7 years later, the largest financing project in history of 4.2 billion dollars announced failure

Author: Jaleel Jia Liu, BlockBeats

Today, EOS has been renamed Vaulta.

The ancient public chain, which raised a sensational amount of funding for a whole year seven years ago and was regarded as one of the earliest "Ethereum killers," has finally given up on its dream of achieving a million TPS and announced a shift towards Web3 banking services. The once grand ambition of raising $4.2 billion, the excitement of campaigning for 21 supernodes, and the utopian declaration of a million TPS—these fragments piece together the most expensive idealistic experiment in the history of blockchain.

Seven years later, apart from the old investors, no one mentions this "ancient public chain," which is now ranked 97th by market capitalization. In the days to come, EOS will no longer be a high-performance public chain but will reinvent itself, attempting to pivot towards Web3 banking services—it has abandoned its former dreams and even its name.

Let us use this article to document the craziest product of the ICO era, which burned so much money and left behind a story of regret.

A Tower of Babel Built with Code and Dollars

In 2017, the blockchain industry was in the midst of its most frenzied rise. Bitcoin broke through $1,000 at the beginning of the year and soared to $20,000 by the end, while Ethereum's smart contracts completely transformed the crypto world. ICOs (Initial Coin Offerings) became the hottest fundraising method, with hundreds of projects flooding the market, all vying to build a "decentralized future."

Amid this capital frenzy, EOS emerged under the banner of "Blockchain 3.0," boldly claiming to "replace Ethereum." Its white paper depicted an ideal nation: a million TPS (transactions per second), completely solving the scalability issues of Bitcoin and Ethereum; zero transaction fees, allowing ordinary users to avoid expensive gas fees, with on-chain transactions as smooth as cloud applications; ultra-fast block production, with 21 supernodes responsible for packaging transactions, no longer hindered by miner competition; a blockchain supercomputer that would make decentralized applications (DApps) a reality.

The founder, BM (Dan Larimer), was the biggest draw of EOS. To tech enthusiasts, he was a genius—having suggested to Satoshi Nakamoto a change in the consensus mechanism just a year after Bitcoin's birth, believing that PoW (Proof of Work) was inefficient. Later, he founded BitShares and Steemit, becoming one of the most well-known engineers in the crypto space. But BM was not just a tech geek; he had a utopian idealism, believing that blockchain could change everything, and EOS would be the ultimate solution for human social structure.

With a genius CTO and a top-notch marketing team, the ambition of this story was already laid out. On June 26, 2017, EOS began its crowdfunding, planned to last for a year (in contrast, most ICOs had fundraising cycles of only a few weeks to a few months).

Global investors flocked in, raising $185 million within 24 hours. Ultimately, EOS successfully raised $4.2 billion, becoming the largest fundraising event in crypto history, far exceeding all other projects at the time, including Ethereum's $18.5 million.

Top 10 ICO Projects of 2018

With $4.2 billion, EOS leaped to become a super capital entity in the crypto space.

In April 2018, EOS's price surged from $5 to $23, a monthly increase of 360%, and its market capitalization ranked among the top five globally, only behind Bitcoin, Ethereum, Ripple, and Bitcoin Cash. The media went wild, with headlines proclaiming "EOS will become the first trillion-dollar cryptocurrency" and "BM is the next Satoshi Nakamoto." Ethereum developers began to feel anxious, fearing that EOS's rise would lead to Ethereum's decline.

That year, before EOS even launched its mainnet, it had already become the hottest star in the crypto world. Driven by FOMO (fear of missing out), EOS was considered the "next-generation Ethereum," with some even predicting it would reach $1,000.

The supernode elections became a global hotspot, with figures like Li Xiaolai and Lao Mao making high-profile entries, while exchanges, mining pools, Wenzhou capital, and even traditional funds rushed in—this election was dubbed the "Wall Street IPO of blockchain." Nodes from China, the US, and South Korea engaged in a "national war in the crypto space," with the Korean community shouting "If you don't invest, you're not Korean." Li Xiaolai's Coin Capital held four node voting warehouses, and the Wenzhou gang entered the market with eight-digit EOS purchases.

