What EOS is doing wrong and why there're misconceptions around EIDOS

Published by eosnetworkxx 24 Jan 2020

What EOS is doing wrong and why there’re misconceptions around EIDOS

The EOSIO Universe is expanding and we see several chains appearing like planets on a dark sky. The YAS chain formed from an idea and dust of the EOS tokens transformed into EIDOS and then into YAS. But while the creator of YAS going by the pseudonym Aiden Pearce is trying to make the planet habitable and preparing it to receive life in form of the dapp users he’s also trying to fight the misconceptions around the EIDOS smart contract. 

Almost every anti-conformist idea encounters some friction and also EIDOS is facing many challenges despite the brilliant idea behind the token model. Aiden Pearce wants to enrich the EOSIO ecosystem with a new blockchain where developers can build their applications and the users can find a new home. He wants to create a new democratic chain and the new token distribution would seem to have achieved that. 

Some members of the EOSIO community are adamant though that the EIDOS contract should be censored. It’s perceived as spam or DDoS but Pearce is fast to correct these misconceptions about what EIDOS really is:

“The main utility of core eosio tokens is to govern and to pay stake for cpu and net. The more demand for cpu and net means more value of the core token. I think eos community missed that part. They called eidos shitcoin when in fact people are paying for what they should want, cpu and net buyers. It's like chasing away their customers. It's like having amazon calling their customers shit when customers wanted to create so many vps.

It's simple, make the prices reflect the demand. But since it's decentralized, it should happen.

Now I see more and more eidos type projects launching on eos, they should be happy, what they called shitcoins means demand for their core tokens. I just don't get why they don't get it.

If you remove the speculative aspect, what is really the value of the core eosio token, isn't it for your share of cpu and net resources? So why get mad if people compete for what you offer? You should be happy.

While it’s clear what Pearce wants to say here people’s perception about EIDOS being a spam isn’t easy to change. Those who don’t mine the token don’t see any value in it. It would seem logical that there should be a reason to hold EIDOS but Pearce disagrees:

“If you are an eos holder, you don't care what a dapp does. You only care if they are paying a fair price to use your service. In fact you want more of them and let them compete for the limited resources. If they look eidos as spam, then let other dapps beat eidos. That's what they should want.”

This is actually what’s not happening. If the dapps started paying for their users’ resources, they would automatically compete with the EIDOS contract for CPU and NET. What we’ve seen was a contrary reaction: Karma left for the WAX chain losing 5x their value and EarnBet also abandoned the chain. Very few apps are actually paying for users’ resources and this is why the EIDOS contract has an almost-monopoly. EIDOS is not a spam contract. Real people use it to mine EIDOS. They chose to use their resources to get these tokens and they even buy resources from REX to mine them.

“What I don't understand is why they don't get it. They should embrace eidos and even welcome other eidos clones and invite other dapps to beat these "shitcoins" said Pearce.

People who use cpu for eidos mining give this monopoly to eidos transactions. It's their choice on what to spend resources.

Pearce said that increasing the cpu price would let the holders make money from lending their eos because at 1:500 it's still cheap.

“So instead of complaining why not make it 1:100 or better and let the eos holders be tempted to make more money on rex” added the creator of YAS. “Let them find the balance of what it costs to run the services (inflation to bp) and what to price the miners. Then invite all eidos type projects and put them with other dapps, let them compete with each other for finite resources.”

Then again, some of them even proposed to kill eidos, that's the entire opposite of what they should want. there is demand for cpu, that's what they should want. More cpu and net demand and let dapps compete and let lenders compete too, the bp's get paid the same by providing optimal network and optimal inflation.

Imagine if rental is at 1:50, that means miners will find it expensive, but let's say they will still rent, what will happen? Eos holders will buy more eos and put them on rex for good returns. More eos will be locked up on rex. More eos scarcity and i think it will still be cheaper to transact than on ethereum because of the massive capacity of eos. They need to optimize their design. How come ethereum is more expensive but there's no such complaints?

Now given that kind of tokenomics, would you like to kill eidos type projects on yas or not? Would you rather price them in such a way you earn after expenses, or you want a dead chain?

Or maybe you just want a chain based on pure speculation and we just keep on guessing "yas will go to 0.x USD in y days?"

