The launch of EOS’s mainnet this summer sparked a new debate. Would EOS be a better platform than Ethereum?

1. www.enigma-securities.io info@enigma-securities.io
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8 October 2018
EOS vs ETH
Research Report
A Competitor to ETH Emerges
The launch of EOS’s mainnet this summer sparked a new debate. Would EOS be a better platform than Ethereum?
There was a lot of buzz around EOS’s record-breaking ICO. The $4bn raised remains the largest sum of any ICO to
date. Now, though still in a nascent phase, some developers are becoming more constructive on EOS, choosing to
build their dApps with EOS rather than ETH. Thus, EOS has become ETH’s first legitimate competitor. Some Analysts
are describing this as the start of a “smart contracts war.”
Currently, EOS is the fifth largest cryptocurrency, with a market cap of about $5bn. Ethereum is nearly five times
larger with a market cap of $23bn – the second largest of any cryptocurrency. Both currencies have fallen over 70
percent from their all-time high. EOS reached an all-time high of ~$22 about five months ago but currently trades
around $5.70. Meanwhile ETH traded at an all-time high of ~$1,450 before falling to its current price of
approximately $224. (Prices as of 8/10/18).
So, where does EOS go from here? We, at Enigma view the development of an Ethereum alternatives as an indicator
of a health, developing crypto market. In an industry that was founded on the promise of decentralization, it makes
sense to have a variety of host platforms for crypto entrepreneurs looking to launch new dApps. We are hopeful
that, through their rivalry, EOS and ETH will accelerate innovation in the crypto world.
We recently met with the EOS team in Tel Aviv to find out more about the bourgeoning new platform. In this report
we look at the idea behind EOS, the strengths it has over its Ethereum, as well as challenges it may face.
Origins of EOS
EOS was founded by Daniel Larimer who currently serves as CTO of EOS’ parent company Block.one. Larimer has had
several other successful projects in the crypto space. He was one of the original founders of Bitshares and Steemit.
Through these endeavors, he developed his Delegated Proof of Stake algorithm (DPOS).
DPOS was intended as a faster, more efficient, decentralized and flexible consensus model. DPOS leverages the
power of stakeholder approval voting to resolve consensus issues in a fair and democratic way. All network
parameters, from fee schedules to block intervals and transaction sizes, can be tuned via elected delegates. This is
the framework on which EOS runs and differs from Ethereum’s Proof of Work model (POW).

2. www.enigma-securities.io info@enigma-securities.io
DISCLAMER: The information contained in this note issued by Enigma Securities Limited is not intended to be advice nor a recommendation
concerning cryptocurrency investment nor an offer or solicitation to buy or sell any cryptocurrency or related financial instrument. While we
provide this information in good faith it is not intended to be relied upon by you and we accept no liability nor assume any responsibility for
the consequences of any reliance that may be placed upon this note. Enigma Securities Limited is an Appointed Representative of Makor
Securities London Ltd which is authorized and regulated by the Financial Conduct Authority (625054).
7/8 Savile Row
London, W1S 3PE
ENGLAND
Tel: +44 207 290 5777
336 Rue Saint-Honoré
Paris, 75001
FRANCE
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Tel: +972 3 545 3777
EOS was built as a competitor to ETH. One blogger compares the rivalry to different computer operating systems in
the early days of the internet: Mac vs Windows. Last year, the team at EOS saw an opportunity to address certain
inefficiencies within the Ethereum network. As in any market, they saw no reason why one player should have a
monopoly on new business, and so, EOS was born.
Comparative Strengthsof EOS
Speed
The primary advantage EOS has over ETH is speed. At the moment, ETH can support up to 15 transactions per
minute whereas EOS boasts the ability to complete 1,000 transactions per minute. This makes EOS a much more
viable platform for mass adoption. Higher speeds are a necessity if blockchain projects are to be scaled successfully.
For perspective, VISA currently handles 2,000 transactions per minute.
As mentioned, the primary reason for EOS’s comparative efficiency is it’s DPOS framework. The Proof of Stake
framework means that EOS can function independently of a large, decentralized supercomputer. The result is a
much more efficient means of validating transactions on EOS. ETH will soon have difficulties competing with EOS if it
is unable to achieve comparable transaction rates.
Scalability
As the crypto world continues to grow, and become more productive, ETH’s slower speeds are getting increasingly
unsustainable. In 2017, a single game, CryptoKitties, caused so much traffic on the Ethreum blockchain that the
network became congested, causing slower transaction times and higher fees. Recently, several major apps were
launched on the platform, including Augur, and Golem. These apps will test the scalability of the Ethereum network,
possibly putting a strain on functionality.
EOS’ ability to complete thousands of transactions per minute will enable easier deployment of dApps as they grow
is size and functionality.
Cost
The other major advantage of EOS is that it is free to the user. By contrast, users of ETH-based dApps must pay in
ETH. ETH’s fee of about a dollar per transaction has continued to climb as the network has grown. This poses an
inherent barrier to new adoption.