With $4.2 billion raised, a star project, a dark horse public chain, and all eyes on it, BM was greeted at the Hong Kong airport by project representatives in luxury cars. Everything seemed so beautiful, yet beneath the feast, everything was built on a Tower of Babel made of code and dollars.

EOS Only Peaked at the Start

Amidst the fervor, problems began to quietly emerge:

EOS's voting system was criticized for being easily controlled by large holders, and the decentralization of supernodes was questioned; after the mainnet launch, multiple technical issues arose, leading developers to question EOS's stability; the deep involvement of exchanges and capital giants made the supernode elections no longer fair, and different voices began to emerge in the community; after the mainnet went live, BM frequently changed the governance mechanism, causing chaos in the community.

But at that time, the market was still immersed in celebration, and all doubts were overshadowed by the slogan "EOS is about to change the world." In that golden era, everyone believed EOS would become the future ruler, even the ultimate form of the blockchain industry. However, reality is often harsher than dreams, and no one anticipated that this once-promising project would fall from grace in just a few years.

Technological Disillusionment: From "Million TPS" to "Distributed Database"

At that time, the biggest issue in blockchain was scalability—how to conduct more transactions in a second. The Bitcoin network could handle 5 or 6 transactions per second, while Ethereum was slightly better, with about 20 transactions per second. But these numbers were far from meeting the demands of blockchain usage.

In this context, EOS's million TPS drove everyone crazy. It's worth noting that during the Tmall Double 11 shopping festival, the peak transaction volume was over a hundred thousand per second.

However, four months after the EOS mainnet launched, the highest TPS was only 3,996, which was far from the promised million.

While EOS fell far below expectations, Ethereum gradually improved its performance through Layer 2 scaling solutions, and competitors like BNB Chain and Solana quickly rose, completely erasing EOS's "performance advantage."

People discovered that the so-called "million TPS" was a carefully designed word trick—BM quietly added a premise to this number: it must rely on an infinitely scalable sidechain ecosystem. According to his vision, if one chain could handle 4,000 transactions, then 100 sidechains running in parallel could achieve 400,000 TPS. But the reality was that by 2023, the EOS ecosystem had only three sidechains launched, two of which had become "ghost chains" due to developers leaving. BM's response to this was to turn to Twitter and announce that he was "researching anti-inflation algorithms," while EOS's market cap had already fallen out of the top 20.

The core issue with EOS was its difficulty of use.

Initially, EOS hit the user pain point with free transfers. Users soon discovered that although EOS transfers did not require transaction fees, they had to use tokens to stake for CPU resources. When the network was congested, transferring 10 EOS required staking CPU resources worth 5 EOS—this essentially froze users' funds in disguise. During a DApp traffic peak in 2020, 2,000 EOS could only be exchanged for 1.3 seconds of CPU time, requiring ordinary users to perform the operation repeatedly to complete a transfer.

Moreover, BM set a RAM supply limit, resulting in market speculation on RAM, causing its price to skyrocket by 100 times, forcing developers to spend exorbitant costs to purchase storage resources. In 2018, some speculators began hoarding RAM, and within a few months, the price of RAM surged from 0.01 EOS/KB to 0.9 EOS/KB, severely impacting DApp development, with many new projects directly abandoning EOS.

Ultimately, this resource management model made EOS's user experience worse than Ethereum's: on Ethereum, users could directly pay gas fees to complete transactions; but on EOS, users had to first learn the complex resource staking mechanism and even spend a lot of money to purchase CPU and RAM, severely hindering the development of the DApp ecosystem.

From today's perspective, it is hard to understand how, under such poor user experience, EOS had a brief surge at the end of 2018 and the beginning of 2019: DApps focused on on-chain gambling were very popular on EOS.

Data from December 24, 2018, showed that in the past week, a comprehensive comparison of the DApp ecosystems of ETH, EOS, and TRON revealed: Total users: EOS (75,346) > TRON (45,777) > ETH (33,495); Total transactions: EOS (23,878,369) > TRON (13,803,322) > ETH (413,019); Total transaction volume (USD): EOS (345,489,773) > TRON (135,201,171) > ETH (44,272,856);

This indicates that at that time, EOS was indeed highly anticipated by the community, and its ecological prosperity surpassed that of ETH and TRON. Perhaps it was this "dream of Nanke" that made today's old players in the crypto space reminisce about EOS with such regret.