So any eosio chain without any dapps or without anyone willing to pay for resources is bad business. I'll prefer a hundred eidos projects than no eidos project.

Without any dapp paying for resources, we have no revenue, and we still pay for inflation to keep the chain running. so it's the job of all yas holders to find those customers.

Did telos tell you that? lynx? bos? eos? or they just kept saying on price speculation groups about how price should be based on nothing?

If at zero tps (no dapps), we run 21 bp's at 100 usd each, that's 2100 usd per month that we all should pay for through inflation.

So we need dapps, but they will pay for resources and they must also earn more than the resources they paid for. If we run at optimal levels, then they can run their dapps optimally also and we can offer them the best price to conduct their business on our chain.

So dapps must also have their business models, how much will they earn from their dapps, and how much will they pay in terms of the resources they use.

I hope you all understand what I'm talking about. I don't want pure speculation and pure pump and dump. let's get the basics right of how it should be.

Aiden is far from saying that the BPs should be shaping the CPU % charge for renting as in Dan Larimer’s new EOSIO resource allocation model .

“The bp's are paid fixed inflation, the market will determine the cpu price. the lenders vs the renters. The bp's can increase the tps by upgrading their hardware, but that will need more inflation to them, so in effect that cost will be passed on to the renters. But we have to consider economies of scale, and also future eosvm upgrades to increase the tps without increase in hardware cost, those savings will also be passed on to the renters. The lenders (yas holders), will also compete and go near the usd interest rates but never equal or lower. That's why there needs to be a good coordination with everyone, the 3 stakeholders (bp's, yas holders, dapp teams), to find the good balance. We have to keep the 3 groups happy. Bp's want more inflation but we also demand more performance from them. Yas holders want more rental revenues but not too much also to retain our competitive advantage. Dapps want lowest possible cost to earn more. There must be a balance to keep everyone happy. That's why I kept saying we throttle down yas initially, meaning, we intentionally keep it as slow as possible to keep operating costs at minimum, then we increase as we grow, on demand. What's the point we can handle 1,000 tps and pay too much inflation and we have no dapps willing to buy the resources. We will end up just as a pure speculative token.

But if we know each yas can earn, let's say 18% per annum, then we (all yas holders) will compete to see how much do we really want. Let's say I want 17%, but some can go 15%, some 12%, so we go the lowest possible returns to the advantage of those who rent the resources, while still keeping the balance and having a healthy chain by making sure the bp's are earning. Even them will also compete. Some bp's want 5% inflation, some will want 4% and still be happy, at some point, they can't go lower anymore since they will operate at a loss. Even that is market driven, because bp's must also compete who can give the best possible chain at the lowest possible inflation.

It will still be the lenders and the renters that will determine the market. As more people will lend, the rates drop. As more people rent, the rate rises.

Pearce plans to artificially slow down YAS. “Even if that will mean more expensive cpu, since yas has still a very low market cap, it will still be cheap to run dapps on yas in terms of dollar price, and it will require cheap servers since it's artificially throttled down.”

He says that it could be done “by tuning various chain parameters, in a decentralized manner. Later the bp's with the coordination of the community, can change the capacity of the chain on demand. Think of yas like amazon web services where the yas tokens are shares of a decentralized web service company. Basically all eosio chains are like that, if you can look at it that way.”

The EIDOS token contract was launched on 1st November and it currently has 43,671 token holders. 100M of these tokens have been transformed into YAS and there are 31,900 YAS token holders. In just over two months EIDOS achieved quite a big user base and a wide distribution. The YAS chain officially launched on January 19th and there’s an ongoing phase of the token swap from EOS to the YAS network. 

YAS has no white paper because it’s a standard EOSIO implementation using standard binaries and system contracts released by Block.one. 

In this initial phase, the blockchain is run by team nodes and implements version 2.0 of the EOSIO and 1.9 system contracts. In comparison, only some of EOS nodes run on version 2.0 and the chain is still on the version 1.8.6 of smart contracts. This is causing some problems to the EOS chain which became unstable.

“This is what I'm talking about when you don't find balance within the 3 big stakeholders (bp's, lenders, renters). Instead of making cpu more expensive, they did the opposite, making it cheaper by pushing it faster to the point of instability. Throttling down the chain makes it more stable and cheaper to operate but it also makes cpu priced higher since it's slower so miners themselves will be competing with resources.

