EOS ($EOS) Analysis and Valuation

April 24, 2018 | 28 Minute Read

We recorded a podcast and webinar discussing our EOS report and answering questions from the community. To listen and download, click here.

An executive summary is presented below. Download our complete 29-page analysis by clicking the Download PDF button.

Disclosure: Multicoin Capital owns EOS tokens.


EOS is a blockchain and smart contract platform with a focus on speed, scalability, and user experience. EOS uses delegated proof of stake (DPoS) and a “token ownership as bandwidth” model to achieve high throughput and zero transaction fees.

The EOS open-source software is currently being developed by Block.one, a Cayman Islands company. Block.one is conducting a year-long token sale for an ERC20 token called EOS. This token is merely a placeholder until the free software is released on June 1, 2018. At that time, the EOS community will be able to use the software to launch a proprietary blockchain, honoring the distribution of the EOS ERC20 token at the genesis block.


Per The Smart Contract Network Effect Fallacy, Multicoin Capital doesn’t believe that we will see convergence around a single smart contract platform, at least in the near-to-medium term. Rather, we believe that a handful of dominant platforms will emerge, each offering a different set of features and tradeoffs. Not every decentralized application requires the same throughput, security guarantees, level of decentralization, programming language, expressivity, privacy, latency, or consensus structure. Different use cases have different requirements, and developers will choose to build on the platforms that most effectively support their goals.

EOS is designed from the ground up to be scalable, user-friendly, and fast. It uses DPoS, Graphene, message-based architecture, the web assembly virtual machine (WASM), accounts and usernames, protocol-layer account recovery, and a variety of other optimizations that will be explored in our report. Betting on EOS is a recognition that there is a huge market for decentralized applications that simply need to be hosted on a neutral, global database that offers platform-grade censorship resistance but has high-level throughput, speed, and finality. Optimizing for sovereign-grade censorship resistance and decentralization at the expense of performance makes sense for certain cryptoassets like Bitcoin and Monero. For a global smart contract platform intended to host thousands of user-facing dApps, it does not. The EOS team recognizes that decentralization requires tradeoffs in both economics and performance. For most blockchain-based applications, being hosted on a distributed, neutral database is much more important than maximizing decentralization. EOS recognizes that for global scale dApps, having each and every transaction validated by a large network of consumer-grade computers all over the globe is both unrealistic and unnecessary.

EOS is making a strong play in a specific market sector—high throughput, no fee, user-facing dApps. This is a huge market, and we expect EOS to gain an early lead in becoming the default platform for these use cases. Given that it is a general-purpose platform that offers maximum flexibility to developers, we expect it to fuel additional use cases and to inspire entirely new business models.

EOS has strong differentiators that make it unique among smart contract platforms. These include its acute focus on throughput and capacity, on-chain governance, options for upgrades, and human-friendly usernames and account settings. EOS will also likely be the first major Ethereum competitor to market. EOS is in many ways an experimental project, and we look forward to witnessing it grow and evolve.

We believe that the EOS token model lends itself particularly well to value capture. We expect to see very significant upward price action in the near to medium term. At current valuations, we continue to be bullish on EOS.


  1. Summary
    • Introduction
    • EOS Background
  2. EOS Thesis
  3. EOS Protocol Mechanics
    • Delegated Proof of Stake
    • WebAssembly (WASM) Virtual Machine
  4. EOS Features
    • Scalability
    • Token Ownership as Network Resources / Zero Transaction Fees
    • Usernames and Accounts
    • On-Chain Governance
    • EOS Storage
    • Digital Constitution
    • Self-Funding through Inflation
    • Upgrades and Bug Fixes
    • Inter-blockchain Communication
  5. Miscellaneous
    • Block.one Capitalization
    • Ecosystem Funds
    • Airdrop Culture
  6. Risks
    • Legal Risk
    • Multiple Chains at Launch
    • Execution
    • Attack on Consensus
    • User Acquisition Costs
  7. Competitors
  8. Valuation
    • EOS as a Store of Value (SoV)
    • EOS as a Pure Utility
    • How Token Price Might Decouple from “Utility Value”
    • Final Thoughts
  9. Conclusion

Update: After our EOS report was published, Spencer Bogart of Blockchain Capital published a piece titled The Long Game in Crypto: Why Decentralization Matters, partially in response to the discussion generated by the publication of our report. We wrote a follow up response that directly addresses many of the concerns raised. We encourage you to read both pieces.


As of the publication date of this report, Multicoin Capital Management LLC and its affiliates (collectively “Multicoin”), others that contributed research to this report and others that we have shared our research with (collectively, the “Investors”) may have long or short positions in and may own options on the token of the project covered herein and stand to realize gains in the event that the price of the token increases or decreases. Following publication of the report, the Investors may transact in the tokens of the project covered herein. All content in this report represent the opinions of Multicoin. Multicoin has obtained all information herein from sources they believe to be accurate and reliable. However, such information is presented “as is,” without warranty of any kind – whether express or implied.

This document is for informational purposes only and is not intended as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy, are based upon selected public market data, and reflect prevailing conditions and Multicoin’s views as of this date, all of which are accordingly subject to change without notice. Multicoin has no obligation to continue offering reports regarding the project. Reports are prepared as of the date(s) indicated and may become unreliable because of subsequent market or economic circumstances.

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This report’s estimated fundamental value only represents a best efforts estimate of the potential fundamental valuation of a specific token, and is not expressed as, or implied as, assessments of the quality of a token, a summary of past performance, or an actionable investment strategy for an investor.

This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment or token discussed herein.

The information contained in this document may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond Multicoin’s control. Investors should conduct independent due diligence, with assistance from professional financial, legal and tax experts, on all tokens discussed in this document and develop a stand-alone judgment of the relevant markets prior to making any investment decision.*