Governance Collapse: Bribery, Centralization, and Community Division

Of course, discussing governance now might just elicit a laugh, but at that time, EOS's governance was highly anticipated. BM firmly believed that under his careful design, the 21 nodes would allow this network to far surpass Ethereum.

He thought that this network would have 2/3 good people, and everyone would act benevolently; nodes that acted maliciously would be voted out by users, creating a perfect utopia. It turned out he was too naive.

Three months after the EOS mainnet launched, bribery among nodes had become an unspoken rule. To obtain EOS block rewards, no one could stop the mutual voting between large holders and nodes, and that was not the most outrageous part; the nodes themselves committing wrongdoing was the absurdity.

EOS's mechanism involved 21 supernodes taking turns to produce blocks. At one point, a user's funds were stolen by a hacker, and the solution was for the 21 nodes to blacklist the hacker's address, preventing the hacker from transferring funds. This was a normal and simple operation, but one node failed to set it. As a result, during the time this node produced blocks, the hacker transferred the money away. It was as if nothing had happened.

BM attempted to constrain these behaviors through the EOS Constitution but soon discovered that the constitution had no binding power: since the supernodes were beneficiaries of the bribery, they had no incentive to enforce the rules set by the constitution. The arbitration mechanism was completely ineffective, with no actual binding force.

In 2019, BM completely abandoned constitutional governance, announcing that the EOS community should evolve freely and that he would no longer interfere with the election methods of supernodes. By 2020, EOS's supernodes had become a battleground for exchanges, mining pools, and capital consortiums, rendering the votes of ordinary token holders meaningless. DPoS was supposed to be a model of decentralized governance, but it turned into a version of oligarchic politics in the crypto space.

On governance issues, EOS also encountered a major problem: before the EOS mainnet launched, BM proposed an innovative "EOS Constitution," hoping to use code and rules to constrain behavior on the network. However, within just a few months, the constitution underwent multiple revisions, and the community became increasingly dissatisfied. In June 2018, the initial constitution allowed supernodes to arbitrate transactions, but due to power abuse, BM decided to amend the constitution a few weeks later to prohibit nodes from interfering with transactions. In 2019, BM suddenly proposed abolishing the constitution in favor of "user contract governance," leading the community into chaos, unsure of how EOS's governance rules would evolve. This constantly changing governance model caused developers and investors to completely lose trust in EOS.

In this crisis moment, BM and Block.one (the parent company of EOS) gradually shifted their focus from the EOS main chain to the EOSIO software: BM believed that "the future of blockchain lies in enterprise-level applications," thus promoting EOSIO, allowing enterprises to build their own private chains instead of focusing on optimizing the EOS public chain. Core updates for the EOS main chain nearly came to a halt, with many critical upgrades (such as cross-chain and storage expansion) delayed indefinitely.

The result was a sharp decline in EOS's developer ecosystem: while the Ethereum community remained active with the explosion of DeFi, NFTs, and other applications, the number of DApp developers on EOS gradually decreased. By 2022, EOS was losing nearly 100 developers each month, and some EOS browsers and wallet projects shut down entirely.

External Strangulation: Mining Crises, Bear Markets, and Block.one's Silence

By the end of 2019, the price of EOS fell below $5, dropping to a low of $1.8 the following year, a decline of over 90% from its historical peak of $23. As supernodes faced survival crises, developers left, and market liquidity dried up, the EOS ecosystem desperately needed rescue from its parent company, Block.one.

What we all know is that Block.one raised $4.2 billion in its early days, becoming the largest fundraising event in crypto history. Logically, this funding should have supported EOS's long-term development, supported developers, and promoted technological innovation, allowing the ecosystem to continue to grow. When EOS ecosystem developers pleaded for funding, Block.one offered a $50,000 check—this amount was not even enough to pay a Silicon Valley programmer's salary for two months.

"Where did the $4.2 billion go?" the community questioned.

In an email to Block.one shareholders on March 19, 2019, BM revealed part of the answer: as of February 2019, Block.one's assets (including cash and invested funds) totaled $3 billion.

Of this $3 billion, approximately $2.2 billion was invested in U.S. government bonds, which were referred to in the email as "liquid fiat assets."

