Differences between EOS and Ethereum blockchain
In 2018, there are two main contenders in the world of blockchain application platforms: the incumbent Ethereum, and EOS. They were both created by certifiable geniuses, and they do some of the same things. Yet at their heart, they are fundamentally different beasts. This article explores each of them, analyzing their strengths and weaknesses.
Both Ethereum and EOS go beyond Bitcoin and its later altcoin derivatives. Whereas Bitcoin used the blockchain as a ledger to track the exchange and ownership of digital currency, these two platforms treat the blockchain as an operating system. Instead of simply allowing you to write things in it, they let you run programs in it. These programs, known as smart contracts, can do anything that a regular computer can.
The advantages of running programs in the blockchain mirror those of storing financial data in it. First, there is no single point of failure. If one or more computers go down, the program still runs. Second, multiple parties can verify the results, meaning that no one party can change the code. This keeps everyone honest.
Bitcoin could be recreated as an application on either Ethereum or EOS. So could any other altcoin. In fact, any existing centralized service, from eBay to AirBnB, could be recreated as a decentralized application (dApp) on either of the platforms. While their top-level deliverables are broadly the same, though, their methods of execution and underlying characteristics vary.
EOS developer Dan Larimer originally looked at a scripting language in the form of Wren but decided against using it due to performance issues. Instead, he went with C++-based smart contracts, compiled into virtual machines (VMs) using the WebAssembly (WASM) instruction format.
In simple terms, WASM virtual machines can run at native speed, whereas most hypervisor-based VMs (the machines running the operating system to power other VMs) take a performance hit. Larimer has previously attacked EVM performance. This should help the EOS blockchain to faster than Ethereum.
Proof of work vs delegated proof of stake
Another key difference between Ethereum and the EOS blockchain is how they verify transactions. At the time of writing, Ethereum still uses a proof of work (PoS)-based system, in which miners spend computing power verifying transactions. For this, they get a transaction fee and a block reward.
The Ethereum Ethash mining algorithm is designed to be memory-hard, meaning that it focuses on how quickly computers can move memory around rather than on how quickly they can calculate. Nevertheless, it still consumes computing power.
As interest in the network has grown, the amount of computing power required to power Ethereum’s public blockchain has grown with it. At the time of writing, Ethereum chews through as much electricity as 1.9 million US households.
Any transaction in an Ethereum-based smart contract leads the EVM to record a change in the state of the program. State changes are bound by the speed at which the Ethereum blockchain can verify transactions into a block, which at the time of writing was under nine transactions per second (TPS).
Ethereum also needs an incentive for miners using their computing power to verify transactions. At present, those running smart contracts use Gas, a unit linked to its main Ether cryptocurrency, to pay for verification. If a smart contract transaction does not have enough Gas to support it, it does not run. In this sense, Gas is a transaction fee.
EOS and DPoS
EOS does away with transaction fees altogether as part of its verification system, which is based on Larimer’s delegated proof of stake (DPoS).
This consensus method, already tried and tested in his prior projects BitShares and Steem, uses 21 block producers, elected by holders of the blockchain’s EOS tokens. They verify the blocks without compute-intensive work. The system claims security and reliability by making the block producers accountable to the token holders, who can elect different producers if the incumbent ones fail to perform.
These are examples of changes that Larimer has made to his system that he hopes will result in a faster blockchain. He wants to scale EOS up to Visa-like speeds, hitting millions of transactions each second. Other measures to help achieve this end include the use of IDs rather than private keys to reduce the cryptographic overhead.
Ethereum’s co-founder Vitalik Buterin has seen the benefit in proof of stake-style systems, and is busy developing Casper, a proof of stake implementation for Ethereum.
To help with the TPS issue he has also proposed sharding, which is a way of breaking the Ethereum blockchain into smaller chains, each processing separate types of transaction. Another proposal, Plasma, would take a similar approach to Bitcoin’s Lightning Network by adding a second layer of blockchain branches, offline from the main Ethereum blockchain.
Governance of the blockchain
Governance is another area in which EOS differs from Ethereum. In Ethereum, decisions are made manually, via a mixture of bi-weekly all-developer calls that approve short-term and long-term changes. The full Ethereum nodes that implement the software then either run the altered software, or they don’t. In this sense, the nodes are the final arbiters.
This has led to some controversy in certain situations, such as when the Ethereum-based decentralized autonomous organization (DAO) was hacked, and the developers agreed to a hard fork to recover the currency.
Larimer wants a more formalized approach to governance with EOS, achieved by codifying governance into the blockchain. The project includes a constitution that is hashed into every block.
When it comes to decisions about the technologies on the blockchain and the treatment of transactions, the EOS community chooses arbitrators to decide things on their behalf. The community can vote out these arbiters but it takes a level of consensus.
Dan Larimer, the final word
Larimer has been critical of Ethereum’s governance processes in the past, calling it a “shadow government”. Will his form of governance be any better? Will it avoid vote selling and other potential toxins?
EOS is too young for us to get a good handle on how effective and egalitarian its governance will be, but there have already been teething problems with EOS in the early days of its blockchain. We’ll know more as the project’s blockchain – alive barely a couple of weeks at the time of writing – gains traction and more test cases emerge.
While Ethereum is older than EOS, both are still early plays in a far longer game as the world explores the potential of blockchain platforms that promise to run any program that a regular computer can. We will watch its development with interest.