1000% Increase in EOS RAM Price Might Be Making Speculators Richer, but It Is Making the EOS Ecosystem Poorer

Siamak Masnavi
  • 3 Jul 2018
  • /
  • In #EOS

During the past week, there has been a massive increase in the price of EOS RAM that DApp developers need to pay for each user account. Although this has helped speculators make a killing, it is sadly hurting the ecosystem by making it prohibitively expensive to create large scale DApps (such as a decentralized social network).

The first thing to note here is that EOS is different from the Ethereum network where users pay transaction fees (i.e. "gas", which is paid for using ether) to use the network when they want to interact with DApps. With EOS DApps, the idea is that either the user has an existing EOS account, or he/she does not, in which case the developer has to decide either to insist on all users creating/registering their own EOS accounts elsewhere, or creating a new EOS account for each of these users and bearing the cost of doing so.

When Dan Larimer and the rest of the EOSIO team were thinking about all of this, they envisioned the cost of account creation to be pretty insignificant. According to the EOS.IO White Paper,

"In a decentralized context, application developers will pay the nominal cost of account creation to sign up a new user. Traditional businesses already spend significant sums of money per customer they acquire in the form of advertising, free services, etc. The cost of funding a new blockchain account should be insignificant in comparison. Fortunately, there is no need to create accounts for users already signed up by another application."

This might have been true when the EOS Mainnet first launched, but the recent explosion in the EOS RAM price means that this is now far from true since each new account requires 4KB of RAM, which means that at current prices (0.5 EOS per KB for RAM, one EOS token worth around $9), it will cost around $18 to create a new EOS account.

(If you would like to know the latest EOS RAM price, there is an EOS trading tool called FeeXplorer that shows a chart displaying in real-time the price of EOS RAM expressed not in USD, but EOS/KB.)

The funny (or sad) thing is that around 16 days ago, one EOS GitHub user ("dmorris99") was complaining about the cost of building a large-scale DApp at a time when the cost creating a new EOS account was less than $1:

"If one of the goals of EOS is to be able to very large platforms (e.g. social network), then how can 4kb * 0.015 EOS RAM cost per account be within the desirable tolerances? 0.5-1.0 USD per account simply can't work if your target is to create tens or hundreds of million user accounts for your dApp!"

You might be wondering why should EOS RAM should cost so much. Well, currently, according to one BP, EOS New York, around 86.44% of the RAM across the EOS network has been reserved (55.32GB out of 64GB), and it is this scarcity (caused by speculators and not genuine users or dApp developers) that is creating FOMO (Fear Of Missing Out) and pushing the RAM price higher. 

Hopefully, this issue will get resolved soon, in some way - otherwise, serious and talented developers who are thinking of building, for example, decentralized alternatives to Facebook or Uber, may decide to abandon EOS and move to other platforms, thereby hurting the future of the EOS ecosystem.