Blockchain innovation is a constant process. Years ago, Ethereum was created to broaden the functionality of cryptocurrencies, and then later, EOS appeared to solve the drawbacks of Vitalik's Buterin creation. In this article, we line up Ethereum against EOS to find out how both cryptocurrencies differ. We will break down the major concepts of EOS and ETH, compare their features, and analyze their place in the Dapps market.
What is Ethereum
Ethereum is the second-largest cryptocurrency by market capitalization and a blockchain platform for creating smart contracts and decentralized applications. ETH is the utility currency of the platform and operates as the fuel for developing and deploying DApps. Sometimes, Ether is used as a means of payment. The platform is based on the Proof-of-Work algorithm but will move to the Proof-of-Stake algorithm in the near future.
What is EOS
EOS is a smart contract blockchain platform developed by the Block.one organization and the primary competitor to Ethereum. In terms of its functionality, EOS is similar to its main competitor Ethereum and aims to become the fastest, easiest-to-use, and most scalable blockchain in the world.
The EOS operating system provides developers with a wide range of tools, including cloud and server hosting and authentication services. All the main functions are available for free.
EOS VS Ethereum
Speaking of scalability, both projects have issues to solve. EOS developers claim that EOS can currently process more than 10,000 transactions per second. Theoretically, they can achieve one mln. transactions per second with inter-blockchain communication (IBC) integrated into the blockchain’s architecture. When integrated, the system creates another EOS blockchain which can handle more transactions. These blockchains can connect to each other, and there is no limit to the number of EOS blockchains that can be created.
However, the distribution of EIDOS tokens in November 2019 showed that with a significant increase in the number of transactions, the network might experience serious difficulties and rent EOSIO resources (RAM, CPU, and NET) will increase significantly.
As for Ethereum, the network can only process 15 transactions per second, which makes it uncompetitive with VISA and other payment systems. That is the crucial problem that might be preventing a more massive adoption of ETH. However, the team intends to increase the network capacity to 100,000 TPS. To achieve this, they are working on Ethereum 2.0, which includes:
- Sharding – it will distribute the entire ETH network into multiple parts called 'shards.' Each shard would contain its own independent state, meaning a unique set of account balances and smart contracts.
- Plasma – a solution to create subsidiary blockchains interacting with the main.
So, the increase of transaction amount processed by Ethereum 2.0 will improve the whole network's capabilities for users, developers, and companies.
The Ethereum network requires Gas – a special fee that works as a fuel to process transactions and ensure network security. Gas is calculated as follows:
- 1 ETH = 1,000,000,000 Gwei (Ethereum share);
- 1 Gas = 4 Gwei = 0.000000004 ETH.
The more Gas you pay, the faster a transaction will be processed. A regular transaction requires 21000 Gas or 0.000084 ETH. But, it won't be enough for the application, and the fee can be much higher. Another drawback is that the growth of the ETH to USD rate can increase the transaction price.
EOSIO has a different approach – the developers eliminated transaction fees. The only requirement for utilizing EOS blockchain is a sufficient amount of resources – RAM, NET, and CPU. The more transactions you do, the more resources you need to process transfers.
Ethereum 1.0, from its start, has used the Proof-of-Work algorithm, where miners have to solve a cryptographic hash problem to confirm a transaction on the network. Thus, the Ethereum network should be decentralized, but in fact, all the power is concentrated in the hands of mining pools and large mining farms. Additionally, this makes the ETH blockchain challenging to scale, slow, and energy-consuming.
Shortly, the team plans to move Ethereum to a proof-of-stake mechanism. A PoS algorithm is based on validators who confirm transactions and receive rewards for their work. To become a validator, you should stake at least 32 ETH. The more coins you have, the higher your chances to validate another transaction.
EOS uses Delegated Proof Of Stake, aka DPoS. In this case, the right to generate blocks is given to a limited number of validators, 21 to be specific. Other network participants vote for block producers. Critics often claim that EOS is not a decentralized platform, but it works faster and more effectively thanks to the limited number of block producers.
Both Ethereum and EOS use their virtual machines called the Ethereum Virtual Machine and WebAssembly.
Ethereum uses a simple model in which a user and smart contracts can perform a transaction. In comparison, EOS requires "permission" to make transactions (named "action"). EOS has a flexible system in terms of accessibility configurations, security, updates, etc.
