CWC Newsletter #32 (June 22, 2020)
By Taylor Ryker, Analyst
A Value Proposition of the EOS Mainnet, Part 1
Before I begin, please check out these news outlets for the past weekly updates and announcements in the EOS and EOSIO space: EOS Nation's Hot Sauce, EOSWriter's Twitter Review, and Crypto Peter's Moran Post.
This research post will respond to the growing concerns about the value proposition of the EOS mainnet popping up on Reddit, Telegram, and Twitter. Many community members and outsiders have voiced their displeasure that Block.one has abandoned the EOS token holder by citing the price decrease in relation to other prominent cryptocurrencies, funding for EOSIO companies (and companies outside of EOSIO), the decision to not take a leadership role in the space, and the fear that developers are leaving.
I acknowledge that these are important issues for many EOS token holders and the current bear market coupled with the rising dominance of Ethereum's decentralized finance space does not help matters.
There have been many responses by community members who provided rebuttals for these concerns, such as Colin Talks Crypto's youtube video about EOS's superior technology versus Ethereum's. Or the fact that the "research" article on EOS developers leaving was based on data that does not reflect the larger EOSIO developer community's activity. In addition, a reddit user posted why EOS is highly undervalued.
A Value Proposition of the EOS Mainnet
But one of the biggest concerns that I would like to discuss is the perception that the EOS mainnet is not valuable when developers can create their own EOSIO chains. The EOS mainnet is valuable because of (1) Security and (2) Liquidity.
Creating your own EOSIO chain, whether that be a private, hybrid, or public chain, requires a lot of resources for security if you are not leveraging the EOS mainnet.
What I mean by this is if you are a private company or semi-public community like WAX or Telos, respectively, you will have to create partnerships with and/or pay Block Producers to secure your EOSIO blockchain. This is a costly endeavor when many of these EOSIO blockchains want or need 21 Block Producers to maintain decentralization and security.
However, there are services that make creating your own EOSIO blockchain very cost effective like LiquidApps' LiquidChains. According to LiquidApps, "LiquidChains is a blockchain-as-a-service solution that allows anyone to spin up a customizable chain in minutes, connect it to a public blockchain ledger for transparent record-keeping (if they so choose) and harness the suite of DAPP Network services to scale their applications even further."
The DAPP Network sits on top of the EOS mainnet and leverages its technologies to provide cost effective services. EOS token holders benefit when the DAPP Network is used.
Yes, it is more expensive to host a decentralized application (dApps) to the EOS mainnet versus other EOSIO blockchains like Telos or WAX. But it is far more secure with a marketcap of over $2 billion USD where malicious actor(s) need to buy up enough EOS tokens to vote in their preferred Block Producers to overtake the network.
One thing that is plaguing other EOSIO blockchains and their hosted dApps is liquidity. Ethereum's greatest strength is that their blockchain network has a lot of liquidity. In relation, the EOS mainnet is also the most liquid chain in the EOSIO ecosystem. Every EOSIO token is pegged to the EOS token in both decentralized and centralized exchanges.
That is why many DeFi products like EOSDT, Vigor, SOV, and EOSOptions are on the EOS mainnet. Private companies like Mythical Games and Voice are incentivized to host their dApp on a combination of private EOSIO blockchain(s) and the EOS mainnet. While other private companies like Upland, Emanate, Everipedia, pixeos and others are on the EOS mainnet.
EOS and EOSIO=NYC/Silicon Valley and USA
To make it more legible, I think of EOS and EOSIO as New York City/Silicon Valley and the USA, respectively. Block.one is interested in supporting both entities but it seems that they are more focused on building a great EOSIO ecosystem (USA).
Without a vibrant USA, the cities inside of it won't be as valuable. But the most valuable cities in the USA are New York City (big banks, financial institutions, and headquarters for many Fortune 500 companies) and Silicon Valley (venture capital, developers, and tech communities), which emulate the EOS mainnet.
New York City and Silicon Valley are where the most liquidity and developers reside and a host of valuable companies and services are located there. Similarly, EOS mainnet is attracting large companies, decentralized finance products, and the majority of EOSIO developers.
I am not saying that other EOSIO blockchains are not important; these other chains are akin to other prominent US cities like Los Angeles or Chicago. But for a competitive EOSIO ecosystem to challenge other blockchain ecosystems (i.e. countries) like Ethereum or Tron, all EOSIO-based blockchains (US cities) need to stick together to provide an environment rich of innovation, collaboration, and healthy competition.
In the future, I will continue to expand on the value proposition of the EOS mainnet and the EOSIO ecosystem in follow-up posts that centers on a multi-chain EOSIO space, governance, and other issues.
Disclaimer: KJ Kingsley is not a financial advisor and holds the digital tokens or cryptocurrencies represented in the content above. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this post constitutes a solicitation, recommendation, endorsement, or offer by myself to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of any of the author’s employers.