Seven Years Later: The Rise and Fall of EOS, the $4.2 Billion Failed Dream

A Tower of Babel Built from Code and Dollars

In 2017, the blockchain industry entered its most frenzied growth phase. Bitcoin surged from $1,000 at the beginning of the year to $20,000 by year's end, while Ethereum's smart contracts revolutionized the crypto world. Against this backdrop of capital euphoria, EOS emerged as the most ambitious project of the ICO era, launching with the audacious banner of 'Blockchain 3.0' and boldly proclaiming its mission to 'replace Ethereum.'

Understanding why did EOS fail requires examining its ambitious beginnings. The EOS whitepaper presented an idealistic vision that captured investors' imaginations. The project promised one million TPS (transactions per second), claiming to solve the scalability issues that plagued Bitcoin and Ethereum. It offered zero fees, eliminating the expensive gas fees that hindered user adoption. With ultra-fast block production managed by 21 super nodes, EOS positioned itself as a decentralized supercomputer that would make DApps a reality. This technological utopia resonated deeply with the cryptocurrency community's aspirations.

The project's credibility rested significantly on founder BM (Dan Larimer), widely regarded as a visionary in the crypto space. BM's résumé was impressive: he had suggested to Satoshi Nakamoto to revise Bitcoin's consensus mechanism, founded BitShares and Steemit, and earned recognition as one of the industry's most brilliant engineers. More importantly, BM possessed a utopian idealism, believing that blockchain could fundamentally transform human social structures. Combined with a first-class marketing team, EOS's ambition was laid bare for the world to see.

On June 26, 2017, EOS began its crowdfunding campaign, uniquely planned for an entire year—a stark contrast to most ICOs that lasted only weeks or months. The response was extraordinary: $185 million was raised within the first 24 hours alone. When the crowdfunding concluded, EOS had successfully raised $4.2 billion, becoming the largest fundraising in cryptocurrency history, dwarfing even Ethereum's $18.5 million.

With $4.2 billion in capital, EOS transformed into a financial superpower within the cryptocurrency ecosystem. By April 2018, EOS's price skyrocketed from $5 to $23, representing a staggering 360% monthly increase and claiming the fifth position in market capitalization, surpassed only by Bitcoin, Ethereum, Ripple, and Bitcoin Cash. Media outlets competed to publish headlines proclaiming 'EOS will become the first trillion-dollar cryptocurrency' and 'BM is the next Satoshi Nakamoto.' Even Ethereum developers began to worry that EOS's ascendancy would precipitate Ethereum's decline.

The super node elections captured global attention as a geopolitical event. Prominent figures like Li Xiaolai and Lao Mao entered the competition, while major trading platforms, mining pools, and traditional funds rushed to participate. This election earned the designation 'Wall Street IPO of blockchain.' Communities from China, the United States, and South Korea engaged in what some termed a 'cryptocurrency national war,' with the South Korean community declaring 'not voting means not being Korean.' Li Xiaolai's Coin Capital controlled four node voting warehouses, while the Wenzhou gang made eight-figure EOS purchases. The level of enthusiasm and investment suggested a project destined for unprecedented success.

However, beneath the festive surface, everything was constructed on a tower of Babel made of code and dollars—beautiful in design but fundamentally unstable.

EOS Only Peaked at the Beginning

As the enthusiasm reached fever pitch, critical problems emerged quietly from beneath the celebration. EOS's voting system faced widespread criticism for its vulnerability to control by large token holders, raising serious questions about the actual decentralization of the super nodes. After the mainnet launched, multiple technical issues surfaced, prompting developers to question the network's stability. The deep involvement of major trading platforms and capital consortiums corrupted the supposed fairness of super node elections, generating different voices within the community. Additionally, BM's frequent changes to governance mechanisms created chaos, eroding community confidence.

Yet the market remained immersed in celebration, with all doubts overshadowed by the powerful narrative that 'EOS is about to change the world.' During this golden era, believers were convinced that EOS would become the ultimate overlord of the blockchain industry. However, reality proved far harsher than idealistic dreams, and few anticipated that a project once held in such high regard would experience such dramatic decline within just a few years.

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

At the time of EOS's launch, scalability was the paramount challenge facing blockchain technology. Bitcoin processed only 5-6 transactions per second, Ethereum slightly better at approximately 20 transactions per second, yet both fell drastically short of real-world application requirements. To contextualize, during Alibaba's Tmall Double 11 shopping festival at midnight, the peak transaction volume exceeded 100,000 transactions per second. EOS's promise of one million TPS therefore captured the imagination of the entire cryptocurrency community.

However, reality delivered a harsh reckoning. Four months after the EOS main chain launched, the maximum achieved TPS was merely 3,996—a fraction of the promised million. Meanwhile, Ethereum improved its performance through Layer 2 solutions, and competitors like leading blockchain platforms and Solana rapidly ascended, erasing EOS's claimed performance advantage.

