Ethereum VS EOS: [The Ultimate Comparison Guide]

Rajarshi Mitra

2 months ago
Ethereum VS EOS: Ultimate Comparison Guide

In the Ethereum VS EOS: Ultimate Comparison Guide, we are going to take a look at the differences and similarities between these projects.

Ethereum and EOS are currently two of the biggest smart contract platforms in the world. They also happen to have some of the most dedicated fan bases in the entire crypto space. Both of these platforms are extremely important to the crypto-space because of the sheer amount of DApp development that is taking place on both of them.

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Ethereum at a Glance

Ethereum VS EOS: Ultimate Comparison Guide

Key Highlights

  • November 2013: Vitalik Buterin publishes the Ethereum whitepaper.
  • January 2014: The development of the Ethereum platform was publicly announced. The original Ethereum development team consisted of Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson.
  • August 2014: Ethereum ends their ICO and raises $18.4 million.
  • May 2015: “Olympic” the Ethereum testnet releases.
  • July 30, 2015: The first stage of Ethereum’s development, “Frontier” was released.
  • March 14, 2016: Homestead, the first “stable” Ethereum release, went out on block 1,150,000.
  • June 2016: The DAO hack happens and the $50 million worth of Ether, which was 15% of the total Ether in circulation back at the time.
  • October 25, 2016: Ethereum Classic forks away from the original Ethereum protocol.
  • October 16, 2017: The Metropolis Byzantium hard fork update happens.
  • February 28, 2019: The Metropolis Constantinople hard fork update happens.

EOS at a Glance

Ethereum VS EOS: Ultimate Comparison Guide Key Highlights

  • 2017: Whitepaper published
  • September 3, 2017: Original testnet Dawn 1.0 released.
  • December 4, 2017: Dawn 2.0 released.
  • January 25, 2018: Dawn 3.0 released.
  • June 1, 2018: EOSIO Dawn 1.0 launched on EOSIO mainnet.
  • May 30, 2019: EOS listed on Coinbase.
  • June 1, 2019: Block.One launches “Voice” an EOS-based social media platform.

Ethereum vs EOS: A Comparison

Before we delve into the differences, let’s look at the similarities. They are both smart contract platforms.

Asdas.

Now, let’s talk about the differences between the two. We will be mainly focussing on the following categories:

  • Working Philosophy.
  • Cost of Developing
  • Consensus Mechanism.
  • DApp Statistics.

Ethereum vs EOS: Working Philosophy

While both Ethereum and EOS happen to be smart contract platforms, both of them go about their jobs in entirely different ways. While Ethereum has a rental model, EOS uses an ownership model for its developers.

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Ethereum rental model

Bitcoin was truly disruptive as a decentralized P2P financial system, however, people wondered whether blockchain technology had more in store. Vitalik Buterin answered by creating the world’s first smart contract platform in Ethereum. The idea of Ethereum is to build a worldwide supercomputer which rents out its computational power to developers around the world. This “computational power” is called gas and each execution step of a smart contract requires a certain amount of gas to be spent.

This is the most critical thing to understand if you want to get a more in-depth knowledge of the working philosophy behind Ethereum.

To make things simpler, let’s use an analogy. Suppose you are going on a road trip. Before you do so you go through these steps:

  • You go to the gas station and specify how much gas you want to fill up in your car.
  • You get that gas filled up in your car.
  • You pay the gas station the amount of money you owe them for the gas.

Now, let’s draw parallels with Ethereum.

The car is the operation that you want to execute, like a gas or a smart contract.

The gas is well….gas.

The gas station is your miner.

The money that you paid them is the miner fees.

All the operations that users want to execute in ethereum must provide gas for the following:

  • To cover its data aka intrinsic gas.
  • To cover its entire computation.

Now that we have covered the bare basics, you may be asking the following question.

Why do we have this Gas system?

The answer is simple…incentivization.

Like any proof-of-work peer-to-peer system, Ethereum is heavily dependent on the hashrate of their miners. More the miners, more the hashrate, more secure and fast the system.

To attract more miners into the system, they need to make the system as profitable and alluring as possible for the miners. In Ethereum, there are two ways that miners can earn money:

  • By mining blocks and getting block rewards.
  • By becoming temporary dictators of their mined blocks.

Let’s explore the second point.

The miners are responsible for putting transactions inside their blocks. To do so, they must use their computational power to validate smart contracts. The gas system allows them to charge a certain fee for doing so.

This fee is known as the miner’s fee and it helps incentivize them enough to take part actively in the ecosystem.

So, how much fees can they charge? Before we can calculate that let’s understand how we measure gas.

The smallest unit of gas measurement is wei. So, if we spend 1 gas unit to during an operation, we call it 1 wei.

