside of Top-21) participate in network redundancy, save the full copy of the blockchain, and aim one day to get into Top-21. Although Standby block producers do not directly participate in the governance of the network, they are still rewarded through the inflation of EOS tokens.

STANDBY BLOCK PRODUCERS

Election of Block Producers

Block producers are voted for directly by EOS token holders. Any token holder can continuously vote for up to 30 block producers, and no block producer is guaranteed its spot in the top-21.

In their decision-making, block producers have to obey the EOS constitution. It has its base layer in the form of ECAF (EOSIO Core Arbitration Forum), the community's forum for the resolution of disputes on the EOS blockchain. ECAF aims to recruit professional arbitrators with the expertise to help facilitate the decision-making process for the BPs.

The other feature that was also introduced to govern EOS blockchain was the Referendum system. It gives token holders the ability to create different referendum proposals, and vote on them.

The governance of EOS blockchain relies on a few key unique features:

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Governance grievance

Although EOS has tried to come up with a relatively good governance structure, it started to show problems, right from the beginning.

The initial interim constitution that was established with the launch of the network was criticized for being unenforceable. After dApp hacks started, the constitution was not able to preserve the property of its users. ECAF has failed since it was not designed to deal with cases on a large scale. As of 14 December 2018, there are 864 cases filed: of these, 39% were from users who lost their keys.

In some way, ECAF has created chaos in the community. It started to give out orders to freeze accounts without explaining the reason for the freeze, stating that the reason will be posted at a later date. Moreover, it was accused of giving preferential treatment, to phished whales’ accounts and has generated a lot of negative feedback from the community since it was a source of centralization, in itself.

EOS block producer voting system also started showing its flaws right from the beginning. For instance, Bitfinex exchange received 50% of the votes to become a block producer from only four whales.

AFTER DAPP HACKSSTARTED, THECONSTITUTION WASNOT ABLE TO PRESERVETHE PROPERTYOF ITS USERS

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private keys, while before it stated that you own your EOS coins even if someone steals your private keys. It also excludes such concepts as vote buying, violence against another member, no perjury, etc.

However, the replacement of the interim constitution was technically illegal. It was replaced with only a 1.74% turnout, while according to the invalidated constitution it could only be changed with 15% turnout.

This again illustrated that the concept of having a constitution has not been working, and all the power over the network is centralized in the hands of 21 block producers. They have the final say over the EOS network and can disregard any constitution or referendum in the community.

Centralization could, in theory, lead to cartel-like behavior of the Block Producers. If block producers start to act solely to maximize their own short term profits, they could undermine the security and credibility of the network.

ATTEMPTS TO SOLVEGOVERNANCE ISSUES LEAD TOMORE QUESTIONS

Meanwhile, Huobi was accused of “mutual voting” and “collusion”. A leaked document from a former Huobi employee showed that Huobi voted for 20 block producers, while 16 of them voted back for Huobi. It might be assumed that this was done in exchange for significant financial rewards. EOS responded with a statement, saying that “the team is aware of some unverified claims regarding irregular block producer voting”, but the issue was neither confirmed nor denied.

These issues have raised many questions about the effectiveness of EOS governance. In fact, it has been fully centralized and has violated the core principles of the crypto world by allowing account freezes and confirmed transaction reversal.

The company has tried to solve some of the issues presented above. Block producers have voted to replace the interim constitution with the EUA (EOS User Agreement). The new user agreement dismisses most of the ethical obligations that were presented in the previous version of the document. For example, it states that users are solely responsible for the safekeeping of

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The CTO of EOS, Daniel Larimer, has his own view on the centralization issues, saying that “Decentralization isn’t what we’re after. What we’re after is anti-censorship and robustness against being shut down.” Some block producers are also pointing to the fact that they are elected by token holders, and can be voted out in case of misbehavior.

However, the voting process on EOS is not simple, due to the difficulty of creating an EOS wallet. This forces users to hold token

on exchanges, which creates additional security risks and even further centralizes the network.

