Down 14% on the Week, EOS Has Seen Its Marketcap Plummet to 1/15th Of Its Peak – What Happened?

Down 14.5% this week, EOS is currently trading at $1.08. These losses came in tandem with a drop in the broad crypto market that has Bitcoin going under $28k, Ether to $1,910, and the total market cap to $1.23 trillion.

EOS is currently down 2.3% in the past 24 hours, 61% in the past year, and more than 95% from its all-time high (ATH) of $22.7 hit in April 2018, according to CoinGecko. The coin, however, has managed to stay in green by 23.3% year-to-date (YTD).

What was once among the top 10 cryptocurrencies by market cap has now fallen to the 45th spot and has a market cap of about $1.2 bln. This is despite EOS having one of the largest and most successful initial coin offerings (ICOs) in history, raising over $4 billion in 2017. This was an enormous amount of money, and it attracted a lot of attention to the project, both positive and negative.

The decentralized blockchain-based platform that aims to provide high performance, scalability, and flexibility for decentralized applications (DApps) development, was created by Block.one, a company founded by Dan Larimer and Brendan Blumer.

The massive funding allowed Block.one to create a significant war chest to support the development and growth of the EOS platform. But critics argued at the time that the ICO was too large and the amount raised was disproportionate to the project's actual needs.

Critics have also pointed out concerns regarding centralization and control, arguing that its innovative consensus mechanism, known as delegated proof of stake (DPoS), gives too much power to a small group of block producers. EOS's network was initially run by just 21 block producers. Additionally, there have been issues with its security and scalability.

There was also criticism of the project's leadership, particularly its founder, Dan Larimer, who left the project in early 2021. Larimer had previously left other blockchain projects he had founded, leading to concerns about his commitment to EOS.

Although the project faced a ton of controversy and never managed to live up to its promises, EOS has recently made some strides to change this.

Launch of EOS EVM 

In the crypto world, Ethereum is the indisputable programmable blockchain leader, although, over the years, many new platforms have emerged, such as Solana, Avalanche, and Cosmos. But Ethereum has been the most widely adopted as the platform of choice for dApps and smart contracts, which had been a primary use case for EOS. 

In 2023, EOS is hoping to regain its footing and attract new users to its network by launching its EVM and a renewed focus on developer support.

Earlier this month, EOS Network Foundation made an announcement about the launch of its new EOS EVM. The EOS EVM emulates the Ethereum Virtual Machine, which has been deployed as a smart contract on the blockchain. This new solution is designed to help tackle some of the challenges that Ethereum developers face, such as scalability.

The EOS EVM has been developed to combine the strong performance of the EOS Network with the easily accessible resources of the Ethereum community. By doing so, EOS hopes to attract new users and accelerate the network's mass adoption. The new EVM is designed to complement Ethereum rather than compete with it.

As Ethereum grapples with scalability issues and slow transaction speeds, with the EVM, EOS presents a solution by enhancing the network with its fast operational capability. 

The EOS virtual machine aims to link the two blockchains, leveraging Ethereum's abundant resources while incorporating its one-second block interval speeds and over 800 swaps per second with minimal fees. 

By using the EVM, developers proficient in Solidity can easily tap into EOS's scalable network infrastructure and funding programs, as well as leverage the resources of Ethereum.

According to a tweet by Ignas, a popular Twitter account that posts insights about DeFi and other crypto spaces, the EOS EVM claims to be 25x faster than Avalanche and 3x faster than Solana or Polygon. 

Interestingly, on the day of the EVM launch, the blockchain's network value spiked as its total value locked (TVL) increased. However, this uptrend was short-lived, and the TVL declined over the following days. Additionally, the network's development activity remained low in April 2023, despite the EVM launch. TVL of EOS EVM is currently standing at almost $14k, as per DeFi Llama.

Investing in Blockchain Ecosystem Revolutionization

But this is not all. EOS Network Ventures has pledged to invest $20 million in GameFi and EOS EVM projects to drive the expansion and adoption of EOS.

As part of the renewed growth strategy for EOS, the investment is aimed at attracting developers and builders to the EOS blockchain, and the CEO of the EOS Foundation, Yves La Rose, stated that the EOS EVM would have the most funding available for builders. 

Deploying EVMs on other blockchains allows developers to build dapps on these networks, including EOS. The $20 million investment will enable EOS to compete with newer networks such as Arbitrum, zkSync, Optimism, and Solana, which are vying for developer talent and increasing their own revenues via token incentives or airdrops.

La Rose is leading the efforts for the EVM system, a consensus mechanism upgrade, and an overall renewed growth strategy for EOS. He believes that the investment will attract a massive influx of developers who want to take advantage of the funding opportunities available for EVM projects. 

In addition, last week, the EOS Network Foundation (ENF) announced a strategic partnership with DWF Labs, a market maker and investment firm, in a $60 million investment deal. This collaboration aims to advance the growth and development of the EOS platform.

The EOS Network Foundation (ENF) plays a pivotal role in driving the development of the EOS network. It coordinates support, fosters innovation through feedback loops, encourages community engagement, allocates funding, and facilitates the growth of the entire EOS ecosystem.

As part of the $60 million investment agreement, DWF Labs has committed to a $45 million purchase of EOS tokens and an additional $15 million investment in EOS-based projects. 

“Our strategic partnership will enable us to explore new horizons and revolutionize the blockchain ecosystem together, providing developers with the tools and resources they need to bring about a more decentralized and connected future,” said Andrei Grachev, the Managing Partner of DWF Labs.

Despite the ongoing crypto bear market, DWF Labs has emerged as an active investor, participating in recent fundraising rounds for Synthetix, a derivatives trading platform that raised $20 million, and Fetch.ai, an AI-focused crypto protocol that raised $40 million. 

By partnering with the EOS project, DWF Labs hopes to unlock the full potential of the blockchain ecosystem and the world of web3 by leveraging their respective expertise and resources. This partnership is expected to secure a promising future for the EOS Network.

EOS “Second Innings” 

Despite its controversies, EOS has continued to be a popular topic in the crypto community, with its social media activity remaining high over the past 30 days. 

The network has been able to maintain an average of 1.3 million daily transactions and 38,000 daily active addresses throughout the year. Furthermore, the network has seen an average of 1,785 new addresses per day. 

The growth in TVL since the start of the year, as well as the launch of new applications such as EOS REX and Vigor, signal positive developments for the future growth of EOS.

But while the EOS native token's price action turned bullish soon after the EVM release, the upward momentum was not sustained, and the token's price went down over the coming days.

Still, EVM compatibility is seen as essential for EOS to attract more developers and users to its platform, and the foundation plans to fund developers working on EVM-based applications through a grants program.

The upgrades to the EOS network, grant programs, and increased interoperability with other blockchains have the potential to boost the value of EOS tokens and increase the total locked value (TVL) on EOS-based DeFi applications.

As a result of this renewed effort, there is potential for EOS token prices to rise in the coming months and for the value locked in EOS-based dApps to increase as well. However, it remains to be seen whether this investment will be enough to entice the community.

Overall, EVMs are a crucial part of EOS' future plans, seen as the blockchain's “second innings.” By allowing developers to build dapps and DeFi applications similar to how they would on Ethereum, EOS hopes to attract more users and drive growth on the platform.