EOS Ecosystem 2024 New Narrative: Brand-new Token Economic Model, Deeply Integrated with Bitcoin Ecosystem

Tokens, the soul of blockchain.

For various Web3 projects, tokens are the economic incentive mechanism of blockchain and the core pillar for achieving decentralization. A perfect token economic model is the key to the project's success and long-term sustainable development.

For ordinary users, carefully evaluating the project's token economics is a critical step before deciding to participate in the project. Only by fully understanding the project's design ideas for the tokens can you further improve the success rate of your investment.

Six years ago, a phenomenal blockchain project raised $4 billion in crowdfunding worldwide with its advanced technical logic and sophisticated token design. This project was EOS, which once attracted thousands of people. Over the past six years, the industry has developed rapidly, and EOS has not disappeared or stagnated. Under the leadership of the EOS Network Foundation and EOS Labs, it has actively responded to market changes and explored a development path that is more in line with the interests of the EOS ecosystem and market demand. Today, six years later, in response to the issue of the core token mechanism of the blockchain, EOS has proposed a new token economic model, which has attracted widespread attention from the community as soon as it was launched. According to OKX market data, after the announcement of the news, EOS briefly broke through $0.95, with an increase of more than 12% in one hour.

From getting rid of the inflation model, significantly reducing the token supply by about 80%, to the brand-new token distribution mechanism, it is not difficult to see that the launch of this new token economic model not only includes the long-term market research of the design team behind it, but also shows EOS's determination to subvert the past and embrace the future.

This article will delve into EOS’s new token economic model and the future planning of the EOS ecosystem, including EOS RAM, EOS EVM, and the integration of EOS and Bitcoin ecosystems, to explore the opportunities and challenges of EOS’s future development.

Interpretation of EOS’s latest token governance model

Generally speaking, the evaluation of token economic models is mainly carried out through the following four dimensions:

  • Token Supply (Supply Side)

  • Token Utility (Demand Side)

  • Token Distribution (Holding Objects)

Therefore, this article will also focus on these four aspects to further understand EOS's new token economic model.

Token Supply (Supply Side)

Generally speaking, the evaluation of whether the token supply is good or not is mainly affected by factors such as maximum supply, circulation, market value, and token destruction mechanism.

Previously, when EOS was launched, the token supply was 1 billion, but an annual inflation of 5% was designed, of which 1% was used to reward block producers and 4% was accumulated in the "eosio.saving" account for subsequent ecological construction. However, community members soon realized the adverse effects of 5% inflation on ecological development. Therefore, between 2020 and 2023, the EOS ecosystem underwent several rounds of consensus reforms, and the EOS tokens accumulated in "eosio.saving" were destroyed, and the annual inflation of EOS was reduced to 3%.

This new token economic model aims to completely solve the various restrictions on the development of EOS caused by inflation.

The new model completely cancels the design of EOS's annual inflation. In the future, more than 80% of the inflation tokens in the total supply will be destroyed. The total supply of EOS is set at 2.1 billion, of which: the current circulation of EOS is about 1.15 billion, accounting for about 54.8% of the total supply of 2.1 billion. No other changes will be made to this part of the tokens, further safeguarding the rights and interests of early users of the project; in addition, there will be about 950 million tokens that will be minted and distributed, and follow certain linear release conditions.

On the other hand, we can see that the current market value of EOS is nearly US$900 million. With the advancement of various ecological construction work and the empowerment of token utility, EOS will have broad room for growth in the future.

Token Utility (Demand Side)

Token utility is the demand side of tokens. If a token has actual usage scenarios within the ecosystem and can attract a continuous influx of users through diverse application scenarios, it means that the value of the token can circulate efficiently within the ecosystem, which is an important indicator for measuring the prosperity of a project.

EOS tokens are a unit of measurement for network resources. Applications on the EOS network require a certain amount of network resources to run, such as CPU and network bandwidth. Users holding EOS tokens can obtain corresponding network resources according to their equity ratio, allowing the EOS network to distribute resources more fairly.

EOS token holders can also receive dividends by participating in governance and voting for nodes. Super nodes on the EOS network are essential for verifying transactions and generating new blocks, and EOS coin holders can choose super nodes they trust by voting. This mechanism ensures the security and stability of the network. On May 9, Yves La Rose, CEO of the EOS Network Foundation (ENF), said in a post: "EOS's new token economic model will be deployed to the main network at the end of May. EOS staking rewards will be launched before the end of June."

In addition, the EOS ecosystem will empower the utility of tokens by building a variety of ecological application scenarios.