Some of the invested funds can be found in publicly available information: gaming company Forte, NFT platform Immutable, and a resort hotel in Puerto Rico, among others. In summary, the companies invested in had little to do with EOS.

Before Bullish became the core business, Block.one still had a trump card: the social product Voice, based on EOSIO smart contracts, which was the only product with a business relationship to EOS. To build Voice, Block.one invested $150 million, with the largest expenditure being $30 million spent on a domain name, purchased from MicroStrategy, a publicly traded company that owns the most Bitcoin.

But it seemed to be a curse of fate; Voice's first launch event lasted half an hour, and the content fell short of expectations, leading to a wave of disappointment and causing EOS's price to drop. More than half a year later, when the Voice iOS version launched on the Apple App Store, it encountered various issues and bugs, with the Voice official website displaying "Error 1020," stating that the site was "using security services to protect itself from online attacks." EOS holders were completely disappointed, and Voice finally announced in September 2023 that it would gradually shut down.

Projects launched by Block.one

The thunder was loud, but the rain was light; this seemed to be Block.one's consistent style of investing, and after this, Block.one ceased to make significant investment moves and began to lie flat. Today, Block.one holds 164,000 Bitcoins, meaning its wealth has grown from $3 billion in 2019 to $16 billion now, a fivefold increase, making it a master of liquidity management.

With no actual DeFi, NFT, or DApp ecosystem support plans, in contrast, the Ethereum Foundation and Solana Foundation continuously subsidized developers and promoted technological innovation, while Block.one did almost nothing.

An early EOS investor angrily questioned on Reddit: "We invested in EOS because it promised to disrupt blockchain, not to let Block.one take this money to speculate on Bitcoin!"

Although Block.one currently holds the second-largest amount of Bitcoin after MicroStrategy, with a total of 160,000 BTC worth $16 billion, EOS, which received no support from these raised funds, continues on its downward path.

The chaotic governance of Block.one is even more shocking; Block.one increasingly resembles a "family business" centered around CEO Brendan Blumer, while BM is not part of this family.

Sister as CMO: CEO Brendan Blumer's sister, Abby, was parachuted in as Chief Marketing Officer, with her only visible "achievement" being changing EOS's brand color from tech blue to a "softer Morandi gray."

Mother managing venture capital: Blumer's mother, Nancy, heads the EOSVC venture capital fund, which invested $150 million in the social application Voice, which had fewer than 10,000 users after a year of launch.

BM as a puppet: Founder BM revealed on Twitter that he had "no decision-making power" and could only watch as the team poured resources into the enterprise-level toolkit EOSIO—a project customized for giants like Walmart, which had nothing to do with the EOS mainnet.

In 2021, the community initiated a "fork uprising," attempting to cut off Block.one's control. The EOS Foundation, as a community representative, began negotiations with Block.one. However, over the course of a month, various proposals were discussed, but no consensus was reached. Ultimately, the EOS Foundation, along with 17 nodes, revoked Block.one's power status, kicking it out of EOS's management. Without its parent company, EOS increasingly resembled a DAO.

After the split between EOS and Block.one, the EOS community engaged in years of litigation over the ownership of the funds raised, but so far, Block.one still retains ownership and usage rights to the funds.

Even more absurdly, since 2024, BM's Twitter content has hardly mentioned blockchain, with the only technical discussion being a sporadic mention of database optimization. In contrast, his focus has completely shifted to theological preaching, with content highly concentrated on biblical interpretations, apocalyptic prophecies regarding geopolitical conflicts, and critiques of mainstream Christianity…

BM's Twitter Content

Looking back at this seven-year crypto epic, the collapse of EOS has long been written in the warning book: no matter how high the TPS, no matter how sophisticated the resource model, if the user experience is so complicated that ordinary people are deterred, everything is meaningless. The once "Ethereum killer" ultimately perished in the quagmire of its own economic model, chaotic governance, and technological stagnation.

Seven years ago, EOS's crowdfunding raised $4.2 billion, once considered the most brilliant fundraising miracle in blockchain history; seven years later, its story has become the biggest "joke" in the crypto space.

In the end, EOS did not kill Ethereum; it first killed itself.