In fact, the top-10 richest EOS wallets hold around 45.10% of the tokens, while most of the wallets from the top-10 list are exchange wallets.

bi

eosio.rex

binancecold1

fepxecwzm41t

okexoffiline

bithumbshiny

vuniyuoxoeub

okbtothemoon

eospstotoken

winterishere

a year ago

2 months ago

7 months ago

7 months ago

10 months ago

a year ago

a year ago

a year ago

7 months ago

a year ago

96,700,005.6802

94,105,909.8996

51,517,768.9374

47,503,937.7469

42,836,600.9949

37,434,907.1198

34,665,017.3896

19,932,703.7442

17,644,234.4425

9.5156%

9.2603%

5.0695%

4.6745%

4.2153%

3.6837%

3.4111%

19614%

1.7362%

1

2

3

4

5

6

7

8

9

10

Rank Account name Creation Date EOS Owned Percentage

16,015,655.8902 1.5760%

Top-10 Wallet Distribution | Source: bloks.io

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Block.one is the Company Behind EOS development. It raised $4.1B dollars during the year-long ICO. In fact, the EOS ICO was the biggest ICO in history. Currently, the company maintains and develops EOSIO - the EOS blockchain, and the EOS VC - the venture arm of the project.

Block.one has established major plans to invest over $1B in EOS ecosystem. The company has already allocated around $700M through VC partnerships with Galaxy Digital LP, FinLab AG, Michael Cao and Winnie Liu and others.

The group has invested in such projects as:

Moonlighting, a marketplace for freelance professionals: it is planned that over 700,000 user accounts from the website will be moving onto the EOS blockchain.

Everpedia - wiki-based online encyclopedia with over 6M articles, an alternative to Wikipedia.

High Fidelity open-source virtual reality software platform, that helps build virtual reality spaces, etc.

However, Block.one is not the only company that is working on the development of EOS. In fact, top block producers have a direct monetary incentive to add value to the ecosystem, since they receive EOS block producer rewards. For example, DAPP Network is developed by LiquidEOS, ranked 6th in the list of block producers.

By the end of Q1 2019, EOS Dapps had over 260,000 active users, with around 500 dApps, while the top-5 dApps had a 24-hour volume of more than $12M.

Although recent studies have reported that “that blockchain bots contributed to 51% of unique accounts and 75% of transactions, equivalent to roughly $6M USD in daily transaction volume on EOS”, this number may not be critical. As the controversies around wash trading on the exchanges have shown, that is representative of the state of the industry as a whole. It is more than likely that many of the other platforms experience similar issues, especially if you consider that almost 40% of all Internet traffic in 2018 was bot-driven.

In the dApp space, bots are used as a marketing tool. Developers are purchasing additional traffic to increase the visibility of their applications. The authors of the report suggest:

“This dynamic hints at the competitive nature of the Dapp world where the runner-ups are leveraging bots in order to augment overall ecosystem usage metrics.”

So, it is possible that dApp projects are using to bootstrap their ecosystem, and the network will eventually outgrow this dynamic.

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 26

Community Involvement Comparison

In 2019 gambling dApps accounted for almost 99% of the dApps on the EOS blockchain, however, this number is slowly dropping, and in Q1 2019, there were more gaming and financial dApps appearing.

Although EOS, is being criticized for having simplistic dApps focused on gambling, this is a function of the state of the industry, in which gambling is dominating the dApp sector, regardless of the platform.

There are also decentralized EOS exchanges, built by large industry players. Bitfinex has launched decentralized EOSfinex. Switcheo

Network is also planning to launch its own EOS DEX. Current EOS DEXes’ USD volume is larger than the volume of its rivals.

The development of decentralized exchanges is a clear sign that the ecosystem is expanding, and there is a need for a new market that will provide liquidity for the users.

From the community involvement perspective, however, EOS is losing the competition to Tron and Ethereum. Although it has the highest number of on-chain transactions, it has a smaller number of active addresses compared to Ethereum.

On-chain Transactions

TRON

Ethereum Steem

EOS

Active Addresses

EOS

Ethereum

TRON

Steem

Social Media

Ethereum

TRON

Steem

EOS

Reddit subscribers Twitter followers Facebook likes

27

EOS dApps ranking by 24 volume | Source: dappradar.com

CategoryName Balance Users 24h Volume 24h Txs 24h

GamblingEosJacks 8.3k 28 $ 3.9M 145k

GamblingBigGame 355.8k 185 $ 2.9M 145.1k

ExchangesNewdex 61.1k 988 $ 1.9M 21.9k

GamblingEOSPLAY 134k 31 $ 616k 11.8k

ExchangesWhaleEx 249.3k 564 $ 555.7k 90.6k

GamblingEOSBet 90.5k 148 $ 441.5k 72.1k

ExchangesDEXEOS 947.97k 468 $ 320.3k 90.8k

GamblingTrust Dice 11.3k 83 $ 240.2k 93k

GamblingBetHash - Blackjack 67.4k 48 $ 210.1k 248.4k

Gambling2100.bet 2.9k 1k $ 199.8k 6.5k

This happens for several reasons. First of all, Ethereum is simply bigger than EOS, it has a larger ecosystem and higher liquidity. Second is the fact that it is much easier to create an Ethereum address than an EOS address, which again discourages users from active participation in the ecosystem.