The token model of Ethereum and EOS is inflationary, meaning that supply is unlimited, and coins are issued to reward miners and block producers. EOS had a 5% annual inflation rate, which is at the core of the algorithm. But recently, EOSIO has lowered the inflation rate to 1% after a majority of the community voted to decrease it.
DApps on EOS and Ethereum
A DApp is a decentralized application that significantly differs from traditional software like Windows. These applications don't have a centralized server, so they operate by interacting with the blockchain. They are more difficult to hack and provide more financial transparency, which is a massive plus for financial services.
We will compare the DApps of EOS and Ethereum by four indicators: daily active users, volume, number of transactions, and their popular categories. All the data is available on DApp Review.
Daily Active Users
Amount of active users is a great criterion to measure the demand for software and its overall presence. There are three ways to evaluate the number of active users by day, week, and month. In this article, we will take a look at daily active users for the last 30 days.
Over the past month, Ethereum showed superior numbers compared to EOS. The average number of EOS Dapps was around 20,000, while Ethereum had about 40,000 active users per day.
The volume shows the amount of money that is moved in the network throughout a day. It indicates the monetary value of the network.
In terms of volume, Ethereum still stays ahead of EOS. It's worth noting that the main driver for Ethereum volume is not ETH itself, but Ether-based DeFi projects, with ERC-20 tokens like DAI, USDC, WETH, etc. Compared to the 2019 Q1, ETH volume increased by 778% in 2020 Q1.
EOS exchange dapps account for 72% of the total transaction volume of the network in 2020 Q1. Compared to 2019 Q1 the "exchange" volume increased by 226% from $386 mln to 1.2 bln. making exchange dapps the largest EOS sector.
It may not be clear from the chart, but the volume of BOTH digital coins fluctuates every day. The volume constantly changes due to more and less value being exchanged, transferred, and used in different apps.
Transactions are another value to measure the activity of the network. As we can see from the chart, users of EOS Dapps perform transactions more often than ETH users.
It can be explained by the higher scalability and speed of the EOS network (keep in mind that ETH can process only 15 tps). At the same time, Ethereum processes fewer transactions but with higher volume.
In the first quarter of 2020, there are 406 active Dapps on EOS, and 19 are brand new. There are:
- 184 active dapps in the Casino category
- 88 apps in the Other category
- 69 active gaming Dapps
As for Ethereum, it has 641 active decentralized applications in 2020 Q1, which is 173 fewer than in 2019 Q1:
- 180 applications in the Games category – the most active category.
- 72 decentralized exchange applications
- 71 applications in the Casino category
- 33 active decentralized finance applications
In terms of active addresses, Ethereum dominates in sectors like Games, Exchanges, and Finance. EOS tops the Other category.
Regarding transaction volume, Etherum has a higher share in the DeFi sector (specifically Financial and Exchange). Simultaneously, EOS dominates in the Casino sector and holds a significant part of the Exchange category.
Store coins on Freewallet
EOS and Ethereum are available on Freewallet: Crypto Wallet for your Android devices and desktop via the web app.
- Manage EOS, ETH, and 150+ other coins and tokens in one place.
- Buy BTC, ETH, EOS, LTC, and more coins directly in the app.
- Seamlessly exchange coins with other digital money right in the wallet.
- Make free transfers with other Freewallet users.
- Check the exchange rate of digital currencies in the wallet.
- Keep your funds safe with enhanced protection features, including 2FA, multisig, and transaction limits.
- The majority of assets are kept in cold storage, ensuring that your coins won’t be lost or stolen.
Feel free to sign-up with your Facebook, Gmail, email, or mobile number and try Freewallet.
If you have any questions regarding cryptocurrencies on Freewallet, please get in touch with our support team. They are ready to guide you and solve any problem 24/7.
In sum, the EOS network is a more progressive and flexible blockchain network with convenient tools for developers. Despite that, Ethereum still beats EOS in terms of Dapps activity, market share, and transaction volume. It is the leading platform for Exchanges and DeFi services, which has become a new industry trend. Nevertheless, Vitalik Buterin's team understands that Ether has poor scalability and speed issues that need to be improved to compete with EOS.