The units of measurements increase like this:

Ethereum VS EOS: Ultimate Comparison Guide
Image Credit: Steemit

So, how do we convert the gas into Ether?

There is no fixed price of conversion, it is completely up to miners to determine the conversion price, however, the average conversion rate is usually: 1 gas = 0.02 micro Ether.

The following chart shows you the average Ethereum gas price chart.Ethereum VS EOS: Ultimate Comparison Guide

Image credit: Etherscan.

When a developer submits a smart contract to the system, they specify a gas limit on top of it. The miners must execute the contract until the specified limit.

EOS: Ownership Model

EOS, on the other hand, uses an ownership model. So, you own the resources given to you, and you don’t need to pay rent. Instead of being a decentralized supercomputer, EOS plans to become a decentralized operating system, that Dapp developers can utilize to create and code various Dapps. The EOS tokens act as a toll booth and holding them gives you access to various resources such as Bandwidth, Computation, and RAM.

Since these resources are scarce, EOS doesn’t want you to hold on to their tokens for too long. The company behind EOS, Block.one, has explicitly mentioned in the platform constitution that EOS members who don’t use their tokens for three years would get their account terminated.

By staking and locking up EOS tokens, you are provided an equivalent amount of resources in network and CPU bandwidth in return. However, since RAM is a scarce resource, you don’t get it automatically by staking. So, to obtain them, you will need to purchase it directly from the RAM marketplace.

Each time someone buys or sells RAM, a 0.5% fee is applied to both the buyer’s side and the seller’s side (1% overall). This actually gives an economic incentive for users to sell their RAM and also it discourages speculative marketing and inflation as the fees that are collected are promptly burned (removed from the ecosystem).

This internal RAM marketplace will make sure that there is a steady availability of RAM and will offset any future predicted shortages. You will be able to buy RAM based on the price that the system sets it at, which is based on the currently available supply of RAM.

By buying and using these resources, developers are then able to create decentralized applications.

Ethereum vs EOS: Cost of Developing

Since both of them are smart contract platform, let’s look at which platforms are easier to develop on.

Ethereum – Development Costs

In Ethereum, users have to pay for the execution of transactions through a smart contract. Executing a contract has a minimum fee of 32000 gas, plus 200 gas per byte of the source code, as outlined in Appendix G of Ethereum’s yellow paper.

Ethereum VS EOS: Ultimate Comparison Guide

As estimated in this article, the gas cost for the execution of Ethereum smart contracts that conduct more than 1,000,000 transactions a year equals roughly 90 ETH or ~$10,000 (as of writing) each year. Developers don’t pay the majority of these fees directly, instead, users are required to pay as they interact with the DApps and send transactions. What this ultimately means is that users bear the burden of the costs and if an application is too expensive, they will likely turn to cheaper alternatives.

EOS Development Costs

As opposed to Ethereum, you don’t need to pay gas prices in EOS. You need to stake your EOS tokens to receive Bandwidth, CPU, and storage for your smart contract. Along with all this, you will still need RAM. Since RAM is such a rare resource, you need to buy it from an internal RAM marketplace. According to EOS resource planner, 1 Mb RAM costs 59 EOS or $139 (as of writing).

So, with all that information in mind, let’s see how much EOS you will have to stake to run an application. Let’s assume that we are going to make an application for 1000 users. You will need to :

  • Pay for each user account which is 4 KB RAM per user
  • You will need to pay for their storage
  • You will also need to account for the network bandwidth and CPU bandwidth that you will need as well.

Factoring everything, according to this article, the deployment and running costs for a 1000 user application will be around 10628 EOS or $25,500.

Ethereum vs EOS: Consensus Mechanisms

Ethereum is currently using the proof-of-work (POW) consensus mechanism, however, it plans to move on to proof-of-stake (POS) soon, using the Casper protocol.

Ethereum – Proof of Work

The idea of POW is for miners to use their computational power to solve cryptographically hard puzzles. The miner who gets to solve the problem, adds a new block to the blockchain and receives a block reward in return. This how the process works:

  • A random string called the “nonce” is appended to the hash of the previous block.
  • The resultant string is hashed and then checked against the network difficulty.
  • If the hash satisfies the conditions, then the block is added to the chain.
  • If not, the process repeats until the desired result is achieved.

There are two essential things to note about POW:

  • The process of getting the required result to meet the difficulty conditions should be extremely hard, time-consuming, and resource heavy.
  • The process of checking whether the miner was successfully able to mine a block should be easy.

Before long, miners discovered that they could exponentially increase their mining power by joining together and forming mining pools via parallel processing.

In parallel processing, program instructions are divided among multiple processors. By doing this, the running time of that program decreases, and that is basically what the mining pools are doing.