From an ecosystem development perspective, EOS has shown steady growth, despite all the controversies in its governance

structure. However, the centralization that is present in its network, will likely continue to provoke a degree of negative sentiment towards EOS in the crypto community.

Therefore, for healthy development in the future, EOS governance shortcomings will need to be resolved. Otherwise, developers and users could start choosing different platforms, especially if we see a solution with better governance and similar throughput capabilities.

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 28

5%

1% Producers 4% Savings*to be allocated by future workerproposal system

.25% per block rewards

.75% per vote rewards*Minimum 100 EOS/day

Token EconomicsEOS is the native currency of the EOS blockchain. It is utilized by the ecosystem participants in several ways.

Block Producer Reward - the token is used to reward active and standby block producers.

EOS does not have transaction fees, so the block producers are rewarded with the newly issued tokens. Currently, the yearly token inflation is equal to 5%.

However, not all issued tokens go to reward the block producers. In fact, out of the 5%, 1% goes to reward block producers, while the other 4% go to the saving account.

Until recently the saving account had nearly ~34.9M EOS (~$202M), while the funds had been unused. However, in an effort to reduce the EOS inflation rate, Block Producers voted to burn these tokens. Although this removal doesn't disturb the forthcoming contributions to the savings account, there is a referendum on the inflation reduction from 5% to 1%, which will likely be passed by top block producers.

EOS Inflation Allocation | Source: medium.com

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 29

Voting/Governance - EOS token holders, can vote on the block producers,

and participate in the on-chain referendums.

- EOS is traded on many of the popular crypto-exchanges.

Speculation

Staking- dApp developers have to stake EOS in order to run theapplications.

The EOS resource economy is entirely dependent on EOS staking since dApp developers have to stake EOS in order to acquire resources on the blockchain (NET and CPU). With increasing adoption, there should be fewer tokens in circulation, which should support the price of the token.

Potentially the issue can be solved by using the funds from the savings account, or by increasing the reward.

The 1% that goes to the block producers, is split between active block producers (top-21) and standby block producers. 0.25% is received by active block producers, in proportion to the number of blocks they discover, and 0.75% goes to the standby block producers, according to the number of votes they get.

In order to receive the reward standby block producers have to receive enough votes to qualify for at least 100 EOS per day. The reward is distributed daily.

Currently, the top-21 block producer receives around 678-755 EOS daily (~$3,300), while the standby block producers receive up to 334 EOS daily ($1,500).

It may seem like a strong reward since the top block producers receive somewhere around $1.2M per year. However, a recent survey showed that the break-even price for the block producers lies somewhere around $4-$4.30 per EOS, while at the $2.50 per EOS rate, most of the respondents said that they would have to declare bankruptcy.

With the current EOS prices, block producers are not making that much money: most of them have already refused to store a full history of the EOS blockchain, to save up on costs. In fact, such a reward system could potentially be ineffective during market downtrends, which puts the network at risk.

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 30

Project name Ticker Current Supply

EOS EOS 921M 5% 1.01B

Ethereum ETH 105B ~4.84% Infinite

TRON TRX 67B ~0.5% 99B

Inflation,% annual rate Total Supply

IOST IOST 12B 2% 21B

Steem Steem 321M 8.54% 335M

Supply Comparison

The current supply of EOS tokens is over 1B tokens. EOS inflation is higher than the inflation of its main competitors. However, most of the inflated tokens do not go directly to the market and are stored in the savings account - where they could potentially be used for the development of the ecosystem.

Overall EOS has a good token economics model, where increasing adoption is directly linked to the supply of the tokens. The ecosystem participants are incentivized to utilize the token, and users have the direct opportunity to participate in the governance of the network.

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 31

Core Team

Rob is the Group President at Block.one. Previously he worked as a Financial Services and Chief Financial Officer of Commonwealth Bank of Australia. He also worked at Credit Suisse as Head of Global Emerging Markets within the Financial Institutions Group. In addition to this, he also held positions at JP Morgan, Barclays, McKinsey & Co, and GE Capital.

Daniel is the CTO and co-founder of Block.one. Previously, he has also founded Bitshares and Steemit. He is also the creator of Delegated Proof of Stake (DPOS) consensus mechanism and EOSIO platform.

