Today, EOS changed its name to Vaulta.
The old public chain that raised funds vigorously for a whole year 7 years ago and was regarded as the earliest Ethereum killer finally gave up the dream of creating a million TPS and announced its shift to Web3 banking. The pride of $4.2 billion in financing, the excitement of 21 super nodes, and the utopian declaration of a million TPS - these fragments pieced together the most expensive idealistic experiment in the history of blockchain.
Seven years later, no one except the old investors mentioned this “old public chain” which now ranks 97th in market value. In the days to come, EOS is no longer a high-performance public chain, but has changed its appearance and tried to turn to Web3 banking business - it has given up its former dream and even its name.
We will still use this article to record the craziest product of the ICO era, which burned so much money and left a sad story.
A Tower of Babel built with code and dollars
In 2017, the blockchain industry was in its craziest upswing. Bitcoin broke through $1,000 at the beginning of the year and soared to $20,000 at the end of the year. Ethereums smart contracts completely changed the crypto world. ICO (initial coin offering) became the hottest financing method. Hundreds of projects flooded into the market, competing to build a decentralized future.
In this capital frenzy, EOS emerged with the banner of Blockchain 3.0 and held high the banner of replacing Ethereum. Its white paper depicts an ideal country: one million TPS (transactions per second), completely solving the scalability problems of Bitcoin and Ethereum; zero handling fees, ordinary users do not need to pay expensive gas fees, and on-chain transactions are as smooth as cloud applications; ultra-fast block generation, with 21 super nodes responsible for packaging transactions, no longer dragged down by miners competition. Blockchain supercomputers make decentralized applications (DApps) a reality.
Founder BM (Dan Larimer) is the biggest signboard of EOS. For technical people, he is a genius - the year after the birth of Bitcoin, he suggested to Satoshi Nakamoto to change the consensus mechanism, believing that PoW (proof of work) is not efficient. Later, he founded BitShares and Steemit, and once became one of the most well-known engineers in the currency circle. But BM is not just a technical geek, he also has utopian idealism. He believes that blockchain can change everything, and EOS will be the ultimate solution to the structure of human society.
With a talented CTO and a first-rate marketing team, the ambition of this story is already on the table. On June 26, 2017, EOS started crowdfunding, which was planned to last for a year (in comparison, the financing cycle of most ICOs is only a few weeks to a few months).
Investors from all over the world flocked to the project, raising $185 million in 24 hours. In the end, EOS successfully raised $4.2 billion, becoming the largest financing in the history of the cryptocurrency industry, far exceeding all projects in the same period, including Ethereums $18.5 million.
Top 10 ICO Projects in 2018
With 4.2 billion US dollars, EOS has become the super capital entity in the cryptocurrency circle.
In April 2018, the price of EOS rose from $5 to $23, a monthly increase of 360%, and its market value ranked among the top five in the world, second only to Bitcoin, Ethereum, Ripple and Bitcoin Cash. The media hyped it up crazily, with headlines such as EOS will become the first trillion-dollar cryptocurrency and BM is the next Satoshi Nakamoto. Ethereum developers also began to worry, fearing that the rise of EOS would lead to the decline of Ethereum.
This year, EOS has become the hottest star in the cryptocurrency circle before it even launched its mainnet. Driven by FOMO (fear of missing out), EOS is considered the next generation of Ethereum, and some even predict that it will reach $1,000.
The super node election has become a global hot topic. Godfather-level figures such as Li Xiaolai and Lao Mao have entered the market in a high-profile manner. Exchanges, mining pools, Wenzhou capital and even traditional funds have flocked to the market - this election has been called the Wall Street IPO of blockchain. The nodes of China, the United States and South Korea have launched a currency circle national war. The Korean community shouted If you dont vote, you are not a Korean. Li Xiaolais Coin Capital holds 4 node votes, and the Wenzhou gang entered the market with 8-digit EOS to buy.
4.2 billion USD in fundraising, a star project, a dark horse public chain, and the attention of thousands of people. BM went to Hong Kong and was picked up at the airport gate by the project owner in a luxury car. Everything seemed so beautiful, but under the feast, everything was built on the Tower of Babel built of codes and dollars.
