Despite more than a year of efforts by ENF and significant improvements in many aspects of EOS, the price continues to hit new lows. The stark contrast between excellent technology and weak prices (as shown in the chart below) has caused considerable pain for EOS users. So, what is the underlying problem? Why is capital still not favoring EOS? Some argue that it is due to B1’s Bullish sell-off, but Bullish is already a market-oriented exchange, so this viewpoint is not entirely valid. This article will provide a deep analysis based on the author’s years of research experience and a financial perspective.
After enduring five years of twists and turns, seizing the next bull market and revitalizing the value of EOS has become a matter of life and death for the entire community! It is essential to delve deep into self-analysis, recognize the reality, and grasp genuine market opportunities in order to develop precise and effective strategies. Concentrating efforts and demonstrating the courage to go all-in, even at the risk of everything, is crucial to fundamentally improving the EOS ecosystem in its entirety!
1. Fragmented Ecosystem, without a Successful Leading DAPP
ENF has made significant efforts in the 20 months since its establishment, including Antelope 4.0, direct grant framework, Pomelo, and support for EdenonEOS. There have been noticeable improvements in technical optimization and ecosystem support, allowing it to gradually emerge from the shadow of B1 and complete the rebranding of NewEOS. Currently, ENF has also explicitly planned to focus on supporting EVM and GameFi. However, the continuous decline in the price of EOS compared to BTC is undeniably a heavy blow to the community. In my opinion, besides the issues previously mentioned in articles, such as the lack of action from most BPs and the funds not being recovered from B1, an essential factor is the absence of a successful leading DApp in the EOS ecosystem.
Let’s first review the expenditure allocation of ENF over the past 5 quarters.
1) Based on the analysis of ENF’s quarterly spending reports (chart below), total spending in the past five quarters was $38,780,306, with the top three expenditures being Grants, Core Code Development, and PR & Marketing, accounting for a total of 86.7%. From these statistical data alone, overall spending is relatively high, and the allocation appears reasonable. However, without detailed expenditure reports, it is currently not possible to conduct a comprehensive analysis of capital efficiency.
2) Looking at the expenditure records from “eosio.grants” transfers (chart below), the current balance is 1,046,153 EOS, while the total expenditure since ENF’s establishment is 38,881,037 EOS. Of this expenditure, 90.33% is attributed to ENF’s daily operations, followed by Pomelo and Recognition Grants (As of May 24, 2023，the eosio.yield account has a balance of 238,615 EOS, so the actual expenditure for Yield+ is 686,385 EOS, ranking 4th and accounting for less than 2%）. As an example, a single project by Hypha DAO had an expenditure of $850,000 in September 2022. Therefore, based on these information, in comparison to the 8 million EOS increase in locked assets brought by Yield+ and the expenditure of 38 million EOS, ENF’s support for DeFi and other financial initiatives appears relatively weak.
3)A lack of a leading DAPP in the past 5 years. Looking at the DappRadar Balance Top 100 rankings (chart below), it’s evident that the list is dominated by DeFi and Exchange categories, with no DApps running primarily on the EOS mainnet making it to the list. This pattern has persisted despite developments over the past year. Furthermore, among the projects directly supported by “Recognition Grants” from ENF, only a few are still alive today, with the notable lending platform Pizza announcing its closure in March 2023. Overall, despite the expenditure of nearly $40 million, the landscape of DApps on EOS has not seen substantial changes, and a leading DApp has yet to emerge.
The use of “Balance” rather than “UAW” rankings is due to the fact that, “UAW” has significantly less impact on the market value of a public chain compared to “Balance.” This is why ENF has repeatedly emphasized the success of Upland on EOS, but Upland‘s impact on the market value of EOS is minimal because the GameFi primarily settles in US dollars, and users hardly need to store or use EOS tokens.
Therefore, the insufficient transparency in ENF’s fund allocation, the fragmented support for projects, and the lack of sufficient support for key projects have been significant reasons why they have been unable to change the crucial fact that “there is no profitable leading DApp in the ecosystem” over the past year. Even well-established DeFi platforms have struggled to succeed, let alone other projects. Without a leading DApp to drive the ecosystem, EOS lacks a direct value improvement, and its price is primarily suppressed by inflation, which is a core factor contributing to the continuous decline to new lows.
2. Indecision, Insufficient Focus on the Most Promising DeFi Market
When comparing leading DApps, we can see that ETH has Uniswap and Curve, BSC has Pancake, ADA has Minswap, all of which are in the DeFi category. But what does EOS have?