Token Distribution (Holding Objects)

The token distribution mainly examines whether the tokens are distributed fairly and effectively. Generally speaking, the Web3 industry standard is to distribute at least 50% of the tokens to the community, which can effectively dilute the ownership that the founding team and investors can retain.

After the EOS new token proposal is implemented, the newly minted 950 million tokens will be distributed according to the following rules:

  • RAM Market: 350,000,000 EOS, accounting for 16.7% of the total supply. A total of 350 million EOS will be used to develop and grow the RAM market and its crypto community. Specifically, one part is RAM market making and liquidity provision. 315 million EOS will be allocated for market making and liquidity provision for centralized exchanges and DeFi across multiple blockchains. The other part is programmatic RAM procurement. 35 million EOS tokens will be used to programmatically purchase RAM from the system Bancor pool within the TBD time frame, and the RAM purchased through this mechanism will be used to support or fund EOS ecosystem initiatives.

  • Staking rewards: 250,000,000 EOS, accounting for 11.9% of the total supply. A total of 250 million EOS tokens will be used for staking rewards, with a reward release rate controlled by EOS block producers. The proposal recommends using a logarithmic curve to distribute rewards.

  • EOS Network Foundation: 150,000,000 EOS, 7.1% of the total supply. The EOS Network Foundation will distribute 150 million EOS tokens, equivalent to 8.5 years of the current 1.5% network inflation.

  • Block Producers: 100,000,000 EOS, 4.8% of total supply. To make block production and network infrastructure more sustainable in the long term, all network fees generated by PowerUC, RAM transaction fees, and name auctions will be distributed equally to the top 21 block producers.

  • EOS Labs: 85,000,000 EOS, 4% of the total supply. The token will be used to invest in ecosystem growth, liquidity provision for ecosystem projects, and partnerships.

  • Middleware: 15,000,000 EOS, representing 0.7% of the total supply. 15 million EOS tokens will be used exclusively as public goods funding for middleware development to improve the usability of the EOS network.

Token distribution diagram

In addition to the allocation rules, we should also pay attention to the lock-up and release schedule of the tokens: see if a large number of tokens will enter circulation, thus putting downward pressure on the value of the token. In general, the release time of the project team should be longer than that of the ecological token holders, which shows that the team has full confidence in the long-term success of the project.

In the new EOS token model, in addition to the RAM market and middleware, which are allocated to the ecosystem and are released immediately, other tokens allocated to staking rewards, the EOS Network Foundation, block producers, and EOS Labs will follow a linear release pattern. Drawing on the successful experience of the Bitcoin ecosystem, they will be halved every four years to further promote the long-term stable operation of the ecosystem.

From the new token model, we can see that under the leadership of the EOS Network Foundation, EOS Labs and a number of core members of the EOS ecosystem, EOS is determined to make drastic reforms and promote the development of the ecosystem through long-term construction. Although the EOS RAM market continues to be hot and the emergence of exSat, a project that integrates Bitcoin and EOS ecosystem, we also see more possibilities for the future development of EOS.

EOS ecosystem becomes more diverse: RAM continues to be popular, exSat emerges

When it comes to the ecosystem, the most eye-catching aspects of EOS right now are EOS RAM and exSat.

EOS RAM is a resource on the EOS blockchain used to store smart contracts, account data, and other blockchain-related information. RAM is a finite resource on the EOS blockchain, so its supply is limited and needs to be purchased or leased. The price of RAM fluctuates based on market demand and supply, so using RAM on the EOS network requires considering its cost and usage.

On December 17, 2023, the EOS ecosystem decided to stop RAM inflation on EOS, and the overall RAM was fixed at 390 GB. As a rigid consumable in the EOS ecosystem, the scarcity of EOA RAM increased further, and a wave of RAM investment was set off in the EOS ecosystem. The price of RAM once soared six times from its historical low.

As the properties of EOS RAM become closer to real-world land resources and can be traded freely like real estate, the role EOS RAM plays in the ecosystem and its role in promoting ecological diversity are becoming increasingly prominent.

For example, Upland, a well-known dApp on EOS, uses 6.7 GB to maintain its operation. The heavy use of Upland and similar dApps further amplifies the demand for RAM, reinforcing the key role of RAM in the seamless functionality and expansion of the EOS network and dApps.

Another example is NFTs on the EOS EVM, which are becoming significant RAM consumers. While these formats support a wide range of digital assets from unique collectibles to multi-purpose tokens, their operational efficiency still requires a large amount of RAM.