EOS is only at its peak at the beginning
Amid the frenzy, problems have quietly emerged:
EOS’s voting system has been questioned for being easily controlled by big players, and the degree of decentralization of super nodes has been questioned; after the mainnet was launched, multiple technical problems emerged, and developers began to question the stability of EOS; the deep involvement of exchanges and capital giants made the supernode election no longer fair, and the community began to have different voices; after BM went online on the mainnet, he began to frequently change the governance mechanism, causing chaos in the community.
But the market was still immersed in the carnival at that time, and all doubts were covered by the slogan EOS is about to change the world. In that golden age, everyone believed that EOS would become the future overlord, or even the final form of the blockchain industry. However, reality is often more cruel than dreams, and no one expected that this project, which was once highly anticipated, would fall from grace in just a few years.
Technological disillusionment: from millions of TPS to distributed database
At that time, the biggest problem of blockchain was scalability, how to conduct more transactions in one second. The Bitcoin network can conduct 5 or 6 transactions per second, while Ethereum is better, with about 20 transactions per second. However, these are far from meeting the requirements of blockchain use.
Under such circumstances, EOSs million TPS made everyone crazy. You know, at midnight on Tmall Double 11, the highest transaction volume per second was more than 100,000.
However, four months after the launch of the EOS main chain, the highest TPS is only 3996, which is far from the million originally advertised.
EOSs performance is far below expectations, but on the other hand, Ethereum has gradually improved its performance through the Layer 2 expansion solution, and competitors such as BNB Chain and Solana have also risen rapidly, completely eliminating EOSs performance advantage.
People found out that the so-called million TPS was actually a carefully designed word magic trick - BM quietly added a premise to this number: it must rely on an infinitely scalable sidechain ecosystem. According to his idea, if a chain can process 4,000 transactions, 100 sidechains in parallel can achieve 400,000 TPS. But the reality is that until 2023, only three sidechains will be launched in the EOS ecosystem, and two of them have become ghost chains due to the withdrawal of developers. BMs response to this was to turn around and announce on Twitter that anti-inflation algorithms are being studied, and at this time EOSs market value has fallen out of the top 20.
Difficulty in use is the core problem of EOS.
At first, EOS hit the pain points of users with free transfers. Users soon discovered that although EOS transfers do not require handling fees, tokens must be pledged to exchange for CPU resources. When the network is congested, transferring 10 EOS requires pledging 5 EOS worth of CPU - this is essentially a disguised freeze of user funds. During a DApp traffic peak in 2020, 2,000 EOS could only be exchanged for 1.3 seconds of CPU time, and ordinary users needed to repeat the operation more than ten times to complete a transfer.
Moreover, BM set a RAM supply cap, which resulted in the market hyping RAM, causing the price of RAM to soar 100 times, and developers had to spend a lot of money to purchase storage resources. In 2018, some speculators began to hoard RAM. In just a few months, the price of RAM soared from 0.01 EOS/KB to 0.9 EOS/KB, which seriously affected DApp development, and many new projects directly abandoned EOS.
Ultimately, this resource management model makes EOS’s user experience worse than Ethereum: on Ethereum, users can directly pay gas fees to complete transactions; but on EOS, users must first learn the complex resource mortgage mechanism, and even spend a lot of money to buy CPU and RAM, which seriously hinders the development of the DApp ecosystem.
From today’s perspective, it is actually difficult for us to understand that with such a poor user experience, EOS had an explosive period in late 2018 and early 2019: dapps mainly based on on-chain gambling were very popular on EOS.
Data from December 24, 2018 shows that in the past week, a comprehensive comparison of the DApp ecosystem of the three major public chains, ETH, EOS, and TRON, found that: total number of users (people): EOS (75,346) > TRON (45,777) > ETH (33,495); total number of transactions (transactions): EOS (23,878,369) > TRON (13,803,322) > ETH (413,019); total transaction amount (US dollars): EOS (345,489,773) > TRON (135,201,171) > ETH (44,272,856);
This shows that at that time, EOS was really highly expected by the community, and its ecological prosperity surpassed ETH and TRON. Perhaps it is precisely because of this fleeting dream that todays old players in the cryptocurrency circle always sigh when they recall EOS.
