A critical comparison and review of NEO and EOS! - More similar than most think
cryptocurrency·@pandorasbox·
0.000 HBDA critical comparison and review of NEO and EOS! - More similar than most think
<center></center> <h3>Recently I discovered some surprising similarities between the NEO and EOS blockchain, and it has prompted me to perform additional research into these two blockchains to try and critically compare the two and discover their similarities and differences. These results I would like to share with you!</h3> The focus of this article isn't so much to tell you which information is on coinmarketcap, but rather to try and focus on the areas that I feel matter most: _vision, scaling, economy, leadership, decentralization and adoption._ I am mostly interested in these areas because I feel these are the most important when it comes to the long term sustainability and survivability of a blockchain. <center></center> <h3>THE VISION</h3> <div class="pull-right"><img src="https://steemitimages.com/DQmP84s3u9Q8S2tR9ZoMzp3ZHc7LnPDc8g1zb8fdhvDo9TQ/eoslogosmall.png" /></div>The vision of the EOS blockchain is to become a decentralized operating system which can support industrial-scale decentralized applications. As a multi-purpose and programmeable platform there is an infinite amount of things that can be built on top of the EOS blockchain. EOS aims to become a high speed, high throughput blockchain capable of handling enough high speed transactions per second in order to create a framework on top which a business could buy, for example, a Steemit or Facebook competitor or any other application that would require a high capacity blockchain. EOS operates on the principle that transactions are free for users/consumers, and although there is a cost of transactions on the network this bill is paid for by the businesses operating the dApps. <br> <div class="pull-left"><img src="https://steemitimages.com/DQmYDzz42eHCent4AX5MP3VVtwP3pJWVhpoDUy7VKSVmFfC/NEO-logo%20small.jpg" /></div>NEO's vision is to create what they call an Open network for Smart Economy, or a distributed network for Trust. Through NEO users can utilize blockchain technology and digital identity to digitize assets, automate the management of digital assets using smart contracts, and realize a "smart economy" with a distributed network. Instead of working against the status quo, NEO seeks to complement the existing order with blockchain technology and focuses on providing a regulatory compliant framework for businesses to leverage the blockchain. NEO too operates under the philosophy that transactions should be free for users, and indeed with NEO it is also the businesses who pay for the transaction fees on the network. <center></center> <h3>SCALING</h3>When it comes to speed and scaling both blockchains have a great deal to offer. EOS is built and designed to scale, with high hardware specs and estimated transactions per second between 20.000-100.000 tps, to as much as 1 million tps. As the EOS blockchain is still in development, these are all theoretical estimates. NEO's blockchain is already operational and can currently support 1000 tps and has a theoretical throughput of 10.000 tps based on current specs. Recently the NEO team announced that by 2020 the NEO blockchain will be able to support 100.000tps. Additionally the Trinity Network project offers an off-chain scaling solution which will provide scaling to the millions of tps. Although EOS has no current plans (that I am aware of) to offer off-chain scaling solutions, it is my personal belief that no amount of on-chain tps will ever be enough and as such every blockchain will eventually have off-chain scaling solutions to complement it's main blockchain. I see no reason why EOS could not have it's own version of the Lightning/Raiden/Trinity Network. Compared to other projects, both EOS and NEO perform exceptionally well when it comes to transactions per second and both are likely to scale 'high enough', if there ever will be such a thing. <center></center> <h3>TOKEN ECONOMY</h3> <div class="pull-left"><img src="https://steemitimages.com/DQmVPdLNSzK7sDdpEjRp3Z6nVchbHfCjg2fTeDY3zFtFz9M/eoslogosmallicon.png" /></div>The EOS token is the native token of the EOS ecosystem. It is currently an ERC20 token whilst EOS is in development but will be exchangeable for tokens on the EOS blockchain when the mainnet goes live. The token is used to gain access to bandwidth and storage on the EOS blockchain, which essentially means that if you have a dApp that uses a lot of either, you will need to own a lot of EOS tokens to be able to support it. Owning EOS tokens represents a claim on server resources, so to speak, and if you want to create a powerful high capacity dApp it means your business will need to buy a large