Investigators discovered that the 'million TPS' promise was crafted word magic. BM had quietly inserted a critical premise: achievement required relying on an infinitely scalable side chain ecosystem. Under his theoretical framework, if one chain could handle 4,000 transactions and 100 side chains operated in parallel, they could theoretically achieve 400,000 TPS. However, by 2024, the EOS ecosystem had launched only three side chains, with two becoming 'ghost chains' as their developers abandoned the project. BM responded to mounting criticism by announcing research into alternative scaling solutions, while EOS's market value had already dropped from the top 20.

Beyond the TPS disappointment, usability emerged as EOS's core problem. Although EOS transactions carried no explicit fees, users discovered they had to stake tokens to obtain CPU resources. When network congestion occurred, staking became severe; users reported needing to stake CPU worth 5 EOS simply to transfer 10 EOS. This mechanism effectively froze user funds during periods of high demand. During a DApp traffic surge in 2020, users discovered that 2,000 EOS could only be exchanged for 1.3 seconds of CPU time—requiring ordinary users to perform operations more than ten times to complete a simple transfer.

Compounding these issues, BM instituted a RAM supply cap, triggering market speculation that caused RAM prices to surge 100-fold. Developers faced exorbitant costs to purchase storage resources. Within months of speculation beginning in 2018, RAM prices skyrocketed from 0.01 EOS/KB to 0.9 EOS/KB, severely impacting DApp development and prompting many new projects to abandon the platform.

Ultimately, this resource management model created a user experience worse than Ethereum's. On Ethereum, users could directly pay gas fees to complete transactions; on EOS, users had to first master a complex resource collateral mechanism, often spending substantial sums to purchase CPU and RAM. This barrier significantly hindered DApp ecosystem development, undermining EOS's core value proposition.

Perspective on this period reveals paradoxes. Despite poor user experience, EOS experienced a burst of activity at the end of 2018 and beginning of 2019, driven primarily by on-chain gambling DApps. Data from December 24, 2018, comparing DApp ecosystems across ETH, EOS, and TRON revealed: EOS had 75,346 total users (exceeding TRON's 45,777 and ETH's 33,495); EOS recorded 23,878,369 total transactions (surpassing TRON's 13,803,322 and ETH's 413,019); EOS processed $345 million in transaction volume (exceeding TRON's $135 million and ETH's $44 million). This data suggested that EOS did possess genuine community enthusiasm and ecosystem activity, explaining why veteran crypto players later reminisced about EOS with nostalgia.

Governance Collapse: Bribery, Centralization, and Community Division

BM had placed tremendous faith in EOS's governance model, firmly believing that 21 carefully-designed nodes would far exceed Ethereum's capabilities. He envisioned that two-thirds of nodes would behave virtuously and that the community would vote out malicious nodes, creating a perfect utopia. This idealistic vision answered why did EOS fail—reality shattered these assumptions.

Three months after mainnet launch, bribery among nodes had already become standard practice. To secure EOS block rewards, large holders and nodes engaged in mutual voting arrangements. More troublingly, nodes behaved maliciously in ways that revealed governance failures. When a user's funds were stolen by hackers, the solution required 21 super nodes to blacklist the hacker's address. However, one node failed to implement the blacklist, allowing the hacker to transfer stolen funds during that node's block production time, as if nothing had occurred.

BM attempted to impose constraints through the EOS Constitution but quickly discovered its ineffectiveness. Since super nodes themselves benefited from bribery arrangements, they possessed no motivation to enforce constitutional provisions. The arbitration mechanism proved toothless, lacking actual binding force.

The governance trajectory demonstrated repeated failure. Before mainnet launch, BM introduced an innovative EOS Constitution intended to constrain network behavior through code and rules. However, the constitution underwent multiple revisions within months, generating increasing community dissatisfaction. In June 2018, the initial constitution granted super nodes arbitration authority over transactions, but following power abuse incidents, BM amended it weeks later to prohibit node interference. In 2019, BM abruptly proposed abolishing the constitution entirely, switching to 'user contract governance'—a move that threw the community into chaos and left participants uncertain about future governance evolution. This constantly-shifting governance model destroyed developer and investor confidence in the platform.

During this governance crisis, BM and the parent company gradually redirected focus from the EOS main chain to EOSIO software. BM championed the belief that 'the future of blockchain lies in enterprise applications,' promoting EOSIO as a platform for enterprises to build private chains rather than focusing on optimizing the public EOS network. Critical updates to the EOS main chain nearly ceased, with essential upgrades like cross-chain functionality and storage expansion significantly delayed.

These strategic decisions triggered ecosystem collapse. While the Ethereum community remained highly active with explosive growth in DeFi, NFTs, and other applications, EOS's DApp developer base contracted dramatically. By 2022, EOS was losing nearly 100 developers per month, with multiple EOS browsers and wallet projects simply shutting down.

