A majority of top decentralized applications (dapps) running on the EOS blockchain are producing inorganic transactions, finds AnChain.AI.
The Silicon Valley blockchain startup revealed in a May report that 9 out of top 10 EOS gambling dapps had used bots to post an average of 75-percent transactions in Q1/2019. One of the dapps, for instance, had more than 4,500 individual accounts, but its organic human traffic was lower than its bot-generated traffic. AnChain wrote:
“By analyzing the top 10 EOS blockchain gambling DApp transactions in Q1 2019, we are able to determine that blockchain bots contributed to 51% of unique accounts and 75% of transactions, equivalent to roughly $6 million in transaction volume daily.”
The revelation indicated that EOS gambling dapps had fewer real users, which typically led their developers to produce fake user activities. The move allowed them to achieve highly-randomized results in games, followed by a top rating at the behest of Block.one, the company backing the EOS blockchain ecosystem.
AnChain provided a stark comparison between the two leading dapps on the blockchain. DApp-1, the first dapp, appeared to have lesser traffic than DApp-2, the second dapp, but its organically generated traffic was higher, proving that DApp-2 was leveraging bots to augment overall usage metrics of the ecosystem.
“Without the use of our sophisticated prediction models, DApp leaderboard websites, investors, developers, and enthusiasts alike will be fooled into believing DApp-2’ssignificant 200K+ transactions (roughly 4x that of DApp-1 transactions) signals more popularity, value, and usage. While the reality is that DApp-1 has the most authentic human accounts and it did not employ a bot army to augment its numbers,” – wrote Victor Fang, the CEO of AnChain.ai.
What This Could Mean for EOS Price
The bogus transactions, as explained above, accounts for $6 million of total daily EOS token volume. It helps create a favorable investment narrative for the asset since outsiders look at a higher daily transactional amount as a sign of growth. But, as AnChain indicated, the metric is hugely flawed, which means there are more investment risks associated with the EOS token than admitted.
Transactions costs on the EOS blockchain continue to be minimal if compared to competitors, including Ethereum, Cardano, and Tron. That could allow more decentralized application developers to choose EOS, much like Effect.AI, Medipedia, Sense Chat, Billionaire Token, and others, the projects that migrated on it from other blockchains.
But the fact that dapps don’t have users as required equalizes EOS to a housing project that has workers building homes despite a lower number of homebuyers. That does not necessarily mean that the blockchain is inefficient — the lower turnout could be due to a lack of awareness about dapps in general.
That said, EOS appears overvalued against the limited organic activity on its blockchain. Its bullish case solely depends on trust and real adoption. Investors need to keep holding the cryptocurrency or purchasing more of it to back the network. At the same time, the team behind the project needs to ensure broader adoption, which it appears to be doing with its latest announcement of launching an EOS-enabled social media platform.
As of 1030 UTC, the EOS-to-dollar exchange rate was trading at $6.32, now up more than 150-percent on a year-to-date basis.