EOS is the native cryptocurrency of the EOS network. Users can use the token for smart contracts and the creation of dApps. Developers who wish to create and manage dApps on the EOS network can do so by holding EOS tokens. EOS token holders who are not running dApps have the option to share their available bandwidth with other participants on the network or rent it out. ^[1][2]

History

In 2018, the initial coin offering (ICO) of EOS set a new record in the cryptocurrency market. It became the largest crowdfunding campaign to date, raising $4.1 billion, which accounted for almost a quarter of the entire ICO boom in 2017-18. ^[7]

The distribution of EOS tokens lasted approximately one year, beginning on June 26, 2017, and consisted of 350 distinct periods. At the end of each period, the total number of EOS tokens allocated for that period was distributed to contributors based on the proportion of their ETH investment relative to the total amount contributed. The ICO concluded on June 1st, 2018. ^[4]

After the launch of the EOS blockchain, Block.one, the company behind EOS, did not reinvest in it as much as many had anticipated. Despite raising a record $4 billion in its ICO, the expected benefits did not materialize. Instead, the company allocated its resources to other projects outside of EOS, including the social network Voice and centralized exchange Bullish. Bullish received much of its liquidity from the proceeds of the EOS ICO. ^[7]

Yves La Rose, the founder and "community-elected CEO" of the EOS Network Foundation (ENF), revealed that they were preparing for a legal "war" against Block.one, the creators of EOS. The EOS leader mentioned that they were reviewing any potential legal action "to seek $4.1B in damages." They also mentioned that a Canadian law firm was working with them to explore what legal action they could take against the original developers of EOS. ^[8]

“Block.one has not kept its word regarding past promises and that both the community and individual EOS users have been harmed as a result.”

In 2021, the Foundation announced that they had engaged in negotiations with Block.one to find common ground and settle the issues in a fair manner. However, ENF notes that Block.one walked away from the negotiations. Led by the EOS Network Foundation, the community voted to freeze the founding team’s token vesting contract in 2021 and fork the open-source codebase in 2022. ^[9][10]

Overview

EOS employs Delegated Proof-of-Stake (DPoS) as its consensus mechanism, wherein a select group of delegates validate transactions and create new blocks. The native token EOS serves multiple purposes on the network. It can be used to purchase system resources, participate in EOS governance, transfer value within native applications, and account for value by investors and speculators. ^[5]

Furthermore, EOS token holders have the option to stake their unused EOS tokens and earn a percentage of the fees collected from users who want to access EOS system resources through the EOS PowerUp Model. This allows token holders to actively participate in the network and potentially earn rewards for contributing to its operation. ^[5]

EOS PowerUp Model

The EOS PowerUp Model is a mechanism utilized within the EOS blockchain ecosystem that allows users to temporarily enhance their accounts by paying a nominal fee in EOS tokens. This feature enables EOS token holders to stake their tokens and earn a portion of the fees generated by the network. ^[6]

The implementation of the EOS PowerUp Model aims to abstract the on-chain resource management from end-users, resulting in a more seamless and user-friendly experience on the EOS public blockchain. Middleware solutions are anticipated to be established to automatically manage resources for decentralized applications (dApps) and new users, potentially reducing the cost of user onboarding and eliminating resource costs from the average user experience. ^[6]

Tokenomics

The EOS blockchain initially had a total supply of 1 billion tokens and an annual inflation rate of 5%. In February 2020, the inflation rate was reduced to 1%. ^[3]