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EOS: Should investors be worried?

EOS, a rising star in the smart contracts market, shocked the financial community with its record breaking ICO, the biggest and longest. Over the course of a year, EOS will raise possibly over 2 billion dollars worth of Ethereum all without having any form of working product and only a whitepaper to depend on.

While having an impressive team some with successful business’s behind them, the scale has brought the project a high degree of deserved scrutiny.

One well-documented concern was the unique method that the EOS team choose to execute their ICO process. Labelled a “continuous distribution model”, whereby over the course of 1 year, 1 billion EOS tokens will be sold off on an almost daily basis in tranches.

This puts the leadership of EOS in an interesting position as they can actively influence the price of EOS tokens through aggressive marketing and PR.

Also mentioned in the EOS FAQ is that holders of the EOS ERC-20 tokens are actually entitled to no rights whatsoever, and specifically, holders should not expect any digital assets in exchange for current EOS tokens. EOS tokens do not possess any use cases, attributes, functions, or features that can be used on any future EOS platform.

The EOS FAQ also prominently states that proceeds from the ICO process will be the revenue of block one. Block one is a private company registered to the Cayman islands, and it is the company behind the development of the EOS platform. As a private company it has total power to spend the ICO proceeds however they want. Block one is also entitled to 10% of token supply or 100 million tokens, on top of proceeds from the token sale. Critics in the community have labelled these terms as excessive and damaging to the credibility of the project.

If successful, EOS has the potential to facilitate transactions on a truly global scale, taking a large market share of the smart contracts space

However, investors have yet to receive justification of its year-long, multi-billion dollar fundraising campaign, or what the team intends to spend it on.

With EOS token holders having no rights whatsoever or future guarantees, these investors have thereby placed huge trust in the EOS management and their ability to turn hype into tangible results.

The longer the market waits for real achievements from EOS, the more investors may be concerned that something might not be quite right behind the scenes.