EOS Slides Below $7 and Its RAM Prices Fall by Half as the Governance Chaos Continues
The cryptocurrency market is in the red again with its capitalization going back to the monthly low levels. EOS, the world’s fifth largest cryptocurrency, hit over 10% loss over the past 48 hours to trade at $6.93. But the biggest problem the project has to face is not the shrinking market cap, but the price distortions of EOS RAM and its ‘ governance’ issue.
EOS New York, a top block producer on the EOS network, said on Twitter on June 8 that some blockchain producers crashed due to the increased RAM usage. In fact, RAM (random access memory) seems to have become a nagging concern for EOS—both block producers and crypto traders flock to trade RAM in the short term for a significant profit, contributing to a significant increase in RAM prices.
RAM prices began to rally on July 1. The cost of 1 MB RAM on the EOS blockchain has reached as high as 920 EOS three days later, equivalent to $8160 then. But the price of 1MB RAM tumbles to 385 EOS at the press time( around $ 2810) after a one-week-long speculative trading, according to data from MarketstackD.io.
Touted as the “Ethereum Killer”, EOS is a blockchain platform specially designed for decentralized applications (dApps). In order to develop and run dAapps on the EOS blockchain, developers need to use EOS tokens to ‘buy’ RAM. The bigger the dAapp is, the more Ram is needed to ensure its proper function. Lots of operations will consume RAM, such as opening an account, creating a smart contract and transferring EOS tokens. And Users have to purchase at least four kilobytes (KB) to open an account.
The intention of the RAM allocation model was to make transactions free, and to financially incentivize users to “sell” any of their unused RAM, letting a simple supply and demand model govern the price.
Contrary to what is expected, EOS RAM speculation frenzy could pose a real risk to the network’s intended function as an operating system for dApps, because developers cannot afford the critical memory resources for their projects.
An EOS-based gaming start-up said if their game could attract 100,000 users, it would consume around 400M RAM which cost as high as 200,000 EOS tokens when the RAM price hit a peak. The cost was extremely daunting.
In response to the situation, the CTO of EOS, Daniel Larimer,said on June 7 that they are developing a derivative based on EOS RAM, called DRAM, an effort to separate developers from investors.
This derivative is suitable for people who are eager to trade EOS RAM instead of using it. Lamier believes that DRAM will encourage speculators to exit from the RAM market and he also recommends a 50% reduction is DRAM transaction fees.
This proposal may bring RAM price to a reasonable level, but the fundamental problem will not be addressed, because EOS ’RAM’ is still open to speculative trading.
The biggest problem that he EOS development team needs to address is not a product issue, but a ‘political’ issue.