EOS Network: EOS is currently the 5th largest cryptocurrency with an $8 billion market capitalization according to Coinmarketcap. Not only is EOS a token, it is also, more importantly, an infrastructure for DApps or decentralized applications.
The EOS Network: What are DApp’s?
DApps are decentralized applications which run on the EOS open-source network. These applications range from wallets to games, and the EOS network currently hosts 140 of them.
Some DApps are tied directly to EOS, for example, an EOS wallet provider or coin index, but others are simply using the EOS open-source technology to launch their own projects.
In May of this year, an update to the EOSIO architecture on which these DApps run was released by the EOS developer Block.one. This update was called EOSIO “Dawn 4.0” or mainnet, and along with some network improvements, it also moved the system to a new market-based RAM allocation model. But what does this mean?
RAM and DApps
Simply put, RAM is needed by every DApp in order to run on the network and specifically in the setting up of new user accounts.
The intention of the RAM allocation model was to make transactions free; EOS CTO Dan Larimer explained that this shift was a way of financially incentivizing users to “sell” any of their unused RAM. The price of RAM would be dependant on a simple supply and demand model.
However, this week saw the start of a problem that Larimer did not foresee at the time; there has been an overzealous buying of RAM in order to hoard it away in anticipation of potential shortages in the future.
As a result, prices for RAM have spiked this week reaching a high of almost 920 EOS. This is equivalent to around $8,160 per 1MB of RAM. At those rates, new DApp account creation is astronomically expensive which renders the EOS network unusable for its intended purpose.
RAM Price Today
Today, the price of RAM has lowered and currently stands at around 480 EOS / 1 MB RAM. Although, this is still a considerable amount at $4,339.47 USD.
The current EOS coin price is actually up 1.07% at $9.06 USD despite the controversy.
This weeks frenzy could be the sign of a long-term problem with the EOS network; where the network’s intended function as an operating system for DApps is futile because developers cannot afford to purchase the needed memory for their applications.
Because there is a limit on the RAM, it suddenly becomes the commodity that governs the worth of the EOS network. As one Reddit user recognized: “If RAM supply is to grow at max 20% per annum as Dan [Larimer] suggested, then RAM supply is extremely limited for the foreseeable future…However, [the] EOS token itself is not the resource. RAM is the resource.”
The only solution to the issue (if users can’t calm themselves and stop hoarding RAM for the good of the broader ecosystem), is to increase the amount of RAM available. This in itself though could pose more issues.
How will Larimer fix this one?
Featured Image: DepositPhotos.com/Shell114