External Strangulation: Market Challenges, Bear Markets, and Funding Silence

By late 2019, EOS's price fell below $5, eventually hitting a low of $1.8, representing a catastrophic 90% decline from its $23 historical peak. When super nodes faced survival crises, developers fled, and market liquidity evaporated, the EOS ecosystem desperately needed rescue from its parent company.

The community asked a fundamental question: where did the $4.2 billion go? The parent company raised this unprecedented sum ostensibly to support EOS's long-term development, assist developers, and promote innovation. Yet when ecosystem developers pleaded for funding, the parent company distributed merely $50,000 checks—insufficient to pay a single Silicon Valley programmer for two months.

On March 19, 2019, BM provided partial answers in an email to stakeholders: as of February 2019, total assets (including cash and invested funds) reached $3 billion. Of this $3 billion, approximately $2.2 billion was invested in U.S. government bonds, referred to in emails as 'liquid fiat assets.' The remaining capital was deployed into projects with minimal connection to EOS: game company Forte, NFT platform Immutable, and a Puerto Rican resort hotel, among others. Notably, companies receiving investments shared a common characteristic—they bore little relationship to the EOS ecosystem.

The parent company's singular EOS-related venture was Voice, a social platform deployed on EOSIO smart contracts. The company invested $150 million in Voice's development, with the largest expenditure being $30 million for a domain name purchase from a major Bitcoin-holding corporation. However, Voice's trajectory exemplified failure. The first launch event lasted merely half an hour with disappointing content, triggering EOS price declines and widespread disappointment. More than six months later, when Voice's iOS version launched on the Apple Store, the platform was plagued by bugs and errors. The Voice official webpage displayed error messages, claiming security protection from online attacks. EOS holders felt completely betrayed. Voice ultimately announced gradual shutdown in September 2023.

The parent company's investment philosophy—much noise but minimal action—became increasingly apparent. Following Voice's failure, the company made no major investment moves and essentially became dormant. Today, the parent company holds significant Bitcoin reserves, accumulating wealth from $3 billion in 2019 to substantially higher amounts currently—a significant increase and a masterclass in asset management. Meanwhile, EOS received no support from the massive raised funds.

In stark contrast, the Ethereum Foundation and other blockchain foundations continuously subsidized developers and promoted technological innovation. The parent company did almost nothing. An early EOS investor angrily questioned on online forums: 'We invested in EOS because it promised to revolutionize blockchain, not so the parent company could take this money to speculate on Bitcoin!'

The parent company's internal governance structure proved equally troubling. The company increasingly resembled a family business centered on CEO Brendan Blumer, with BM excluded from power. Blumer's family members occupied various executive positions, whose primary visible achievements included rebranding initiatives rather than ecosystem development. BM revealed that he possessed 'no decision-making power,' forced to watch as the team poured resources into EOSIO, an enterprise toolkit customized for large corporations and unrelated to the EOS mainnet.

In 2021, the community initiated efforts to sever the parent company's control. The EOS Foundation, representing community interests, began negotiations with the parent company. After a month of discussing various proposals, no consensus emerged. Ultimately, the EOS Foundation and 17 nodes revoked the parent company's power status, removing it from the EOS management team.

After separation from the parent company, the EOS community engaged in years of litigation over fund ownership, yet the parent company retained full control and usage rights. More ironically, since 2024, BM's public activity has barely mentioned blockchain, with only sporadic technical discussions. His focus has completely shifted to theological preaching, concentrating on Bible interpretation, geopolitical analysis, and mainstream Christianity critiques.

Conclusion

Looking back at this seven-year epic in cryptocurrency history, the collapse of EOS has become a cautionary tale for the entire industry, answering definitively why did EOS fail. No matter how impressive the promised TPS, or how intricate the resource model design, if user experience is complex enough to deter ordinary people, everything becomes meaningless. The once-heralded 'Ethereum killer' ultimately died in the quagmire of its own economic model, chaotic governance, and stagnant technological development.

Seven years ago, EOS's crowdfunding raised $4.2 billion, widely celebrated as the most brilliant financing miracle in blockchain history. Seven years later, this story has become the biggest 'cautionary tale' in the cryptocurrency circle—a reminder that capital, vision, and technology alone cannot guarantee success without proper execution, genuine community alignment, and sustained support. In the end, EOS did not kill Ethereum; it first killed itself.

FAQ

Why is EOS not popular anymore?

EOS declined due to centralization concerns, weaker developer ecosystem compared to Ethereum, and slower adoption. Its governance model also faced significant criticism from the community.

Why does EOS fail?

EOS faced challenges including governance issues, low transaction volume, limited developer adoption, and competition from faster blockchains. High initial hype failed to translate into sustained ecosystem growth and real-world utility.

Why is the EOS coin falling?

EOS is falling due to negative market sentiment and lack of major ecosystem developments. Investor confidence and broader market trends are key factors influencing its price decline currently.

What happened with EOS?

EOS faced significant challenges including frozen accounts due to theft allegations, which damaged user trust. It failed to surpass Ethereum and ultimately declined in market dominance and adoption.