The EOS ecosystem is once again on the brink of change, as the EOS Network Foundation (ENF) is coordinating the end of several recently launched projects. As a non-profit entity, the ENF receives 2% of EOS from the annual network inflation to strategically enhance and advance the EOS network development efforts. On August 8, the X platform formerly known as Twitter hosted a Spaces event featuring ENF CEO Yves La Rose to deliver an important “Alpha” message to the community. The funding channel for public goods will undergo a fundamental shift, with approximately 25% of the ENF’s annual inflation budget shifting to a for-profit framework. This change is a departure from the quadratic funding approach previously adopted by the broader open source community through Pomelo. The EOS Yield Plus and ENF grants programs will also be terminated to make way for the newly formed for-profit EOS Labs. This new venture, operating from the east, adopts a business philosophy that La Rose hopes will maximize return on investment, something the grants program failed to achieve.
In response to recent market conditions and project-specific considerations, Yves La Rose officially announced the termination of these emerging initiatives. Among these efforts is Yield Plus, an initiative designed to revitalize the EOS DeFi ecosystem, increase the total locked value (TVL) within EOS DeFi, and enhance the yield prospects of EOS asset holders. Yield Plus' comprehensive 77-page blue paper was jointly curated by EOS Nation, Greymass, 0rigin, Defibox, Joe Louis, Pizza DeFi, and EOS Asia. These teams assumed advisory roles and made important contributions to the initiative.
Yield Plus begins operations on August 28, 2022; however, financial support ends on August 6, 2022, marking the project’s allocation rate dropping to zero. The ENF team recognized the importance of Total Value Locked (TVL) after recognizing its stabilizing role during recent market volatility. Notably, a striking observation emerged: approximately 84% of the cumulative returns went to a single source, raising obvious concerns. While some community members advocate the importance of DeFi within the EOS chain, ENF has shifted its focus to GameFi. La Rose recently stated that it believes this shift can promote the next billion users to enter the blockchain.
Despite Norman Cousins’ claim that history is a broad warning system, the implications of properly allocating capital resources and deploying grant funds seem to have escaped the attention of La Rose and his team. This experience highlighted the capital-intensive nature of grant programs, as seen in their disregard for the cautionary advice issued by Larmier and Block.One (B1). Larimer, the creator and founder of EOS, has candidly revealed in public interviews the enormous difficulties encountered by B1, mainly due to the legal fees and operational overhead associated with such programs. It took La Rose and his team about 1.5 years to gain a semblance of understanding, conveying to the community the fact that the grant framework requires a significant capital investment, as human resources are an indispensable requirement. About 50% to 60% of the expenses are attributed to the operational maintenance of the program itself.
The ENF has allocated a total of $20,979,546 in grant funding, a fact documented in quarterly public reports, starting in the fourth quarter of 2021 and ending in the first quarter of 2023. This revelation means that at least $10 million has been spent on administering the program itself, according to insights shared by La Rose on Spaces.
Additionally, ENF publicly disclosed that there was a significant allocation of approximately "$2,238,888 to the Pomelo Grant Matching Pool" during the first five quarters. This funding was then dispersed across a total of 652 proposals, giving EOS token holders the power to determine the allocation of public goods funds. Sadly, this aspect of their efforts will be terminated after the seventh quarter, which is about to end.
In 2019, Block.one (B1) demonstrated a clear commitment to the decentralized community by donating a substantial commitment totaling $600,000 to the development of this quadratic grant program. This initiative aims to provide a platform for decentralized communities to exert influence and powerfully combine intention with action by substantively supporting projects in their common field. In addition to serving as a medium for resource allocation, this platform also effectively promotes interaction between communities, familiarizing members with projects and developers, while cultivating a sense of solidarity within the community, ultimately extending influence beyond public goods.
The announcement of EOS Labs marks a major milestone within the EOS ecosystem, as it operates independently and separately from Yves La Rose. It is unique in that this is the first division not directly overseen by him. This novel concept is guided by an alternative leadership, fully accountable to the block producers. La Rose emphasized the historical nature of this development, marking a shift from his directly involved role in ENF and ENV. While an automated distribution system is expected in the future, for now ENF will act as an intermediary to forward funds. This division will have a research team and fill a gap in ENF's current structure. In a public blockchain ecosystem, allocating a large portion of the network's inflation to a profitable investment division involves numerous impacts and trade-offs, including concerns about potential centralization, reduced transparency, and reduced community involvement.
Admittedly, navigating prematurely terminated initiatives is challenging. However, the ability to quickly pivot and cut expenses remains critical in the face of greater market demand for flexibility. Regulatory scrutiny and declining market volumes have converged to create a uniquely complex situation in the blockchain space. Whether this crucible of pressure will produce valuable gems is uncertain and will take time to judge. However, sensitive responses to market signals and flexible strategy shifts have the potential to enhance prospects for survival.
Original address: https://roundtable.io/crypto/antelopeio/eos/eos-ecosystem-update
Disclaimer: This article only represents the personal views of the original author, and no part is intended to be, nor should it be considered, investment advice.
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