amount of EOS tokens in order to support the required resources. New EOS tokens are constantly minted by the Block Producers, creating about 5% inflation per year. This means everybody's 'claim' to the EOS resources gets diminished by 5% yearly unless they purchase extra tokens. Governance is also possible through EOS tokens, and those who have the most EOS tokens will have the highest voting power in governance related things such as voting in new Block Producers. Contrary to popular belief, EOS does not offer free transactions in the purest sense of the term. On the front end, for end-users, there are indeed no costs associated with sending transactions on the EOS network. On the back-end, however, businesses will be footing the bill instead. There is a certain amount of server resources that can be freely spent, but beyond that limit transactions costs occur as with any other blockchain (but the business pays for them). EOS transaction costs are, according to the official EOSIO video below, about 'one five-thousandth of a cent' (1:30-1:35 mark in the video). <center><iframe width="560" height="315" src="https://www.youtube.com/embed/FEl0-zpXVyw" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe></center> <div class="pull-left"><img src="https://steemitimages.com/DQmdR797QjJsNFw5y6R9XC18K6kcLysw6CSZiCAgpdjSkFx/neo%20logosmall%20icon.png" /></div>NEO on the other hand uses a dual-token model, with the NEO token representing shares in the NEO blockchain, and GAS being the utility or 'currency' token of the platform. Holding NEO generates GAS at a ROI of about 5%, which can then be spent on the blockchain to deploy dApps or to pay for transactions that exceed the value of 10 GAS. <br>As with EOS these costs are paid for by businesses and smaller transactions for regular users/consumers are also free. I could unfortunately not find a similar clue as to how much the cost of these for-pay transactions are, as I could with EOS, but I did find out that the transaction times are determined by the Bookkeeper Nodes and the expectations are for the transaction fees to be 'free, or as cheap as possible'. Similar, but different from EOS, business also face a cost to 'buy in' to the ecosystem in the form of 500 GAS to deploy a Smart Contract (in other words: launch a dApp), which is currently about $50.000. This cost will be adjusted as the market fluctuates. NEO's version of Block Producers are called Bookkeeper nodes and they perform the same functions as their EOS counterparts. Contrary to EOS, NEO's coin supply is fixed and there is no inflation. Instead, Bookkeeper Nodes will be paid in GAS through transaction fees and dApp deployment fees. An interesting feature of the dual-token model, and a quite powerful one at that, is the fact that participating in the NEO ecosystem _does not diminish one's stake in the network_ because the utility token is different from the token that gives a stake in the network. If you buy 1% of the NEO tokens, you will _always_ have 1% of the NEO tokens, but on EOS due to it's inflationary nature and single token model where you pay with the same token that gives you a stake in the network, it is likely that businesses will have to actively maintain their positions by buying new tokens. Although worded differently and approached from a different angle, it's interesting to see that many of the design philosophies match up in both blockchains. Both of them offer free usage for regular users, and businesses foot the bill. On both blockchains businesses face an upstart cost, but on EOS this cost is variable depending on the dApp whereas on NEO it is a fixed and high cost. One notable difference is the 'dividends' that NEO pay out, which EOS does not offer. On EOS your stake provides you resources, but on NEO you use the dividends to pay for the resources. Both are ways to secure network resources, but in the case of NEO these are tokenized and tradeable. You can calculate the current NEO-GAS rewards on [www.neotogas.com](https://neotogas.com/). It has to be said however that on EOS it will very likely be possible to 'delegate' your EOS token and in effect 'rent them out', which would amount to a ROI as well. This is speculative however and dependent on community efforts, as the native EOSIO software will not natively incorporate such a function. <center></center> <h3>THE LEADERS</h3> <div class="pull-right"><img src="https://steemitimages.com/DQmeUJrm2nCqNiPAvd13BRBys5PKxhZEKUDgUXjwAHZhV4u/danlarimersmall.png" /></div>Both EOS and NEO have charismatic and popular leaders. Dan Larimer is the CEO and lead developer of EOS, and he is wellknown for his past work on the Bitshares and STEEM blockchains which are often applauded for their high speed. Larimer is also the inventor of the Delegated Proof of Stake (DPOS) consensus protocol, and he has a large almost cult following of fans who admire his work. Dan Larimer is a geeky type, and I believe he appeals most of all to the developer crowd. <br> <center><iframe width="560" height="315" src="https://www.youtube.com/embed/xkXuFeN-KMw" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe></center> <br> <div class="pull-left"><img src="https://steemitimages.com/DQmecnb3vQAao3P8SbC7CFKGtmooJXhvZieFqLuaMnwDPNH/hongfei.jpg" /></div>NEO is led by it's CEO and Founder Da Hongfei, who has also made a name for himself. Fans call him the 'Steve Jobs of Crypto' because of his charisma and visionary approach to NEO and fostering it's ecosystem. Da Hongfei is Chinese, and soft but well spoken in English. Contrary to Dan Larimer, Da Hongfei has a more business-man appeal to him. <br> <br><br><br> <br> <center><iframe width="560" height="315" src="https://www.youtube.com/embed/tO2zu_SMjt4" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe></center> <center></center> <h3>CONSENSUS PROTOCOL</h3> The similarities in consensus protocols is what first drew my attention to making this comparison in the first place. As the inventor of DPOS, Dan Larimer opts again for a version of DPOS in EOS which he calls DPOS+BFT which stands for Delegated Proof of Stake + Byzantine Fault Tolerance, which is an enhanced version of DPOS. <center><iframe width="560" height="315" src="https://www.youtube.com/embed/Xs1dyZFhIr4" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe></center> NEO uses dBFT as it's consensus mechanism, which stands for Delegated Byzantine Fault Tolerance. As you may have guessed, this is the same consensus protocol as EOS uses. When it comes to security both systems can withstand up to a 66% attack. <center></center> <h3> DECENTRALIZATION</h3>There are a total of 21 Block Producers on EOS, which are voted in based on the highest voting power which is determined by the amount of EOS tokens are being held. Those who hold the largest amount of EOS will play a significant role in determining who becomes a Block Producer. Block Producers not only produce blocks, but they also have the ability to censor transactions, freeze accounts, change the code or change the constitution (_contractual stuff_). On NEO there is no set amount of Bookkeeper Nodes, but algorithmitically determined. Currently there are 7 nodes, which can be scaled up to 10, 13, 16, 19, 22, 25, 28, 31, 34 .. and so on. On NEO too Bookkeeper Nodes are voted in based by how many NEO tokens voted them in, and as such the biggest stakeholders will also be the biggest influencers in this regard. Just like on EOS, Bookkeeper Nodes on NEO have the ability to freeze, revoke, inherit, retrieve, and ownership transfer assets, in order to stay regulatory compliant. It is likely the same reason why EOS incorporates this function. **As such, neither platform is in fact censorship resistant.** With a fixed amount of 21 Block Producers EOS appears to risk centralization more than NEO, which can keep increasing the amount of Bookkeeping Nodes to further decentralization. On the other hand one might argue that on EOS Block Producers are more in flux due to the inflationairy nature of EOS while on NEO stakeholders will be hard to dethrone since their stake percentage always remains fixed. <center></center> <h3> ADOPTION</h3> Adoption and community are key for the long term success of a project. Both EOS and NEO are popular projects with a large community following. <div class="pull-right"><img src="https://steemitimages.com/DQmc2gwcrXiaEJmSXe4DU6NeQffsM662kxxmqR2RAwYwdVG/steemtiny.jpg" /></div>EOS benefits from Dan Larimer's fanbase and existing communities from Bitshares and STEEM which offers an enthusiastic and experienced cryptocurrency and developer base. Dan Larimer brings so much hype, that the EOS ICO is (was?) the largest ICO of all time (still ongoing in fact). Nobody knows what EOS stands for but it's fans call it 'Ethereum on Steroids'.<br><br> <div class="pull-right"><img src="https://steemitimages.com/DQmR51WfzUdRRx2ozmomAtguDkA88EeMXsYSzmPVqPxUXbo/bitsharestiny.png" /></div>With a lower buy-in cost associated, EOS is likely to see a high amount of development on the platform of various qualities, both successful and unsuccesful. Although no major partnerships have been announced yet, it is known that well-informed investors such as Mike Novogratz consider EOS to be a promising project. EOS has a significant warchest of EOS tokens, about $6 billion worth of them, set aside to invest in and foster the EOS ecosystem. Some projects are being planned on EOS, when it releases. One such project is EOSFinex, a project of Bitfinex. <br>Unlike EOS, NEO is already up and running and adoption is underway. NEO too has a nickname, namely 