For the last seven years, developers and teams have launched Proof-of-Stake blockchain protocols aimed at providing a seamless, scalable and decentralized way for users to interact with various blockchain applications. While this protocol brings its touted benefits, it’s important to understand what has been accomplished in this short amount of time, and what problems still exist for application layer projects in the space when choosing a protocol to build on top of. Starting with some broad context of the ecosystem, we’ll be able to see how and why IOST can be the leading protocol if they continue to execute on their plans for the most usable, decentralized and scalable blockchain.
First, however, we must travel back in time and explore how we got here…
As the first project utilizing Proof-of-Stake (PoS), Peercoin hit the scene in 2012 touting a novel way to reach consensus that didn’t involve the standard Proof-of-Work mining the industry was used to with Bitcoin, Litecoin and others. At one point, Peercoin was the third most valuable cryptocurrency by market cap.
The earliest available market cap snapshot from CoinMarketCap
In 2014, Ethereum launched a public crowdsale and (eventually) ended up being the most successful blockchain after Bitcoin. Alongside Ethereum, Bitshares and its new consensus mechanism Delegated Proof of Stake was being launched by Dan Larimer, someone we’ll meet again shortly.
As other protocols like Lisk and Nxt joined the PoS / DPoS ecosystem touting their own unique benefits over Ethereum, Proof-of-Stake truly emerged as a contender to the incumbent, Bitcoin’s proof-of-work. As the DAO hack manifested itself as the “death of Ethereum” in 2016, development teams saw the first real chance to cash-in on Ethereum’s issues and overtake the throne as the most successful Proof-of-Stake blockchain.
Shortly thereafter in 2017, EOS.IO was born via a whitepaper from Dan Larimer (the Bitshares founder referenced above) and eventually a year long public ICO was launched. EOS.IO was the largest crowdsale in history, raising over $4,000,000,000, touting millions of transactions per second (“TPS”), thousands of dApps at launch, and usability for the mainstream user and enterprise. EOS.IO was expert in the completion of their token sale, because they hosted it on the Ethereum blockchain, resulting in the congestion of the Ethereum network. With some help from their feline friends, EOS expertly showcased and marketed themselves as the solution to the scalability issues inherent to Ethereum by hosting their ICO on Ethereum.
As EOS finished their token sale in June 2018, another project named Tron launched its mainnet off of the back of Justin Sun, the infamous founder and marketing guru of the then latest blockchain-based operating system. Tron aims to change the way that content (especially entertainment) is distributed and consumed. In July 2018, Tron officially completed the acquisition of BitTorrent, dramatically increasing the value of Tron, or at least its balance sheet. While the network struggles with similar issues like governance and usability that plague EOS, its largest problem has been trust from the community after allegedly plagiarizing its first whitepaper and offering up thinly constructed announcements to pump its token price. Even with all of these issues, many believe (including myself) that Tron has come a long way and is poised to make an impact on decentralized content.
As the Proof-of-Stake story played out, Jimmy Zhong was studying in college, where he would eventually sell his startup, Find Inc., a college note-sharing platform, for $40,000,000. While Ethereum continued to dominate the PoS ecosystem and EOS and Tron ran into their own problems with governance, usability and baseline trust in each project’s team, IOST was being conceptualized as a next-gen solution to these problems.
So, as we arrive back to the future, at the launch of OASIS, an integration being created for the IOST blockchain… we wonder, why is this so important?
While each adaptation after Ethereum has solved scalability issues or has presented a new, novel consensus mechanism, no project has yet to solve the usability issue for non-crypto users i.e. the mainstream user.
Imagine attempting to play a dApp on Ethereum, Tron or EOS today without any prior knowledge of what a private key, blockchain transaction or token is… you would never make it past step one or two. As EOS and Tron launched they did a fantastic job of stealing mindshare and hodlers from Ethereum, but have not been able to break into a mainstream user base. Inside the world of cryptocurrency we often struggle to understand the prerequisites needed for users outside of this bubble to participate. Tron and EOS have yet to release an application layer project that meets their promise of mainstream adoption, because the underlying usability of each platform prohibits the on-boarding of what I’ll call “non-fanatical blockchain users”. (You could argue that BitTorrent is the closest example of mainstream adoption, and I’ll seed you that victory, albeit an acquisition.)