In eidos type mining, you don't need to be so fast, you just need to be faster than the rest to get more. So if everything is slow, everyone will still get the same portion of the airdrop, but at a more stable environment.”

What would happen if the same EIDOS type mining occurred on YAS though? 

Aiden is adamant that “the yas community should welcome it and we only have to (if needed), adjust some chain parameters to keep everyone happy. Meaning, we price the cpu resources the best way for everyone. We will even welcome more of it, as long as we price things right. On two extremes, one extreme is no dapps, and on the other extreme are 100 eidos type projects. I'll choose the latter one. We can always price them well. It makes yas more valuable. I think that's what eos missed. It should be good, not bad. We don't care how they use their cpu, as long as we price them well. Like  market economy. It should be like that, and other eosio chains should do it too. What is really the value of the core token of each eosio chain if not to stake and claim the resources it offers for decentralized applications. that's the main utility of the core tokens, governance is even just a side effect. We treat yas and all other eosio chains as a business with revenues and expenses. Not just some pump and dump schemes where anyone on price discussion groups just says "it will be x dollars in y days" out of thin air. "Eos is undervalued at 4 usd" based on what?

Yas is decentralized, there's no ceo, no coo, no cfo, etc. we all decide as a group using our voting power. The eidos team only facilitates the launch. after that, it's all up to us as holders how we go from there. By the way, we are a community about 30k strong, that alone is also a market, meaning dapps can build on us and make us the market, we can also be dapp consumers/customers.”

When the EIDOS contract launched and the EOS token holders have been deprived of the leeway they started complaining that the EOS blockchain was congested. This is simply because they couldn’t use free resources that were given to them that they had the perception of a congested blockchain. EIDOS made resources scarce what in Aiden’s eyes is a good thing: “Resource scarcity is good. That's what everyone should strive for.” He believes that the artificial 10% cap that exists on the EOS REX is not a good thing. The EOS resources on REX are priced following the Bancor algorithm. When the resources become very scarce the price will go always up to infinity but to a lender “the natural cap should be 1:1 where it becomes pointless to rent” said Pearce.”

Soon, he’ll remove the cap that is on REX to prove his theory. When Block.one tested lately REX with no cap there was some loss of funds although it’s unclear how that is possible. 

“We will also try to put the Rex on yas at 1:1 to 1:100 range with 10m yas available. That means if there is demand for resources people will be so tempted to lend and bring it down better than 1:100. At 1:1 no one will rent but people will buy Rex since there is still income from other sources. So it always brings it down to cheap resources. We try to make it 1:100 at 10% available to rent. Not yet sure if it can be done but that's our ideal point.

We are still trying to get the right cpu pricing. Next will be to get the rental rates at levels what we think is ideal. Again, it's only for the initial parameters.”

It’s been lately discovered that the eosio.contracts 1.9.0 doesn't push producer schedules regardless of the changes in voting. The result of this is a fixed set of BPs. “We simulated it today, using 1.8.3, we tested changing votes and changing the BPs, it's working. Right after activating the needed features and upgrade to 1.9.0, no voting can change the bp schedule. So the moment you upgrade to 1.9, it will always be the same BPs” wrote Pearce.

Aiden announced yesterday that there has been made significant progress with the CODEX exchange that will be launched on YAS. He introduced 3 different types of tokens that will be present on the exchange. 

“While we wait for the fix of the 1.9 contracts, and while we wait to bring down the supply to 100m, i'd like to inform everyone we have started to design our 3 token system to bring into the YAS mainnet a stablecoin EOS token we call VEOS. VEOS will be one of the 3 tokens, it's Virtual EOS, we will also have an ANTIEOS token to be the shorting token to VEOS, and will will call the 3rd token OREOS, or Oracle EOS, to be able to linke YAS and VEOS together by oracle. So initially the YAS ecosystem will have YAS, OREOS, VEOS, and ANTIEOS and all can be traded among each other using codex automated market makers.”

There have been many misconceptions about EIDOS and the EOSIO community could have been too precipitous in judging the smart contract and its creator. Only time will tell if YAS will find adoption and will prove that the EIDOS approach was right. Time was on Aiden Pearce’s side so far.

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