Standard Kepler

RAM Prices Skyrocket in EOS Dawn Resource Allocation Model

07/02 – 07/08

RAM Prices Skyrocket in EOS Dawn Resource Allocation Model
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WEEKLY RECAP

  • Total market cap. reached $277.89 bn (a 8.5% increase), where 7 day trading volume surged 8.9% for top 100 crypto


WEEK AHEAD

  • 9 July: VEN to launch VeChainThor mobile wallet and X-Node binding service
  • 11 July: ETH to participate at the RISE Conference in Hong Kong


THOUGHTS OF THE WEEK

The unexpected skyrocketing price of random-access memory (RAM) on the EOS network caught investors’ attention this week. As noted in our Chart of the Week, the RAM price once reached 919 EOS/ 1MB RAM, a 5.1x increase in the price of RAM on the network (24h).

RAM is a precious resource in the EOS network, which needs to be purchased by developers before deploying decentralized applications (Dapps), and expensive RAM makes the EOS blockchain unviable for many business models. This highlights a drawback of the market-based RAM allocation model introduced in EOS Dawn 4.0. The Bancor algorithm is adopted to determine RAM allocation in the EOS network, where the price of RAM is positively correlated to the total supply of EOS tokens and negatively correlated with the available RAM in the EOS network.

In addition, EOS adopted Bancor Connector Weight which measures the price sensitivity of RAM against its trading orders in the EOS network, where a higher weight results in greater liquidity and price stability. This parameter is set unintentionally as 0.05% instead of 50%, which has allowed heavy slippage of large RAM trades and increased price volatility.

Contrary to the previous allocation model of EOS where the price of selling RAM was fixed, the current EOS’s resource allocation model encourages hoarding where developers anticipate future shortages of RAM, thus leading to the surging price of RAM this week.

We believe that enhanced transparency in RAM supply would encourage a more efficient RAM allocation in the EOS network. As recommended by Daniel Larimer, the elected block producers can set a sustainable growth rate by adding a fixed amount of bytes-per-block. In addition, the price volatility of RAM can be reduced by raising the Bancor Connector Weight on the EOS blockchain, which reduces slippage and makes the pricing of RAM more predictable.

 

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