EOS... ETH killer? - Issue #9

In our 9th newsletter profiling crypto coins, we’ll cover Block.one’s EOS blockchain that raised billions in 2018 and was sold to become better and more efficient than Ethereum.

If you are an investor, trader or just curious about cryptocurrencies, subscribe to our weekly newsletter to get better insights into this space.

The Short of It

In 2018 EOS raised more than any ICO (Initial Coin Offering) or IPO (Initial Public Offering) had. They didn’t take the non-profit route as many other blockchains had; instead, they have a for-profit in the Caymen Islands. Have they done enough with the massive amount of cash available for decentralizing everything using blockchain technology to make them a good investment for the future?


Portfolio

This portfolio section gives you an idea of what sort of return you can get when investing in cryptocurrencies. Over time, we will introduce other portfolios with different crypto assets.

  1. The BTC Hold is up 115% up from last week’s 76% since October 1st, 2020. Since this is a long term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long term hold position as our best stable alternative.

  2. The BTC/USD fund is up 70% since November 2nd. Bitcoin hit all-time-highs last week of about $24,295 USD. The above chart is from a user named TradingShot on TradingView. Are we at the bottom of the next bull run as we were in late 2015? Starting from around the $500 range and over a two year period went to $20k, a massive bull run. In the same way, will the current bull run bring bitcoin over $500k in 2023?

  3. FUND 3 started on November 16, 2020, with $1000 USD in value and invested into BTC, LTC, ETH and ADA. The BTC value is up 37% since the start. We will hold these positions to see how well it does against our BTC-only portfolios. LTC is up against BTC by 6.5%. ETH is down 2.7% against BTC. ADA is up 7.5% against BTC.


Profiling

EOS was initially launched as an Ethereum ERC20 token but was migrated to their own mainnet blockchain in June of 2018. It is the creation of the company Block.one, which is headed up by Brendan Blumer, Andress Bliss, and Dan Larimer (previously of Steem). Chinese interests are huge financial backers. Their ICO was rather lengthy at one year and garnered over an astonishing four billion dollars. Of the one billion tokens available upon launch, 10% went to the development team, and 90% was sold off.  

A new block is generated every half second via delegated proof-of-stake (DPOS) in which 21 validator nodes determine consensus. The validator nodes, or candidate delegates, are voted in. There are no transaction fees, as the validators are rewarded by the creation of new tokens via yearly inflation. There is currently over one billion EOS supply because of this, with no upper supply cap.  They have agreed to limit growth to a maximum of 1% per year (previously was 5%). The governance model consists of 5 components: token holders, proxies, dApp developers, block one, and candidate delegates.

As with other cryptocurrencies attempting to define “blockchain 3.0”, such as competitor Cardano, EOS has succeeded in being highly scalable both horizontally and vertically. Their system can handle over one thousand transactions per second, and their smart contract dApp ecosystem consists of more than three hundred actively used apps. They have a big focus on making things easy for developers, supplying many tools and even a web-based IDE.  Developers have access to three kinds of resources, namely CPU, NET and RAM.  CPU and NET can be acquired by staking EOS while RAM must be purchased via smart contract (supported by Bancor for market-making and pricing).  The developer portal can be found at developers.eos.io.

EOS is well supported on many third party wallets and the majority of larger exchanges.  They are trying to cater to enterprise users as well as mainstream adoption.  Their official explorer and voting system can be found at eosauthority.com. If you are a company thinking of using the EOS blockchain as your core technology, you have a chance at getting financial support via their EOS Venture Capital program.

If you are looking at investing in a blockchain ecosystem that is out of the research phase and going full steam ahead with tons of regulatory acceptance, EOS may be a good call.


Trends

In this chart, we look at EOS/BTC pairing over the last 3 years on the weekly chart. From its lows of 0.0000800 late 2017 to all-time-highs (ATH) April 2018 of 0.0024400, which saw 2900% gains. Since the ATH, it dropped way back to touch the support line in December 2018 and finally broke down in June 2019. Once it broke, it turned into a resistance line, and in February 2020, it tried reaching back up but failed to do so.

Using the same EOS/BTC weekly chart as above, this next one is zoomed into the last 1.5 years. EOS created a support line around 0.000335, and that held for 9 months and broke down in late April 2020, which became a resistance line once again. It came close to the resistance line in August 2020, and since then, it has fallen 60% to today’s price. EOS does not look great against Bitcoin within this bearish trend line. Though it definitely has room to the upside. It is over a 160% gain if it makes a quick move up to the top.

The next chart is EOS/USDT on a weekly scale from Salah-LH on TradingView. This gives us the bullish case for EOS against USD. The $8 area he is predicting EOS will run up to would be somewhat close to the upper trend line from the above chart. But, if in the unlikely but possible scenario EOS breaks down past support, it could go as far down as $0.50 from it’s current $2.97

The trend line is still acting as a strong resistance on the weekly frame
But we expect it to be broken in the coming weeks in order for the price to break free and head to the 8 $ areas in the medium and long term.


In 2019, Block.One, the creators of EOS paid $30 million to MicroStrategy for the domain name Voice.com to create a blockchain-based social media platform. The CEO of MicroStrategy, Michael Saylor, was surprised when the buyer was a blockchain company. This was the start of the journey for Michael Saylor to look closer at Bitcoin and cryptocurrencies in general.

Today MicroStrategy released a statement that they have purchased over $1.1 billion worth of Bitcoin in 2020, which is about 70,740 Bitcoins. Today that is valued at $1.6 billion ($22,900 per Bitcoin). Will this type of news become the norm in 2021 with companies placing cash reserves into Bitcoin as MicroStrategy has done?

As a note: We do not hold or will not be adding EOS to any of our portfolios in the near future.


About

MadCapX research newsletter is written by the Madbyte Team. You can learn more about Madbyte and MadCapX on our websites. This weekly newsletter is a paid subscription and supports the team and the Madbyte projects. Subscribe for free and get a limited-time complimentary paid subscription and access to all our archives. The regular cost is $5/month or $50/year. Cancel anytime.


Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.