3. www.enigma-securities.io info@enigma-securities.io
DISCLAMER: The information contained in this note issued by Enigma Securities Limited is not intended to be advice nor a recommendation
concerning cryptocurrency investment nor an offer or solicitation to buy or sell any cryptocurrency or related financial instrument. While we
provide this information in good faith it is not intended to be relied upon by you and we accept no liability nor assume any responsibility for
the consequences of any reliance that may be placed upon this note. Enigma Securities Limited is an Appointed Representative of Makor
Securities London Ltd which is authorized and regulated by the Financial Conduct Authority (625054).
7/8 Savile Row
London, W1S 3PE
ENGLAND
Tel: +44 207 290 5777
336 Rue Saint-Honoré
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Tel: +972 3 545 3777
By contrast, EOS dApps are free to use. The cost is the burden of the dApp developer, rather than the user. This
model will likely result in higher adoption rates. Millennials are not used to having to pay to use an online service.
Social media sites that attract and retain the most users, such as Facebook, and Instagram, do not charge a user fee.
The no-fee model is particularly appealing given the current market conditions in crypto. As one blogger writes,
ETH’s high fee model is like “high gas prices in bearish market conditions.”
Challenges Facing EOS
Since its launch, EOS has had its fair share of critics. Loudest of all is Vitalik Buterin, the founder of Ethereum. Clearly,
Buterin has an interest in picking holes in his competitor. On twitter, Vitalik has been outspoken about what he sees
as false advertising on the part of EOS. For example, Buterin believes the ‘no fees’ label is a misnomer since EOS still
charges fees to developers. Fees are not charged upfront to the user but they are still a part of the broader model.
Likewise, Buterin has argued that the idea that EOS is somehow less centralized dude to its 21 block producers is
false. The 21 miners represent 21 slots, not 21 “distinct entities,” he tweets.
Centralization
Indeed, Crypto sticklers will notice that EOS sacrifices decentralization in order to achieve increased efficiency. EOS
has 21 block producers. This contrasts with the infinite number of miners in ETH’s proof of work model. While this
helps EOS become a faster, more scalable network, it may concern those who feel it is not sufficiently decentralized.
Nick Szabo, inventor of the smart contract, has expressed his doubts. He has described EOS’ method as “penny-wise,