Brendan Blumer

Brandan is the CEO and co-founder of Block.one. Previously Brandan has also co-founded okay.com, Hong Kong’s largest digital property agency and Gamecliff, which is working with the world’s largest online video games.

Daniel Larimer Rob Jesudason

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 32

Block.one’s executive team consists of ten employees, that have various experiences in different industries.

The CTO of Block.one, Daniel Larimer, is probably one of the most well-known faces in the industry. This is already his third projects in the crypto space, and his experience was one of the main drivers behind the success of EOS ICO.

However, not all early executives have stayed with the team up to this point. In September of 2018, four senior executives and two

contractors resigned from Block.one to start their own blockchain project, StrongBlock. This was an awkward exit since some of these people were among the first employees of the company and were responsible for the technology, product, and infrastructure of EOS.

Nevertheless, the company has a significant and experienced team with all the capabilities necessary to increase adoption of its technology.

Source: eosrio.io

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 33

Roadmap ProgressAlthough the project has not been releasing its roadmap to the public for a while, the team participated in two major events in June at which they disclosed everything they have been (and will be) working on.

The first event took place in Washington DC on June 1st, where the project announced a new social media applications called “Voice” that will run on updated EOS software EOSIO2.

However, the announcement was not received well by the community, where some have questioned the unique value proposition of a new social media platform.

The platform is still in beta, and it will take time before we can judge its success.

The second event is EOSIO Block Producer & Technology Summit,

that took place in San Francisco, CA on June 6th and which was dedicated to EOS and its project in general. It also aimed to connect EOS communities in different countries.

The main topics discussed during the Summit were the centralization concerns and how to improve the governance of the network. The block producers appeared aware of the problem and were discussing steps to improve decentralization.

June’s events showed that EOS ecosystem is evolving while Block.one and the independent Block Producers are all working towards one goal - to enhance the network.

Still, the absence of the formal roadmap is rather concerning, since it makes its hard to connect the progress of the company to its set goals.

EOS ECOSYSTEM IS EVOLVINGWHILE BLOCK.ONE AND THEINDEPENDENT BLOCKPRODUCERS ARE ALL WORKINGTO ENHANCE THE NETWORK

34

Token PerformanceEOS is the 6th largest cryptocurrency by market capitalization and trading volume. Its price has been hit hard by the overall decline in the cryptocurrency market, and it has lost around 74.15% of its total value since the ATH.

Although the project has been outpacing its rivals in terms of the

Price Comparison | Source: coinmetrics.io

number of on-chain transactions, the price comparison chart for EOS and its competitors displays a similar trend.

This illustrates that the market is not yet putting too much store into the transaction count number.

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 35

Average daily volume accounts for about $2.7B. While exchange volume has been increasing with the overall increase in the market.

Volume Comparison | Source: coinmetrics.io

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 36

USDT

USDKRW

QC

ETHBTC

EOS Volume by Currency

OKEX

HuobiProBitforexCoinBeneCointigerBinance

EXX

IDAXBitZ

BitMart

DigiFinex

HitBTC

FCoin

EOS - BTC Volume by Exchange

The vast majority of EOS trading is represented by EOS/USDT, EOS/BTC, and EOS/ETH markets, with almost 40% in USDT volume. EOS is trading on all major markets, while its trading volume is spread across many exchanges.

Source: coinmarketcap.com

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 37

Recent EOS volatility (30-day) numbers remain close to its competitors, with an overall spike in volatility during the start of Q2 2019.

30-Day Volatility Comparison | Source: coinmetrics.io

© 2019 SIMETRI and Decentral Media Inc. – simetri.cryptobriefing.com 38

DUE TO ITS STRONGECOSYSTEM AND OVERALLPROGRESS EOS RECEIVESA B- GRADE

Despite all of the controversies EOS has been able to grow its ecosystem and make decent progress towards increasing adoption. The number of dApps on its platform is increasing, and the project is among the leaders when it comes to choosing a dApp platform for development.

Although the project has some technological drawbacks, its team has all the resources to solve them. EOS block producers are also working on improving the platform since they are directly incentivized to increase the value of the blockchain.

ConclusionCentralization and governance problems that the project faces will most likely continue to raise negative sentiment towards EOS in the market. However, at least for now, this does not appear to be a big concern for developers.

Due to its strong ecosystem and overall progress EOS receives a B- grade.

The author(s) of this report is/are invested in the following coins: Bitcoin, Ethereum.

39

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