Your town just decided to introduce fiber-optic Internet access. After deliberations and town halls, and careful planning by engineers, the community agrees to buy miles of cable for installation.
Then, just as the Mayor is about to sign the contract, members of the town council and chamber of commerce buy up every inch of fiber – and sell it back to the public at a massive premium.
That’s the situation facing EOS, a decentralized community whose governance is somewhere between the Philadelphia Convention and a free-market Lord of the Flies. Rather than focusing on creating new dApps and extending the network, some developers have found a more profitable business model: trading network resources.
A speculative market has emerged for RAM, the gold of the EOS economy. RAM is vital to the creation and growth of distributed applications. But unlike a token, there’s no secondary trading–RAM is bought and sold from the network, via an algorithm that mimics market pricing.
Because it is a scarce resource, RAM prices have skyrocketed in the past week, reaching a peak of 900 EOS per megabyte. Dan Larimer (CTO of EOS) has proposed revising the algorithm for pricing; until then, an EOS Rich List, collected from data visible on the EOS blockchain, shows that users are hoarding hundreds of megabytes of RAM.
That bubble may be hampering the growth of EOS. For one thing, simply opening a new account requires a fee of 4kb–which, at peak prices, cost around $30.
Ram prices soared over the past few weeks. Source: eos.feexplorer.io Ram for Sale
Some developers have made significant profits from selling their RAM. Everipedia, which seeks to establish a blockchain-based, for-profit alternative to Wikipedia, began buying RAM in June to airdrop its EveripediaIQ token. But as prices rose, they decided to sell instead.
Everipedia, along with its partners Ikigai Asset Management and Dollar Vigilante, constitut...