For IOST, OASIS changes that. OASIS, as touted by the IOST team, solves the following problems:
- The elimination of the resource consumption problem
- Exemption for users from registering an IOST account
- Exemption for users from maintaining private key storage
As well as the inclusion of:
- Fair, transparent and non-temperable transactions
- Easy and smooth dApp transfers
Breaking each down, with the context laid out above, we find the true value of OASIS:
The Resource Consumption Problem
On EOS, Tron, Ethereum and IOST, resources are consumed in order for transactions to be completed. In a world where the internet disrupts the traditional ‘paid business model’ (think illegal streaming vs. cable), this can be a problem when trying to bring a dApp to the mainstream user.
On Ethereum you must pay for each transaction with “gas”, which in most cases should end up being a small amount of Ether. However, as we’ve seen in times of high network congestion on Ethereum, gas requirements could end up being very expensive if the user doesn’t want to wait minutes or hours for their transaction to be completed, effectively increasing the average amount of gas required for transactions to be completed. This is a symptom of the scalability issues that plague Ethereum.
In order to solve for scalability and transaction-fee-model issues, EOS, Tron and IOST use a different model that allows you to ‘stake’ your token (re: lock up for a period of time) in exchange for network ‘resources’ that allow users to interact with the network, applications and send transactions. This is often referred to as an “owner vs. renter” model when compared to Ethereum and can be touted as “free transactions” even when it’s not necessarily the case.
The problem becomes, as we’ve seen on EOS especially, that when these ‘resources’ vary in cost they tend to prohibit users from interacting with the network, or prohibit dApps from functioning and building on the EOS blockchain. There are three primary network resources on EOS: CPU, NET and RAM. For all network participants, EOS utilizes ‘CPU’ and ‘NET’ to interact with applications on the blockchain. These resources are earned when users stake their tokens and are regenerated over time i.e. the “ownership model” outlined above. You can also rent or borrow CPU and NET through programs like Chintai and EOSREX. Unlike CPU and NET however, RAM is used for storage on the EOS blockchain and has traditionally been purchased or traded on a free market by speculators, dApps and users alike. Essentially dApps looking to build and run their project on the EOS blockchain must generally utilize RAM in order to access storage on EOS. This resource consumption problem on EOS has historically existed because RAM varies in price on the free market, is limited in supply and thus tends to sit at prices that are generally too expensive for dApps to embrace. If bad actors continue to hoard RAM, further decreasing the supply and artificially inflating the price of RAM for their own gain, it will only be at the detriment of the dApp.
The current cost of one GiB of RAM is 46,466.81 EOS or $232,334.05 at an EOS price of $5. As the price of EOS increases it actually becomes more difficult and expensive for the dApp. You can check for yourself here. So while we indeed have a more scalable solution (as promised by EOS), it’s quite a bit more complicated and expensive for users and dApps to interact with, especially if they have no prior knowledge of blockchain / crypto. If you’re interested in digging deeper and hearing from someone else other than an IOST block producer on EOS RAM issues, there are plenty of ways to do so. LiquidEOS, the fourth largest EOS block producer, documents and explains the issues that have occurred in this article written on January 7th, 2019. Springrole, a project building blockchain-based professional profiles that has adopted EOS to some degree, talks about RAM on the EOS blockchain in this article from June 2018.
Exemption For Users From Registering an IOST Account
As it stands today, in order to create and register an IOST account you must first have IOST. IOST can be purchased through exchanges just like most other tokens, or currently via the TokenPocket app you can spend $1 via Paypal and other similar methods to create and register your IOST account.
We haven’t received exact details on how the exemption of IOST account registration will work. If I’m speculating, I would assume it will allow users to interact with dApps on IOST without having to register and create an account through an automatic, free and seamless account registration / creation process, or by simply eliminating the process altogether in some way. This shouldn’t be too large of a barrier for IOST or OASIS, and has probably been solved in some form or fashion by other blockchains already. Regardless, it’s incredibly important for the non-crypto user who wants convenience and zero friction when interacting with an application.
