EOS' Dan Larimer Responds To Its Bancor Algorithm And RAM Trading

EOS RAm Trading speculations have been on the rise lately as EOS Redditors have exclaimed that someone has recently turned $10,000 worth EOS into $80,000 by only making RAM Trading. According to recent price spikes, the RAM in EOS RAM is worth about $4 USD per KB.

Because of this, the CTO of EOS, Daniel Larimer, has recently explained to the media about the current EOSIO RAM Market and the Bancor Algorithm. According to the company, while RAM can be purchased the clients cannot exchange it amongst themselves. This means that the transactions have to made via the company, as there is no P2P market. EOS’ supply of RAM will be overseen by voters.

Adopting A Free Market Approach

According to the CTO, EOSIO adopts a sort of a free market approach when dealing with the allocation of rare assets. It is because of this that there is no P2P market. The company states that by only letting the clients buy and sell RAM, it enables the market to have more liquidity while encouraging value disclosure and price discovery at the same time.

If the market has less unallocated RAM, the cost will be higher, while if the market has a lot of it, the prices decrease, which explains how people are able to make so much money by buying and selling RAM. They follow the oldest rule of capitalism: buy low, sell high.

The Bancor Algorithm

The algorithm known as the Bancor Relay is the key to this free market. Initially designed to ensure that the flows of buying and selling RAM in the market work, it looks like there is an issue with the algorithm.

According to Daniel Larimer, Bancor Relay weights on the EOS blockchain, but there is a parameter on the algorithm that has been set a 0.05% instead of 50% as it was supposed to and this introduces a heavy factor of volatility in the market. In fact, considerably more volatility than it should.

To solve this issue, the CTO of EOS has stated that some teams will be working on this in the near future to find proper solutions to this problem and change the code.

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