EOS, a Layer-1 blockchain based on Delegated Proof-of-Stake (DPoS), has not been immune to the market downturn in the second quarter of 2023. The cryptocurrency market has been grappling with instability, and EOS has felt the impact as well.
During Q2, several regulatory events took place in the United States, resulting in enforcement actions against major players such as Coinbase and Binance. These actions classified certain L-1 tokens as securities, causing a negative ripple effect across the alt-L1 token market. However, BTC and ETH have not been implicated in these allegations.
Although EOS was not directly involved, it still experienced the effects of the market downturn.
According to Messari, EOS’s financial performance in Q2 showed a further decline compared to previous quarters. The network’s market cap decreased by 43% quarter-on-quarter, dropping from $1.3 billion in Q1 to $740 million in Q2. In terms of market cap rank, EOS slipped from 42nd to 49th among tokens with similar market caps.
EOS’s revenue, generated through fees collected by the EOS Resource Exchange (REX), also experienced a downturn. It witnessed a 19% decrease when valued in EOS and a 29% decrease when valued in USD, primarily due to the depreciation of EOS’s price.
However, despite the decline in revenue, it still performed better than the network’s market cap. This suggests that the decrease in EOS’s price was not driven by the network’s fundamentals but rather by external market events.
In the past four quarters, EOS has witnessed fluctuating market cap figures. Additionally, its quarterly revenue in USD has consistently decreased. The revenue valued in EOS has also followed a downward trend in the last three quarters.
Despite the challenging financial landscape, EOS made a significant move in April 2023 by launching the EOS EVM (Ethereum Virtual Machine) during early Q2. This addition introduced a new element to EOS’s tokenomics.
The EOS EVM operates as an execution environment, deployed as a smart contract on the EOS native network. It is comparable to Aurora on NEAR and employs EOS as its gas token.
In the event of increased network activity, the EOS EVM has the potential to become the primary contributor to the value of EOS. Not only could it generate more fees than the native EOS network, but a considerable portion of these fees could also be burned, depending on governance decisions. This development has the power to shape the future of EOS and improve its overall market performance.
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