Exemption For Users From Private Key Storage
“Not your keys, not your crypto!” is perhaps one of the most important messages delivered throughout the cryptocurrency industry as a whole. The concept of your private and public key is integral to the philosophical ownership model that crypto touts against a bank ‘owning’ your fiat money when you deposit it with them. As you probably well know, when you put your tokens on a centralized exchange (Binance, Coinbase, Kraken, etc.) you are effectively giving away control of your tokens as well. Of all of the solutions presented by IOST, this is perhaps the most exciting and crucial to execute on, as ownership of private keys allows for baseline control of tokens and is a big component of crypto today.
IOST has not yet released information on how this will be handled with the OASIS integration, but perhaps (in this hypothetical example) with the approval from the non-crypto user, a third party would manage private keys for the user via a smart contract or by simply acting as a custodian, thus improving usability for the non-crypto user who may not care to manage their private key. I’m excited (and nervous) to see how this functions when released.
The Inclusion of Fair, Transparent and Non-Temperable Transactions
Other blockchains, namely Bitcoin, have suffered from malleability attacks (scroll down a bit in the linked article) and weaknesses because of the tempered nature of the transactions signature data. Translation: essentially by changing the input you can affect the output. I’m assuming this is what IOST is referring to in their medium article, but I’m not entirely sure.
It’s quite a bit harder to speculate on what this solution might look like from IOST and OASIS, but in a world where private user data is sold, fairness and transparency will be key in ensuring that non-crypto users are comfortable interacting with an application that is built on the IOST blockchain.
Easy and Smooth dApp Transfers
dApp transfers could mean a few different things in my mind:
- A seamless setup for ETH, Tron and EOS dApps to transfer over to IOST
- A seamless setup for users to transfer IOST (or other IOST based tokens) in between various dApps hosted on the IOST blockchain.
The first point has been proposed by just about every project at some point in an effort to steal market share from Ethereum, but few have been able to execute on a large scale. While Ethereum completes less daily transactions than Tron and EOS, their blockchain is still the most utilized in the industry for third parties building protocol or application layer projects. This is generally because of the developer ecosystem and first-mover advantage that Ethereum carries over other projects. By the way, be wary of ‘real’ transactions vs. ‘fake / spammed’ transactions as a way to measure adoption.
The second point would be more novel, in that you wouldn’t have to repeatedly send your IOST between dApp accounts in the same way you would send your fiat money between your bank account, Venmo account, and Paypal account in order to transact with someone. Third parties like Scatter effectively allow for this to happen on EOS, Tron and Ethereum by acting as a single ‘wallet’ of sorts that plugs into the dApp relatively quickly, as long as the dApp allows for the plugin. This would need to be a better solution from OASIS in order to really make usability waves, but is needed on IOST for the mainstream user regardless.
Hopefully this is not you at this point in the article
Sooo…. In summary, whether it be solving the almighty resource consumption problem, seamlessly allowing non-crypto users to interact with dApps and IOST, or bridging the gap across various IOST dApps, the IOST team seems to be headed in the right direction. Having only released their mainnet less than two months ago, IOST appears to be staying true to their promise of the first decentralized, scalable and usable platform for dApps. With that being said, there is still a lot to be done. IOST has yet to release its own wallet other than the iWallet Chrome Extension, and is only just beginning on other initiatives like dApp growth or enterprise success. While Ethereum struggles with scalability, EOS struggles with governance and usability via resource management issues, and Tron continues to struggle with trust, IOST attempts to solve all these problems and more while bringing its token and ecosystem to the mainstream user through integrations like IOST and dApps like Bermi.
It seems to me that usability is the most important next step for protocols, dApps and crypto in general to reach the mainstream. As what will hopefully be the first of many steps towards mainstream use of IOST, OASIS helps solve the traditional usability issues that Ethereum, Tron and EOS have not been able to solve. Are you ready?
Ready Player One, the reference from the IOST team when looking at OASIS’ impact on the usability of IOST