From the brief focus on DeFi through Yield+ and Recovery+ in July 2022, to the recent overall capital and technical focus on GameFi and DAOs by ENF, there has been a lack of consistent and effective investment in the most promising DeFi sector. However, looking at the projects in the Coinmarket Top 100 and the DappRadar Balance Top 100 rankings, almost all of them are DeFi projects, including Uniswap, DAI, AAVE, Cake, and others, with some projects even surpassing EOS in terms of market capitalization. This has proven that the first key to success for a public chain is the success of DeFi projects, which is exactly what EOS currently lacks, resulting in a lack of diverse financial services in the EOS ecosystem. Therefore, compared to GameFi, the multi-billion dollar DeFi market should be the first priority for EOS.
According to a report by Bybit, DEXes have a market share of less than 5% compared to CEXes. If EOS could create a “decentralized Binance” and attract a large number of ETH and other tokens to its DeFi ecosystem, capturing the trading volume of Uniswap, Binance, and other DEXes and CEXes, which totals hundreds of billions of dollars (chart below), it would create a successful leading DeFi project. This would rapidly attract cryptocurrency enthusiasts and blockchain developers, promoting the rapid growth and prosperity of the EOS ecosystem and driving the EOS price to increase at least tenfold.
1) An example of a DEX: Currently, the 24-hour trading volume of Uniswap V3 is approximately 4,000 times higher than that of DefiBOX (a top DeFi project on EOS), and the trading speed on Ethereum is in a completely different league compared to EOS (chart below). The main reasons for this difference are the lower market capitalization of EOS, a lack of high-quality ecosystem DApp tokens, and the relatively low industry visibility of DefiBOX. Assuming that the trading volume of DefiBOX could increase by another 200 times, the corresponding TVL (Total Value Locked) would grow at least 40 times, and the amount of EOS locked in DefiBOX would also increase by more than 40 times. This significant growth would undoubtedly drive the EOS price up by at least 10 times!
2) A example of a CEX (centralized exchange). If we focus only on the trading pair of EOS/USDT on Binance, the spot trading volume is already 100 times higher than that on DefiBOX, and the perpetual contract trading volume of EOS/USDT is 2000 times higher (chart below)! This indicates that there is a tremendous untapped market on exchanges. The core advantages of CEX include speed, variety, security, and stability, and EOS can potentially offer alternatives in many of these aspects. For example, in terms of speed, Binance currently has a maximum throughput of 1.4 million trades, which is 82 times higher than the theoretical TPS (Transactions Per Second) of EOS. However, EOS’s capacity of 17,000 TPS is already sufficient to meet the current trading demands of Defi, which is 100 times higher. Moreover, considering EOS’s infinite scalability, it has the potential to achieve N-fold growth in TPS, surpassing even Binance’s maximum throughput!
3) Comparing the entire cryptocurrency trading market. According to data from The Block, the total cryptocurrency trading volume in April 2023 was $599.12 billion, while the trading volume on DefiBOX was only around $6 million, indicating a minuscule market share. On the other hand, EOS tokens consistently rank among the top five in terms of turnover rate within the top 100 cryptocurrencies by market capitalization, even surpassing the turnover rate of BTC by more than 2 times. The high turnover rate reflects the widespread distribution and excellent liquidity of EOS, making it one of the most cost-effective tokens for exchanges. However, the TVL in Defi on EOS is currently only about 14 million EOS, accounting for less than 1.3% of the total circulating supply, indicating tremendous growth potential. Additionally, data shows that trading volume on Binance has increased at least 50 times over the past five years, suggesting that the future growth potential for Defi on EOS in the next five years could be as high as 5,000 times, presenting significant opportunities.
In summary, Defi on EOS has a market size in the hundred-billion dollars and tremendous growth potential, making it the best ecological track for EOS. Judging from its impact on the price of EOS, it outperforms GameFi, Web3, and other sectors. With the launch of EVM and IBC, the possibility for tokens from different blockchains to circulate on EOS becomes limitless. This presents the perfect opportunity to leverage EOS’s superior TPS performance and invest heavily in building a super Defi platform. However, the lack of emphasis and investment in the most promising billion-dollar Defi market by ENF, compared to the total investment in individual DAO projects, has led to a gradual loss of Defi Dapps. Therefore, I believe that the insufficient focus and investment in the most promising billion-dollar Defi market is a serious strategic misjudgment by ENF. Even CZ, the CEO of Binance, predicts that “in the next 10 to 15 years, there will be a decentralized exchange larger than Binance.” As the largest DAO, EOS BPs should support a strategic adjustment ASAP.
3. Misplaced Priorities，Neglecting EOS Native Chain Projects
By comparing the L1 blockchain, EOS still maintains its performance advantage. Considering its stable operation for 5 years and its status as the largest DAO (chart below), its high-performance advantage becomes even more valuable. On January 16, 2023, IBC was officially launched, enabling EOS to achieve unlimited scalability. On April 13, the EVM was officially launched, making EOS no longer an isolated ecosystem and providing a technical channel to attract more excellent Ethereum DApps and tokens. These technological advantages provide EOS with a perfect technical foundation and unlimited development space to accelerate the creation of a stable, rich, and fast blockchain ecosystem. However, ENF and ENV have shifted their focus of venture investment strategy to the EOS EVM, which is still in the early stages of development, and they lack the appropriate attitude and investment commitment towards EOS native chain projects. This represents a misguided strategy of prioritizing secondary objectives over the core ones. The following examples further demonstrate this viewpoint.
