$EOS

RAM on EOS Part 3

The Bancor Algorithm: Enhancing EOS RAM Trading

EOS utilizes a free-market system for the allocation of its limited resource, RAM. Through EOS system contracts, users can buy and sell RAM, using the blockchain’s native EOS tokens. This process not only ensures liquidity in the RAM market but also aids in discovering the right price for RAM. As the availability of unallocated RAM decreases, an automated market maker (AMM) increases the price for the remaining RAM. This market operation is governed by the Bancor Relay algorithm, which plays a key role in this dynamic pricing mechanism.

History of EOS RAM

In June of 2018, The EOS blockchain launched with 64GB of RAM. A proposal to incrementally increase the RAM supply was subsequently enacted to support network growth and keep dApp and account creation costs reasonable. Over the years, this led to an annual RAM increase of 64GB. However, as the supply of RAM began to exceed 400GB, concerns emerged about overabundance, undervaluation, and hardware constraints. Notably, higher RAM requirements increase infrastructure costs for node operators, raising the barrier to entry and potentially hampering further decentralization of the network. These factors culminated in a new proposal to stop RAM inflation that reached consensus among a supermajority of block producers on December 17th, 2023.