4. www.enigma-securities.io info@enigma-securities.io
DISCLAMER: The information contained in this note issued by Enigma Securities Limited is not intended to be advice nor a recommendation
concerning cryptocurrency investment nor an offer or solicitation to buy or sell any cryptocurrency or related financial instrument. While we
provide this information in good faith it is not intended to be relied upon by you and we accept no liability nor assume any responsibility for
the consequences of any reliance that may be placed upon this note. Enigma Securities Limited is an Appointed Representative of Makor
Securities London Ltd which is authorized and regulated by the Financial Conduct Authority (625054).
7/8 Savile Row
London, W1S 3PE
ENGLAND
Tel: +44 207 290 5777
336 Rue Saint-Honoré
Paris, 75001
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Tel: +972 3 545 3777
and pound-foolish” arguing that “social scalability gives you much more value than computational scalability does…
We’re trying to build the Brinks trucks of the future, not the race cars.”
Governance
EOS’ unique constitution and complex governance model is another sticking point. Some claim that there is
potential for bribery in the voting structure. The fact that Block.One wrote the original constitution has been
attacked by crypto enthusiasts on both Twitter and Reddit. They argue this is too authoritative and centralized.
Why ETH May Prevail
First Mover Advantage
As the first dApps platform ETH has a first mover advantage. Since its launch in 2015, ETH has become an established
and successful dApp community. There are already over a thousand dApps built on the platform whereas, so far, EOS
only has nine live dApps to its name.
Default Platform for ICOs
ETH boasts a plethora of ICOs launched with ERC-20 tokens. ETH remains the dominant currency of ICOs, a fact that,
some argue, has contributed to the recent selloff in the currency. While the ‘no-fee’ model is a good sweetener, it
will be difficult for EOS to dethrone ETH as the default platform given it has been the leader since the ICO market
began.
Developers and investors alike are more accustomed to Ethereum and will not switch unless EOS offers them truly
differentiated functionality. A more cautious investor will ague that Ethereum has a track record for success while
the jury is still out on EOS.
Plans to Increase Speed
The primary advantage posed by EOS – high transaction speed – may not be unique to EOS for long. Ethereum
founder Vitalik Buterin claims Ethereum is working on creating a faster alternative and will eventually achieve one
million transactions per second. They will do this through with the help of second-layer scaling solutions such as
Casper, Sharding and Plasma .
Casper, released this January enables ETH staking. This frees up more liquidity on the network, thus speeding up
transactions. Meanwhile, Sharding is technology designed to move Ethereum away from its time-consuming Proof of

5. www.enigma-securities.io info@enigma-securities.io
DISCLAMER: The information contained in this note issued by Enigma Securities Limited is not intended to be advice nor a recommendation
concerning cryptocurrency investment nor an offer or solicitation to buy or sell any cryptocurrency or related financial instrument. While we
provide this information in good faith it is not intended to be relied upon by you and we accept no liability nor assume any responsibility for
the consequences of any reliance that may be placed upon this note. Enigma Securities Limited is an Appointed Representative of Makor
Securities London Ltd which is authorized and regulated by the Financial Conduct Authority (625054).
7/8 Savile Row
London, W1S 3PE
ENGLAND
Tel: +44 207 290 5777
336 Rue Saint-Honoré
Paris, 75001
FRANCE
Tel: +33 1 42 33 02 05
Menachem Begin 11
Ramat Gan, 5268104
ISRAEL
Tel: +972 3 545 3777
Work model. Sharding aims to decrease the amount of time needed to form consensus across Ethereum’s large
network. It does this by simply sharing receipts amongst trustless nodes that are all able to come to the same
conclusion in regards to the money flow. Ethereum is also using Plasma, a new second-layer scaling technique.
Buterin seems confident that ETH can use these methods to meet higher speeds.
If successful, these methods would enable Ethereum to handle enterprise-level software and compete with EOS.
However, this is a big ‘if.’
Conclusion
Today, EOS remains far behind Ethereum. However, that could all change soon if Ethereum is unable to match EOS’s
speeds.
Lower fees may not be enough of an incentive for blockchain entrepreneurs to upend existing systems on ETH.
However, higher speeds will become a critical issue as technologies begin to scale.
If Ethereum’s plans to increase speeds with technologies like sharding prove fruitless then EOS will possess a marked
advantage over its competitor and will likely start to win a higher proportion of new projects. Eventually, this could
result in them overtaking Ethereum as crypto’s largest smart contracts network.
ROAD MAP