As most other digital currencies EOS has seen quite significant gains this week. Having started the month of July at $8.03, the 5th-largest cryptocurrency by market cap is hovering above the $9 mark at press time. However, EOS has been bothered by numerous controversies ever since its mainnet launch and it seems the troubles are not over yet, as a fresh issue has just arisen.
To understand it, we must first explain the nature of EOS network. Like all other virtual currencies EOS is a token but more importantly it also serves as the infrastructure on which decentralized applications (Dapps) are being built. Currently, there are over 140 Dapps in the EOS ecosystem, covering a variety of sectors, such as healthcare, education, gaming, crypto wallets, etc. While some Dapps are directly linked to EOS, most of them are using its open-source technology to host their own projects.
Every Dapp requires a sizeable amount of RAM memory to run its operations, with most memory-demanding activity being new user account registration. RAMs can be purchased from the EOS RAM market, which has recently went through a significant change that apparently caused more issues than EOS developers could have imagined.
The previous version of the RAM market used a simple fixed price model, which prevented speculation and hoarding. However, block.one, the company behind EOS, released an update on EOSIO architecture, dubbed EOSIO Dawn 4.0 in May of this year. Alongside bug fixes and some network improvements, it also changed the RAM marketplace to a supply-demand RAM allocation model.
At the time, EOS CTO Dan Larimer claimed that the new model will financially incentivize users to sell their unused RAM. However, even then he anticipated that, “Under Dawn 4.0 the system contract now buys and sells RAM allocations at prevailing market prices. This may result in traders buying RAM today in anticipation of potential shortages tomorrow.“
It seems that Mr. Larimer has foreseen the problem without realizing it was actually a problem as this week has seen speculators reaping huge profits from hoarding the RAM. In anticipation of rising prices for the essential developer resource, a few individuals hoarded over 85% of the available RAM on the EOS network.
Understandably, the prices skyrocketed with 1MB of RAM rising to as much as 910 EOS ($8190) during the peak of hoarding craze, according to data from marketstackd. The prices have since stabilized but remain way above their previous levels, with 1MB of RAM currently trading for 333 EOS (around $3000). Such a frenzy signals a potential long-term problem for EOS, as buying RAM at such prices might simply prove to be unfeasible for Dapps developers.
A Reddit user hit the nail on the head, claiming that RAM instead of the EOS token is the real resource of the network.
One way to prevent the reoccurrence of RAM hoarding would be EOS Block Producers (BPs) vote to decide on increasing the total RAM supply, thus decreasing scarcity. However, having the recent events in mind, such a move would surely prove controversial and met with community backlash, as it goes against the principle of decentralization.
BPs have already come under fire in the last weeks for freezing numerous user accounts. Other recent issues for EOS include having to pause its network, discovering high-risk vulnerabilities just before the mainnet launch and proposing to replace its current constitution with a new one.
Despite the hoarding controversy, the EOS price remained relatively stable, increasing over 2 percent in the last 24 hours.
Image Source: “Flickr”
I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.