1) The primary advantage of EOS EVM is not to build DApps, but rather the ability for tokens to flow into the EOS native chain. The speed of EOS EVM is 17 times faster than Polygon (chart below). However, when users have become accustomed to the Polygon, the speed advantage of EOS EVM may not create a significant difference in user experience. The substitutability of DApps on EOS EVM is relatively weak, and cultivating and retaining user habits is a long-term process. An example, the Noah DApp on EVM experienced a loss rate of nearly 70%, with only 954 out of 3031 accounts holding the tokens after a week of airdrop.
However, if a token aggregation trading interface could be developed on EVM, connecting it with the Defi ecosystem on EOS and enabling cross-chain integration, it would be possible to easily share the liquidity depth of the EOS native chain, achieve compound utilization, then significantly increase trading volume, TVL, and users. Therefore, the cross-chain bridge of EOS EVM is its primary advantage, and integrating it with native Defi can quickly increase the amount of EOS locked in contracts.
2) No Investment in EOS Native Projects by ENV. On November 13, 2022, BPs approved a proposal to increase the supply of EOS by 68,277,906 EOS to the account named “eosio.fund”, establishing ENV to utilize community funds and drive social capital to promote positive growth for the entire EOS network. However, in the past 6 months, apart from the devaluation caused by inflation, there have been no substantial public progress or investments made. Surprisingly, the first announcement on March 20, 2023, was a commitment to invest $20 million in the EOS EVM, completely neglecting any investment in the stable and long-running EOS native projects. This disregard for the fact that the EOS mainnet’s speed (10,000 TPS) is 12 times faster than the EOS EVM (814 SPS), and the incomplete EVM technology foundation with a lack of time verification, demonstrates a significant strategic issue of idle capital and misplaced investment focus.
3) Neglecting the Technological Advantages and Foundation of EOS Native Chain. On December 7, 2022, Binance announced support for USDT withdrawals on the EOS network, and the achievements of workgroups such as Yield+ and Recovery+ showcase the strong technical foundation of the EOS native chain. The 9 contracts that have gained incentives on Yield+ (chart below) cover the fundamental categories of Defi, including Swap, Lend, Stablecoin, and Vault. They are fully functional and operate stably, providing a solid foundation for Defi on the EOS native chain. If a super Dex, a “decentralized Binance,” could be built around the existing Defi ecosystem, targeting the trillion-dollar Defi market, the minimum value of EOS would easily achieve a 10-fold increase! Why is such a significant investment opportunity being delayed and overlooked?
In conclusion, Defi on the EOS native chain has the most significant impact on the price of EOS, attracts participation from large capital players, and allows the true technological advantages of EOS to shine. It is also the most likely field for prioritized success in the future of EOS, as it enables Defi to be more secure, fast, and decentralized. If there were to be a decentralized exchange larger than Binance in the next 5–10 years, I hope it would be born on the EOS native chain. However, we must take decisive action, increase investment, and seize the opportunity!
Summary:
Over the past 5 years, EOS has experienced multiple instances where its price fell below the initial issuance price. We no longer have much time to waste and make mistakes. This round, we must make the EOS ecosystem thrive and the price rise. Therefore, we cannot afford any significant strategic errors.
The stagnation of EOS price is the most urgent issue that needs to be addressed by the entire community. Apart from some short-term factors that are difficult to change, ENF and ENV have shown clear deviations and even mistakes in strategic aspects such as the lack of leading DApps in the ecosystem, lack of emphasis on Defi, and lack of emphasis on the native chain. These need to be corrected through the DAO. Even the efficiency and transparency of using inflation funds in the EOS community, prioritizing investment directions, selection and arrangement of key management personnel, KPI assessments, market value management, and other aspects need to be optimized and adjusted.
A “decentralized Binance” could realize the creation of a profitable leading DAPP for EOS, demonstrating and leading the development of EOS ecosystem projects. It would provide powerful and diverse financial services to EOS’s GameFi, Web3, and other ecosystems, creating a positive ecological cycle and generating investment returns of over 1,000 times!
“One DAPP, one public chain”. The opportunity of a multi-billion-dollar Defi market is right in front of EOS, with the potential for investment, necessity, and feasibility all present. It is crucial to change the trend of EOS prices, and such an opportunity is rare and should not be missed!
EOS community members who support this viewpoint, please like, comment, and share, to show your support! Thank you!
Note: The above content only represents personal opinions and does not constitute investment advice.
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