EOSIO

Publication Date :

19 May, 2025

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Table of Contents

What Is EOSIO?

EOSIO is a blockchain-based platform designed to enhance performance by reducing transaction fees. It allows developers to create decentralized finance (DeFi) apps, among other types of decentralized applications (dApps). Unlike Bitcoin, which uses a proof-of-work consensus mechanism, it employs a delegated proof-of-stake (DPoS) mechanism, enabling block producers to validate transactions and create blocks.

The protocol's origins date back to 2017 when Dan Larimer and Brendan Blumer founded Block. One published its whitepaper. The EOSIO mainnet was launched in 2018 as open-source software, and the EOS token was introduced. Block producers, instead of miners, handle the protocol's governance.

Key Takeaways

EOSIO is an open-source platform that allows developers to create decentralized products at a reduced cost. It works on an EOS protocol that involves zero transaction fees.
The founders of Block.one, namely Dan Larimer and Brendan Blumer, released its whitepaper in 2017. However, the platform was officially launched in 2018.
It involves block producers that validate the transactions in 0.25 seconds and add them in 0.5 seconds in the blocks.
The platform handles almost 4000 transactions per second. However, the number may exceed 10,000 tps.

How Does EOSIO Blockchain Protocol Work?

EOSIO is a blockchain protocol that allows developers to create decentralized applications (dApps) with low transaction costs. It operates on a Delegated Proof of Stake (DPoS) algorithm, where stakeholders vote to elect block producers responsible for validating transactions and producing blocks. These block producers are akin to miners in other blockchain networks but are elected through a voting process by EOS token holders.

The mechanism involves block producers who can produce a fixed number of blocks within a specified period. Specifically, each producer can produce six blocks in a round. A producer must produce a block to maintain credibility and avoid being selected in future rounds. However, they can still participate in the next cycle. Each cycle consists of 126 blocks, produced by 21 block producers, each creating six blocks. After each cycle, token holders vote again to elect the block producers.

The platform is designed to handle high throughput, averaging 4,000 transactions per second, although actual performance can vary. For a transaction to be considered valid, it must be approved by at least 15 out of 21 block producers. Each Block is produced every 0.5 seconds. A delay of four seconds can lead to a gap of eight blocks, but these blocks are not lost; they remain in the forks and can be included later.

Block producers receive rewards for their work, with block rewards set at 1% annually. The rewards are distributed, with 0.25% going to block producers as commissions and the remaining 0.75% staying with the platform to fund future development and operations.

Features

The following are the features of the EOSIO platform:

Actions: In the network, transactions consist of multiple actions. These actions, which are permission-based codes, are executed by various EOSIO smart contracts. Actions can be explicit (already present in a transaction) or implicit (developed from transaction processing). If an action added by a party fails, it can cause the entire transaction to fail.
Blockchain Resources: This ecosystem utilizes several computer resources to operate effectively. These resources include bandwidth and storage (Disk), CPU (central processing unit), and state storage (RAM). Actions tracked by the blockchain are downloaded by nodes and stored using network bandwidth. The CPU processes data transfers and the RAM stores information about order books and states. If an application fails to read a state, the transaction is not stored.
Transaction Fee: The resulting transaction cost is near zero, enhancing the platform's efficiency. However, any fraudulent activity can lead to account freezing.
Distributed Consensus: The platform requires consensus for protocol upgrades. If any smart contracts deviate from protocol requirements, the contract owner can update it. An upgrade is accepted only when it is approved by at least 15 out of 21 block producers.
Interoperability: EOSIO ensures inter-chain communication among various blockchains. It creates DeFi products using the C++ programming language, facilitating the mass adoption of developed solutions on the network.
Security Layers: The platform operates on two security layers: Asynchronous Byzantine Fault Tolerance (aBFT) and Delegated Proof of Stake (dPoS). aBFT allows transaction verification and block creation, while dPoS is used for voting purposes. dPoS is enabled on Layer 2 via WebAssembly (WASM) smart contracts, while aBFT functions as the initial protocol layer.

Examples

Let us look at some examples of the EOSIO platform to comprehend the concept in a better way:

Example # 1

Suppose Alfred has been a crypto developer operating in the Web3 space for more than three years. During this time, he also participated in block staking within the EOSIO ecosystem, receiving his block rewards in return. However, at one point, Alfred's computational power was reduced, causing him to fail to add 12 transactions to the Block within the allotted time. As a result, these transactions went invalid and were turned into a fork. Yet, they were still present on the chain.

Due to this performance issue, Alfred lost his position as a block producer following a voting consensus conducted after the cycle ended. Although Alfred had previously performed well as a block producer, his recent failure led to the development of a fork. Consequently, stakeholders with more tokens in their EOSIO wallets voted against him, preventing him from being re-elected as a block producer in the next cycle.

Example # 2

According to the crypto news, as of March 2023, Brendan Blumer, the co-founder of Block. One and a key figure behind the EOSIO platform lost at least $74 million on Silvergate, a crypto-friendly bank. Blumer spent over $90 million to acquire a 9.27% stake in Silvergate. However, the investment resulted in significant losses due to the bank's collapse, which saw its stock value plummet by over 80%.

Advantages And Disadvantages

Although EOSIO has many advantages over the DeFi space, it also has some serious limitations. Let us look at them:

Advantages	Disadvantages
It allows developers to create decentralized apps on their platforms. It has more than 400 DeFi apps.	The consensus of 15 producers put the platform's security at risk.
Users can conduct transactions at near to zero cost.	As maximum transactions are free from transaction fees, it may result in bots.
This ecosystem can process up to 10,000 transactions per second compared to Bitcoin, which takes four tps.	The cost of running a node is high compared to other networks.
It has an anti-security system called 'Recover +' for asset recovery during cyber attacks.
The names of the addresses are easily readable instead of random and complex strings.

EOSIO vs EOS

Although EOSIO and EOS are closely related and very similar, they have a thin line of difference. So, let us look at them:

Basis	EOSIO	EOS
1. Meaning	It is a software platform that fulfills the limitations of Bitcoin and ensures faster transaction efficiency.	EOS is the blockchain of EOSIO. Plus, it also refers to the governance token.
2. Purpose	To provide a scalable space for the development of DeFi apps.	To act as a currency and blockchain protocol for network maintenance.
3. Maintenance	It is maintained and managed by Block.one.	The EOSIO platform governs the EOS token and network.
4. Application	Users deploy this software for creating other blockchain networks.	It acts like a high-efficiency protocol for conducting transactions at zero cost.