It has been about a month since block.one launched its EOS token sale and now is a good time to evaluate the project.
The last couple of years has seen a dramatic increase in the number of ICOs and token distributions. With that rise also comes the largest capital increase the crypto markets have ever seen. The EOS project is one of the most anticipated and popular token sales to date, and is currently the largest capital-raising exercise in the crypto world.
The EOS software is a new blockchain platform that enables easy creation of decentralized applications. EOS is often referred to as a possible Ethereum killer because it enables easy DAPP development and offers superiority in scalability and block confirmation time.
My concerns for the EOS project
Overpriced
The token sale is a one-year token distribution with an end-number of 1 billion EOS tokens in total. The current price for EOS tokens on the exchanges is about 1.7 US Dollars, and with a total end-supply of 1 billion tokens, this gives EOS a future market cap value of 1.7 billion US Dollars. This makes EOS massivly overpriced in regards to all of its competitors, besides Ethereum.
It is hard to say whether this evaluation will hold true in the future seeing that an increase in supply could deflate the price. Regardless of this, I still think that EOS is overpriced at the moment, seeing that it has not yet fully developed the platform and there aren’t any DAPPs running on it.
Volatility
I don’t think that a token sale lasting a year makes sense. EOS might be doing this to try to stabilize the price and gain a foothold in the market, but I see it as being unnecessarily greedy. I don’t see how the developers are going to develop the tech any faster just because they raise a shit load of money.
The EOS tokens are released for purchase in stages. Block.one will keep a reserve of 10 percent of the tokens, which cannot be traded. 20 percent was sold during the first five days and 70 percent is being split into 350 consecutive 23-hour periods of 2 million EOS tokens each.
Because the sale has been divided into so many stages, many investors will end up paying a lot more for their tokens when demands are high than the investors that buy when demands are low. This makes the price of the tokens susceptible for speculation and incentivizes price volatility, which is a bad thing for long-term investors which should be EOS’s core customers.
EOS is not a cryptocurrency yet, it’s a tradeable token
EOS tokens are meant to be used as gas/transaction fees to run the DAPPs built on top of the EOS platform. The only problem is that EOS doesn’t have these DAPS built on it yet, and as an investor you have to wait and hope that someone will develop something on the EOS platform, otherwise the tokens will be useless.
EDIT: @lukestokes has been so kind to remind me that EOS won't have gas/transaction fees. Thanks for clarifying :) I was aware of this, but I somehow managed to forget it when I wrote this piece lol.
This fact isn't making me reconsider my outlook on EOS as it simply gives the token even less possible uses.
Here is what the faq says on EOS website:
5. What features, uses or attributes do EOS Tokens have? Can the EOS Tokens be used on a blockchain adopting the EOS.IO Software?
block.one is building the EOS.IO Software but it will not configure and/or launch any public blockchain platform adopting the open source EOS.IO Software (the “EOS Platform”). Any launch of an EOS Platform will occur by members of the community unrelated to block.one. Third parties launching the EOS Platform may delete, modify or supplement the EOS.IO Software prior to, during or after launching the EOS Platform.
The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.
These are the reasons why I won’t be investing in EOS any time soon, even though it’s a project of the highly esteemed Dan Larimer. I might buy EOS in the future but as for now there are simply to many uncertainties and the valuation is simply to high for me.
What are your thoughts on EOS and have you invested in the token sale?
Sources
Picture: https://twitter.com/eos_io
Faq: https://eos.io/faq.html