In order to better support the development of the ecosystem, the EOS Network Foundation has also launched a series of initiatives: on the one hand, EOS announced the launch of packaged RAM (WRAM) to improve the tradability of the asset; on the other hand, it made major updates to the RAM system, with features including transferable RAM, RAM logging and notifications, secure purchase of RAM through Buy RAM for Self, RAM tokenization on EOS, etc., further enhancing the flexibility, efficiency and overall practicality of EOS RAM.

Another recent and very high-profile project is exSat.

We know that the Bitcoin ecosystem has experienced unprecedented explosive growth in the past year: from the inscription of all people to the continued popularity of Bitcoin NFT, Bitcoin, which was originally only used for value storage and exchange, can also be used as a place for asset issuance, which has greatly broadened the use scenarios of Bitcoin and made more people have higher expectations for the Bitcoin ecosystem.

Because as one of the earliest blockchain projects, Bitcoin has unique advantages in ecological development:

  • Leading decentralization and security advantages: Bitcoin is driven by the community and has been tested for more than a decade of stable operation.

  • Unique market consensus: Bitcoin has the highest visibility and recognition among the global public and investors.

  • Huge amount of funds: The current market value of Bitcoin has reached 1.2 trillion US dollars, accounting for about 50% of the market value of the crypto market.

  • High community enthusiasm: The popularity of inscriptions and runes demonstrates the great enthusiasm of users and the community to participate in the Bitcoin ecosystem.

  • Good market expectations: Bitcoin halving, Bitcoin spot ETF approval, and Bitcoin price hitting a new record high.

The high participation under high expectations soon overwhelmed the Bitcoin ecosystem. In short, the performance of the Bitcoin network severely restricted the development of the Bitcoin ecosystem.

  • Slow transaction speed: Only about 3-7 transactions can be processed per second.

  • High transaction fees: Users need to pay higher transaction fees during peak trading periods.

  • Long transaction confirmation time: In order to ensure that the transaction is confirmed by the network, users usually need an hour or more.

  • Scalability limitation: only supports 4MB of content space.

In order to support a richer ecosystem, Bitcoin's current performance is obviously not enough. Ethereum founder Vitalik once publicly stated that Bitcoin has the potential to surpass its current role as a payment system, and to achieve this goal, more expansion solutions need to be implemented. Bitcoin Layer2 is widely regarded as the only way to build a prosperous Bitcoin ecosystem.

exSat is a docking layer that aims to bridge the gap between the Bitcoin native layer and the numerous layer 2 scaling solutions for the Bitcoin ecosystem. exSat combines multiple blockchain technologies together to create a powerful solution that overcomes many of the current challenges in improving Bitcoin scalability, and EOS will play a key role in this vision.

exSat's technology stack combines multiple consensus mechanisms, including PoW for BTC miners, PoS for BTC staking validators, and the DPoS data consensus extension protocol powered by EOS. The platform takes advantage of EOS block space to achieve on-chain storage of block data.

EOS RAM also plays an important role in the parsing and storage of relevant data. All of this happens at a time when RAM is becoming increasingly popular as an important utility for Web3 developers. Because RAM is actual physical RAM, deeply embedded in the computer, it enables multi-layer indexing.

exSat’s system has validators or synchronizers that work together to create the trust and robustness of POW, and we leverage real Bitcoin miners to achieve this. If a miner has produced a block in the past 72 hours, they can push that information to our validators. The validators run the POS mechanism, verify that the information they received from the actual miners is correct, and then write the data to RAM on EOS. The result of this is that we are able to access the full UTXO data, which is about 60 GB of data. Writing and accessing this data on other chains is very expensive, but because exSat is backed by EOS, this can be extremely cost-effective and scalable.

exSat has synchronizers pushing data, validators are motivated to read the data and ensure the data is correct, they need to wait for six confirmations or about an hour, and validators also need to pledge Bitcoin and store it in an insured custodian. Then exSat mints wrapped Bitcoin for governance, users can deposit Bitcoin, and validators can choose to grant credit immediately and charge a small fee, or wait an hour and then wait for six Bitcoin confirmations. This way users can use their Bitcoin on scalable solutions and start interacting with applications, DeFi, etc.

In the future, exSat's solution will be open to other second-layer networks. Most second-layer networks are very expensive to generate their own index data, and exSat makes this data open to everyone. Anyone can use exSat's EVM smart contract to access UTXO data.

exSat is another example of EOS performance and scalability following platforms such as EOS EVM and EOS Stablecoin Chain (ESCC). This demonstrates the tremendous flexibility and performance provided by EOS, and introduces unlimited imagination for the subsequent development of the EOS ecosystem.

