EOS is dusting itself off and getting back on its feet. But how did one of the most anticipated ICOs in history turn into such a disappointment?
At launch, some viewed EOS as one of the most promising layer-1s in history. EOS is a smart contract platform that was founded using open-source technology developed by Block.one, a Cayman Islands-based company. This network launched in 2018 to challenge Ethereum as the leading platform for smart contracts. For a time, it was one of the most prestigious projects in the L1 blockchain space.
Its initial coin offering (ICO) in 2018 set new records. Becoming the largest crowdfunding campaign in the crypto market to date. It raised a staggering $4.1 billion in its ICO, almost a quarter of the entire ICO boom in 2017-18.
Things started with great promise. During the ICO boom, blockchain projects raised billions by selling digital tokens. The industry felt generally optimistic about its potential to shake up traditional finance, enable decentralized apps, democratize fundraising, and offer high returns. The ESO ICO was the industry at its most excitable. But the high was not to last.
After launch, Block.one largely did not reinvest in the chain. The record $4 billion raised also failed to yield the benefits many expected. Instead, the company directed resources to other projects outside of EOS, including the social network Voice and centralized exchange Bullish. (Bullish derived much of its liquidity from the proceeds of the EOS ICO.)
Block.one claims it can legally do as it likes with the proceeds of the ICO. However, critics say it has failed to live up to its public promises. EOS also did not meet the bar technically, either. Critics panned it for its centralization, governance, and lack of any development activity.
The Community Fights Back
In August 2021, after years of failure, Yves La Rose founded the EOS Network Foundation (ENF). An organization dedicated to forcing Block.one’s hand into reinvesting in the network. La Rose maintains that the company exaggerated its capabilities and knowingly misled investors.
According to a May 2019 Bloomberg report, shareholders in Block.one had received returns as high as 6,567 percent during a buyback. So generosity could be found in some places.
“We’re victims,” La Rose told WIRED magazine. “The community is reclaiming the chain for itself.”
Led by the EOS Network Foundation, the community voted to freeze the founding team’s token vesting contract in 2021 and fork the open-source codebase in 2022.