Investors Hoard RAM on EOS blockchain, Push Prices Up for Other Developers
Speculative investing has resulted in a significant increase in RAM prices on the EOS blockchain. Developers need to purchase RAM according to the requirement of their smart contract. However, investors have bought RAM and created an acute shortage of resources for developers. The cost of 1 MB RAM on the EOS network peaked at 920 EOS, equivalent to $8160 at press time.
Investors buying EOS RAM
Developers who want their dapps to work on the EOS blockchain need to acquire computational resources from the network. The amount of resources they need to purchase depends on the requirement of their smart contracts. RAM prices began to rally on July 01, 2018. The price of 1 MB of RAM on the EOS blockchain went up from around 100 EOS to 919.64 EOS on July 03, 2018.
It is believed that investors were responsible for buying up these computational resources. They speculated that its prices might rise in the future with the adoption of EOS. If more developers want to build their smart contracts on EOS blockchain, there will be a higher demand for RAM, leading to the investors profiting from the market.
At the highest point of the rally, 1 MB of RAM cost upwards of $8000. Developers of decentralized applications typically cannot afford this high cost of entry, especially during the launch phase of their smart contract.
EOS Community Proposes Solution
The EOS community is already dealing with its internal problems regarding block producers. The increase in RAM prices was becoming another crisis for the platform. An announcement signaled that the platform might be ready to move to a RAM allocation model instead. The Dawn 4.0 model had been released by Dan Larimer in May 2018.
The EOS community has proposed that block producers confiscate unutilized RAM from investors and return it into the open market. This would normalize prices and developers would also be willing to develop smart contracts on the EOS blockchain.
EOS developers have said that the supply of RAM will rise in proportion with Moore’s Law and eventually reach 4 TB or even 16 TB. While releasing Dawn 4.0, they said, “As RAM is reserved the price will automatically increase so that the price approaches infinity before the system runs out of RAM.”
However, if the problem is not resolved in the short-term, increasing prices may impede the development of EOS based smart contracts.
Current Prices of RAM
EOS RAM prices have corrected significantly from the highs of July 03, 2018. It has now fallen to 336 EOS from 919 EOS, while the capacity utilization is at 79 percent. Although the price remains three times higher than what it was before the rally, it could decline further if developers intervene
Another solution could be that block producers stake their EOS coins and vote to increase the RAM capacity of EOS blockchain.
A Reddit user suggested:
“EOS RAM should be like CPU but full reserve. You stake to use the RAM for yourself. If staked it’s put on the rental market at algorithm price. This creates passive income for token holders, and speculation frees RAM instead of locking it. Better aligns incentives. Dapps that need more RAM can rent or buy.”
Unfortunately, though, RAM cannot be leased and would require a complete overhaul of the EOS consensus.