In a wide-open field of crypto contenders, where does EOS (CCC:EOS-USD) stand? The native token of the EOS.IO blockchain, so far it hasn’t become as big as some of the trending altcoins not named Ethereum (CCC:ETH-USD).
With whales like Mike Novogratz and Peter Thiel backing its developer, Block.one, it’s understandable why some investors have become excited about this more obscure crypto’s prospects. Its token price surged last month, as news broke of Block.one launching its Bullish Global crypto exchange later this year.
Yet, this run-up in enthusiasm quickly faded. Coupled with the “crypto meltdown” last month, prices have fallen back from highs above $14, to around $5.10 today. So, what’s it going to take to move the needle once again? Likely, something greater than this indirect catalyst.
It has many advantages over the coins/tokens more used in DeFi (decentralized finance), but it still needs to differentiate itself from the rest of the pack. Otherwise, it could end up getting lost in the crowd.
EOS Needs More Than Just Billionaire Backing
Novogratz and Thiel aren’t the only familiar names involved with this crypto’s developer. As InvestorPlace’s Ian Bezek discussed on June 2, hedge fund billionaires Louis Bacon and Alan Howard have invested in Block.one as well.
This is a unique feature of the EOS narrative. To be sure, this isn’t the only blockchain project the so-called smart money have taken a liking to. Other cryptos have Wall Street and Silicon Valley heavyweights backing behind them as well. But, few have such as concentrated involvement from the investment and tech spaces as this token’s developer. Yet, this relatively higher amount of business establishment backing doesn’t by itself make the bull case here.
Billionaire backing may provide some social proof. But, it’s going to need more than this to substantially rise in value over time. What does it need? Critical mass. Given its features, it has a shot of gaining more widespread usage. In other words, it has the potential to become an “Ethereum killer.”
The problem? Rival altcoins have many of the same advantages. This is what gives them a shot at taking a shot at DeFi leader Ethereum. Those advantages? These include greater scalability, faster transaction times and lower fees. Not only that, the leading DeFi blockchain’s upgrades are just around the corner. Both factors may make it tough for EOS to expand its user base.
It May Fail To Become an ‘Ethereum Killer’
EOS may have a smaller market capitalization ($4.8 billion) than many of the other names taking on Ethereum’s DeFi dominance. But, as I mentioned above, this blockchain has its fair share of “Ethereum killer” bona fides.
To begin with, this platform was built specifically for the hosting of commercial-scale dApps, or decentralized applications. Another is that EOS.IO offers faster transaction speeds and doesn’t have transaction fees. Add in its greater scalability, and you’re probably wondering why this platform hasn’t caught on, given its clear-cut advantages to the established DeFi platform.
It may have built a better mousetrap. But, that doesn’t mean it’s set to become the ultimate ETH killer. Other names vying for that moniker have many of the same advantages. Cardano (CCC:ADA-USD) is moving ahead with upgrades that could further make it a better version of Ethereum. Solana (CCC:SOL-USD) is coming close to having transaction speed on par with legacy payment systems, which could give it an edge.
Yet, what’s the biggest challenge to EOS becoming an Ethereum killer? The popular blockchain itself may manage to stay ahead of the pack that’s gaining on it. The upcoming Ethereum 2.0 upgrades may be enough to keep these rivals at bay. With the competition heating up, and little to differentiate itself from the rest, this platform, and its native token, may have a tough time rising above their current also-ran status.
Still Not a Stand-Out From the Crowd
The EOS.IO platform may have billionaire backing on its side. Its blockchain may have many advantages over the current top dog in the space, Ethereum, as well. But, while it’s not lacking in terms of scalability, speed and transaction fees, this fails to differentiate itself from the rest of the crowd.
Add in that Ethereum’s 2.0 upgrades could help it maintain its lead, and it’s hard to be confident that it’ll end up breaking out in price in the near-future. If more developments, like further platform upgrades, or news such as the Bullish Global exchange news that sent it soaring briefly last month, play out, we may see another pop in prices.
Until we see more progress with EOS, however, it may be best to hold off on this token, and focus more on the rest of the pack.
On the date of publication, Thomas Niel held a long position in Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.