Governance failure: vote buying, centralization, and community division
Of course, when we talk about governance now, it seems that we can only laugh, but at that time, EOS governance was highly anticipated. BM was very confident that with his careful design, 21 nodes would make this network far superior to Ethereum.
He thought that this network would have 2/3 good people, everyone would behave in a good way, and nodes that did evil would be voted out by users. This was a perfect utopia. It turned out that he was too naive.
EOS mainnet has been online for 3 months, and it has become an unspoken rule for nodes to bribe each other. In order to obtain EOS block rewards, no one can stop the big players and nodes from voting against each other. This is not the most exaggerated thing. It is absurd for the nodes themselves to do evil.
The mechanism of EOS is that 21 super nodes take turns to produce blocks. At that time, a users money was stolen by a hacker. The solution was that the 21 nodes set the hackers address to the blacklist, so that the hacker could not transfer money. This was a normal and simple operation, but one node was not set at the time. So the hacker transferred the money away when this node produced a block. Just treat it as nothing happened.
BM tried to constrain these behaviors through the EOS Constitution, but soon found that the Constitution had no binding force: since the super nodes themselves were the beneficiaries of vote-buying, they had no motivation to enforce the rules stipulated in the Constitution. The arbitration mechanism was completely in name only and had no actual binding force.
In 2019, BM completely abandoned constitutional governance and announced that the EOS community should evolve freely and no longer interfere with the election of super nodes. By 2020, EOS super nodes have become a game field for exchanges, mining pools, and capital consortiums, and the votes of ordinary coin holders are meaningless. DPoS should have been a model of decentralized governance, but it turned out to be the currency version of power politics.
EOS also encountered a big problem in terms of governance: before the launch of the EOS mainnet, BM proposed an innovative EOS Constitution, hoping to use code + rules to constrain behavior on the network, but within a few months, the constitution underwent multiple revisions, and the community became increasingly dissatisfied. In June 2018, the original EOS constitution allowed super nodes to arbitrate transactions, but due to abuse of power, BM decided to amend the constitution a few weeks later to prohibit nodes from intervening in transactions. In 2019, BM suddenly proposed to abolish the constitution and use user contract governance instead, and the community fell into chaos, not knowing how the EOS governance rules would evolve. This ever-changing governance model has completely made developers and investors lose trust in EOS.
In this critical moment, BM and Block.one (EOSs parent company) gradually shifted their attention from the EOS main chain to the EOSIO software: BM believed that the future of blockchain lies in enterprise-level applications, so he began to promote EOSIO so that companies can build their own private chains instead of focusing on the optimization of the EOS public chain. The core update of the EOS main chain has almost stagnated, and many key upgrades (such as cross-chain and storage expansion) have not been promoted.
As a result, the developer ecosystem of EOS has shrunk dramatically: the Ethereum community is highly active, applications such as DeFi and NFT have exploded, while the number of DApp developers of EOS has gradually decreased. By 2022, the number of EOS developers will be lost by nearly 100 people per month, and even some EOS browsers and wallet projects will be directly closed.
External Strangulation: Mining Accidents, Bear Market, and Block.one’s Silence
At the end of 2019, the price of EOS fell below $5, and the following year it dropped to a low of $1.8, a 90% drop from its all-time high of $23. When super nodes are facing a survival crisis, developer loss, and market liquidity drying up, the EOS ecosystem needs the help of its parent company, Block.one, the most.
We all know that Block.one raised $4.2 billion in the early days, becoming the largest financing event in the history of cryptocurrencies. In theory, this amount of money can support the long-term development of EOS, support developers, promote technological innovation, and enable the ecosystem to continue to grow. When EOS ecosystem developers begged for funding, Block.one threw out a check for $50,000 - this amount was not enough to pay Silicon Valley programmers two months salary.
“Where did the $4.2 billion go?” the community asked.
On March 19, 2019, BM revealed part of the answer in an email to Block.one shareholders: As of February 2019, Block.one held assets (including cash and invested funds) totaling US$3 billion.
Of the $3 billion, approximately $2.2 billion was invested in U.S. government bonds, which were also referred to as “liquid fiat assets” in the email.