EOS Network Foundation takes the lead and more measures are taken to empower ecological development

As a collaboration, decision-making and information sharing platform for the EOS ecosystem, the EOS Foundation will strive to listen to the community’s voice, support high-quality community projects, and provide future planning, funding sponsorship and key infrastructure support for the EOS ecosystem. Previous efforts made by the EOS Network Foundation include:

1. Continuous performance optimization. The EOS Network Foundation strengthens the construction of EOS infrastructure to help developers enter the EOS network more easily and comfortably for development and construction. At present, the EOS Network Foundation has established nine core working groups, including Core+, API+, and Wallet+, to improve the infrastructure from different angles such as performance, API, and wallets to make up for the shortcomings of ecological development.

2. EVM compatibility: EOS is pushing the door to the broader Ethereum and even EVM ecosystem. Yves La Rose, CEO of the EOS Foundation, said on social media that EOS's EVM is the most powerful EVM to date, with performance 25 times that of Avax and 3 times that of Solana, while also having Ethereum-level security and reliability.

3. Ensure security. EOS itself is an old public chain that has been operating stably for 5 years, so the security of EOS is unmatched by other emerging public chains. In addition, the EOS Network Foundation has also established two major working groups, Audit and Recover+. The former is responsible for auditing, and the latter responds to hacker crisis events to further protect security.

Of course, in addition to this, the EOS Network Foundation has also promoted the birth of other ecological organizations, such as the establishment of EOS Network Ventures (ENV) and EOS Labs. The three organizations serve the EOS network together, but their respective tasks are different and complementary, and they are jointly committed to the development of the EOS ecosystem.

The EOS Network Foundation is a non-profit organization whose mission is to enable businesses, developers, and individuals to build on the EOS network. It is responsible for the maintenance and development of the EOS software stack, represents the network through ecosystem information materials, and provides funding for public goods within the ecosystem.

ENV will complement the work of ENF as an independent for-profit entity that is able to foster partnerships and attract external capital to invest in projects that benefit the EOS ecosystem while generating profits for the network. Previously, ENV launched a $100 million EOS Ecosystem Fund to empower Web3 entrepreneurs.

EOS Labs aims to become an incubator to enhance the competitiveness of the EOS ecosystem. EOS Labs's responsibilities are more focused on incubation and research, while ENV's responsibilities are more focused on investment. Previously, EOS Labs teamed up with NFT platform UBOX.io to launch the UB ChainPass program. The first project of the program was the EOS Landmark NFT jointly issued with EOS Labs - the first NFT with storage value. Each NFT has a corresponding face value of EOS as a value anchor and can be 100% redeemed at any time.

Faced with the brand new EOS ecosystem, many people have changed their attitude towards the future development of EOS: with the reform of the economic model to get rid of inflation and the multi-pronged ecological construction, this round of bull market may be a huge opportunity for EOS to overtake others.

The former "top streamer" started a new business: EOS still has the potential to reach the top again

A genius founder, $4 billion in crowdfunding, a super node election with a huge community and a luxurious lineup... At the beginning of its birth, EOS's high community popularity and outstanding technical advantages have amazed countless people. Since it can be regarded as a "top stream" in the past, it proves that EOS itself has the characteristics of becoming a top stream:

On the one hand, the popularity of EOS has helped EOS complete rounds of solid user awareness education, and also endowed the EOS project with a strong passerby base;

On the other hand, EOS technology is still at the forefront. The advantages of the entire EOS architecture have always been obvious, with low transaction costs, high performance, low latency, and smooth experience. It has been operating stably for 6 years without any major accidents. It has many years of stable operation experience, which is very valuable for the development of a public chain. It is also very important for carrying hundreds of millions of users and supporting the stable and smooth operation of dApp.

Thanks to the efforts of the EOS Network Foundation, EOS Labs, ENV and other entities, as various ecosystem support initiatives are implemented and a new token economic model is deployed, the EOS ecosystem is about to have a second life: the popularity of EOS RAM is a strong proof of this trend, and the emergence of exSat also introduces infinite imagination for the future development of EOS.

It is true that the EOS ecosystem has experienced many twists and turns since the official launch of the mainnet in 2018, but the community's tenacious vitality and strong cohesion still support the continuous development of EOS. In the future, EOS ecosystem-related work will continue to advance at a high speed, and we look forward to EOS opening the next chapter of vigorous development.