The biggest asset of POW mechanism is the security it brings in to the system. Since mining on it is so expensive, the miners don’t have any incentive to work against the system, and mine on any parallel chains just to waste their money for no reason.

However, POW chains definitely do have a lot of flaws:

  • They are slow.
  • They tend to be centralized.
  • They waste a lot of energy.

This is why Ethereum is going to ditch the POW protocol and move on to proof-of-stake (POS)

Ethereum in the future – Proof of Stake (POS)

Ethereum plans on using POS via the Casper Protocol. Proof of stake will make the entire mining process virtual and replace miners with validators.

This is how the process will work:

  • The validators will have to lock up some of their coins as stake.
  • After that, they will start validating the blocks. Meaning, when they discover a block which they think can be added to the chain, they will validate it by placing a bet on it.
  • If the block gets appended, then the validators will get a reward proportionate to their bets.

As you can see, the POS protocol is a lot more resource-friendly than POW. In POW, you NEED to waste a lot of resources to go along with the protocol. It is resource wastage for the sake of resource wastage.

Casper is the POS protocol that Ethereum has chosen to go with. Casper is a protocol that utilizes POS with a punishment mechanism. Let’s look at how POS under Casper would work:

  • The validators stake a portion of their Ethers as stake.
  • After that, they will start validating the blocks. Meaning, when they discover a block which they think can be added to the chain, they will validate it by placing a bet on it.
  • If the block gets appended, then the validators will get a reward proportionate to their bets.
  • However, if a validator acts maliciously and tries to do a “nothing at stake,” they will immediately be reprimanded, and their entire stake slashed.

As you can see, Casper is designed to work in a trustless system and be more Byzantine Fault Tolerant.

Anyone who acts in a malicious/Byzantine manner will get immediately punished by having their stake slashed off. This is where it differs from most other POS protocols. Malicious elements have something to lose so it is impossible for there to be nothing at stake.

Flawlessly implementing Casper and Proof Of Stake will be critical if Ethereum plans to scale up.

EOS – Delegated Proof-of-Stake

EOS plans on executing POS via the DPoS algorithm. DPoS is an example of a leader-based algorithm, wherein, certain members are selected from the entire network who are in charge of the consensus protocol and the general network well-being.

This is how the DPoS works:

  • Blocks are produced in the rounds of 21.
  • At the start of every round, 21 block producers are chosen. Top 20 are automatically chosen while the 21st one is chosen proportional to the number of their votes relative to the other producers.
  • The producers are then shuffled around using a pseudorandom number derived from the block time. This is done to ensure that there is no collusion among the producers.
  • To ensure that regular block production is maintained and that block time is kept to 3 seconds, producers are punished for not participating by being removed from consideration. A producer has to produce at least one block every 24 hours to be in consideration.

Since fewer people are involved in the DPoS protocol it is much faster, but it definitely leads to centralization.

Ethereum vs EOS: DApp Statistics

Since Ethereum and EOS are both DApp-creation platforms, let’s check some of the DApp stats to see how they are performing. We will only be considering DApps built on Ethereum and EOS.

Top Five DApps based on users in the last 24 hours

Ethereum VS EOS: Ultimate Comparison Guide

  • EOS dominates this category. Of the top five DApps, top four are EOS-based.
  • None of the Ethereum DApps managed to get more than 3k users in the past 24 hours.
  • ADM by far got the most users with 5.2k.

Top Five DApps based on 24-hour volume

Ethereum VS EOS: Ultimate Comparison Guide

  • Once again, four of the top five are EOS-based DApps.
  • EOS Jacks has the most 24-hour volume by far with $3.3 million.
  • FCK is the only Ethereum DApp among the top five and it is in second place with $1.8 million 24-hour volume.
  • The top three DApps are all gambling-based.

Top Five DApps based on transactions in the last 24 hours

Ethereum VS EOS: Ultimate Comparison Guide

  • EOS DApps have done a complete clean sweep of the top five when it comes to transactions in the last 24 hours.
  • Of the DAppss, four of the five belong to the gambling category while EOS Dynasty is a gaming DApp.
  • BetHash has had nearly two times as many transactions in the last 24 hours as the second-placed EOS Jacks.

Ethereum vs EOS ConclusionEthereum VS EOS: Ultimate Comparison Guide

Ethereum and EOS are both stalwarts of the smart contract space as of now. While EOS has emphasized speed by reducing the number of people involved in its consensus and making their system more centralized, Ethereum is trying to incorporate various scalability techniques to make their system faster without compromising on decentralization. As it stands, these are both highly important projects which have attracted developers from all over the world to create DApps on top of it.

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Ethereum VS EOS: Ultimate Comparison Guide

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