Some of the investment funds can be found in public information: game company Forte, NFT platform Immutable, and resort hotels in Puerto Rico, U.S. In short, the companies invested have one thing in common: they have little to do with EOS.
Before Bullish became a core business, Block.one still had a trump card in hand, Voice, a social product based on EOSIO smart contracts, which is also the only product with business relationship with EOS. In order to build Voice, Block.one invested $150 million. In addition, the biggest expense was to buy a domain name with $30 million. The seller was MicroStrategy, the listed company with the most Bitcoin mentioned above.
But it seems to be a curse of fate. The first press conference of Voice lasted half an hour, and the content was not as expected. There were many disappointed voices, which caused the price of EOS to fall. More than half a year later, when the Voice iOS version was launched on the Apple Store, various failures and Bdangsugs occurred again. The Voice official website page showed Error 1020 and stated that the website was using security services to protect itself from online attacks. EOS holders were completely disappointed, and Voice finally announced in September 2023 that it would be gradually closed.
Projects launched by Block.one
The thunder is loud but the rain is small, which seems to be the consistent style of Block.ones investment projects. After this, Block.one has no large investment actions and has begun to lie flat. Today, Block.one has 164,000 bitcoins in its account, which means that its net worth has increased fivefold from 3 billion in 2019 to 16 billion US dollars now, which can be called a master of liquidity management.
There is no actual DeFi, NFT, or DApp ecosystem support plan. In contrast, the Ethereum Foundation and the Solana Foundation continue to subsidize developers and promote technological innovation, while Block.one does almost nothing.
An early investor in EOS angrily questioned on Reddit: We invested in EOS because it promised to subvert the blockchain, not to let Block.one use the money to speculate in Bitcoin!
Although Block.one is the company with the second largest amount of Bitcoin after MicroStrategy, with a total of 160,000 BTC worth $16 billion, EOS, which has not received any support from the huge amount of money raised, continues to go downhill.
The governance chaos of Block.one is even more shocking. Block.one is becoming more and more like a family business with CEO BB as the core, and BM is not in this family.
Sister as CMO: CEO Brendan Blumers sister Abby was parachuted into the position of Chief Marketing Officer. Her only visible achievement was changing the EOS brand color from technological blue to softer Morandi gray.
Mother manages venture capital: Blumers mother Nancy is in charge of the EOSVC venture capital fund. The social application Voice, which she led the investment in, has less than 10,000 users in one year since its launch, but cost $150 million.
BM’s puppet show: Founder BM revealed on Twitter that he “has no decision-making power” and can only watch the team pour resources into the enterprise-level toolkit EOSIO - a project customized for giants such as Walmart and has nothing to do with the EOS mainnet.
In 2021, the community launched a fork uprising in an attempt to cut off Block.ones control. The EOS Foundation, as a representative of the community, came forward and began negotiations with Block.one. But over the course of a month, the two sides discussed multiple options but failed to reach an agreement. Finally, the EOS Foundation joined 17 nodes to revoke Block.ones power and kicked it out of the EOS management. Without its parent company, EOS is becoming more and more like a DAO.
After EOS and Block.one separated, the EOS community engaged in a years-long lawsuit with Block.one over the ownership of the funds raised, but so far Block.one still has ownership and use rights to the funds.
What’s even more ridiculous is that since 2024, BM’s Twitter content has almost never involved blockchain, and the only technical discussion was just a sporadic mention of database optimization. In contrast, his focus has completely shifted to theological sermons, with the content highly concentrated on the interpretation of the Bible, the doomsday prophecies of geopolitical conflicts, and criticism of mainstream Christianity…
BMs Twitter content
Looking back at this seven-year crypto epic, the collapse of EOS has already written a warning: no matter how high the TPS is, or how sophisticated the resource model is, if the user experience is so complicated that ordinary people are daunted, everything is meaningless. The former Ethereum killer eventually died in the quagmire of its own economic model, chaotic governance, and stagnant technology.
Seven years ago, EOS raised $4.2 billion in crowdfunding, which was considered the most brilliant financing miracle in the history of blockchain. Seven years later, its story has become the biggest joke in the cryptocurrency world.
Ultimately, EOS didn’t kill Ethereum, it killed itself first.