'The Ethereum of China' even though it is trying hard to shed that image in favor of a more global one. NEO has a healthy and thriving community, most notably unified under the banners of City of Zion, the official NEO sponsored community initiative. NEO too has a significant warchest of NEO tokens, 50 million NEO tokens, worth about $6 billion which they also use to foster the ecosystem, for example by sponsoring City of Zion. <center></center> NEO already has a lot of development on it's blockchain and several significant partnerships. Since it's decentralization efforts began, NEO has forged partnerships with Fenbushi Capital and KPN Telecom who will both be hosting NEO Bookkeeping Nodes. On the NEO blockchain itself a multitude of ICO's and projects have sprung up, some of which have significant real-world partnerships as well. [I've found an overview of NEO ICO's and funded projects here](https://stateofneo.com/). <center></center> <h3> CONCLUSION</h3> Much to my surprise, but confirming my suspicion, I found that NEO and EOS actually share many similarities. In some cases there appear to be differences such as in the case of the token model, but upon further inspection the implications on the network are in fact very similar as well. I learned several new things during my research. Most notably that EOS isn't free, which was a surprise to me. But also that _neither platform is censorship-resistant_. [This dampens my fears of EOS creating a Steemit-killer somewhat](https://steemit.com/steemit/@pandorasbox/eos-to-build-a-competitor-to-steemit-will-steem-survive-eos-long). But it is a very thought-provoking feature: the ability to stop transactions, refund them or unspend them means that the nodes running the network have a lot of power that will make many people uneasy. Would _you_ put a billion dollars on a blockchain if you knew that 21 people could together decide to freeze your funds if they were so inclined? When I take a step back and try to put my finger on the real philosophical difference between the two, I think I would summarize it by saying: 1) **EOS is potentially better for users and developers, due to it's lower barrier of entry** 2) **NEO is potentially better for businesses and investors due to it's enhanced stakeholder features (no lessening of stake + tokenized (_sellable_) network usage)** One possible advantage of NEO is with regards to decentralization. The fixed amount of 21 Block Producer nodes in EOS makes it seem like it is not impossible to convince 66% of those to join you in a conspiracy. On the other hand, _it all depends on what EOS gets used for_. Maybe for transferring billions of dollars from A to B, trust will be lacking. But when it comes to running a blogging website or cryptokitties game - how much trust _really_ is required? Would you trust a consortium of Facebook, Google and Amazon for that? We do now, don't we? Why would it be different, if they were the Block Producers? We don't need maximum trust for _everything_. Just enough. Still, I don't understand why this fixed amount is chosen when a scalable solution is so obviously more secure and flexible. On the other hand: EOS Block Producers have the ability to change the code, and therefore the ability to increase the amount of block producers. Give it a long enough time, and it seems every blockchain eventually evolves into the same one, it sometimes feels like. Whether one project or the other is better is hard to say, because both are very similar. I think the future will see a place for both of them, with some overlap in areas such as digital assets, but EOS much more focused on entertainment, social media, games, website integration and similar applications, whereas I see NEO much more focused on the financial world and digitizing real world assets and putting them on the blockchain, coupled with powerful digital identities and passport modules. NEO seems to focus on coupling the real world to the digital world, whilst EOS seems mainly focused on the digital world of dApps in itself. EOS being a primarily American-led project is likely to gain strong footing in the USA, while NEO with it's Chinese roots is likely to gain a strong foothold in Asia. <center></center> All in all I learned a lot of new things, especially about EOS, and I hope that after reading all of this you've learned some new things as well. I spent two days reading through two massive whitepapers to write this, but I thought it would be interesting to cover these more indepth subjects and actually try to understand the finer intricacies of these blockchains some more! <br> <center>[](https://steemit.com/@pandorasbox)</center>_(Art by [Roy Lichtenstein](https://en.wikipedia.org/wiki/Roy_Lichtenstein))_
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