On July 1, RAM in the EOS network cost about 0.11 EOS per kilobyte, a price around which the resource had long hovered. Then, over the course of two days, the price shot up in a nine-fold increase. After peaking at 0.9 EOS per kilobyte earlier today, the price briefly dropped to 0.55 EOS then rebounded again reaching a price above 0.7 EOS.
The RAM available on the network is intended to be used for Dapp development. Users have to purchase a minimum of four kilobytes to open an account, essentially staking out a portion of the network's processing power for their own projects.
The price jump was striking since EOS still has no applications running on it. Why would a share of the network's processing power suddenly become so valuable when no one is actually using it? And why is 86 percent of the total RAM already locked up?
Most have concluded that RAM is being bought up as a speculative scheme, a trend that threatens the success of EOS itself. If instead of being bought for its utility, RAM has become a commodity that is bought and sold for profit, it potentially won't be available as a resource to actually develop Dapps. Additionally, the price could be driven so high that EOS simply becomes too expensive to use.
Hoarding and speculation in RAM are not entirely unexpected developments. EOS creator Dan Larimer foresaw the possibility. Under an earlier version of the EOSIO, users could only sell RAM at the price they paid for it. However, this system was changed in the later version.
"The goal was to disincentivize hoarding and speculation. The downside to this approach is that those who buy RAM cheaply have no financial incentive to free RAM for other users after it gets more congested," Larimer wrote about the earlier system.
In order to prevent such congestion, the updated version "buys and sells RAM allocations at prevailing market prices. This may result in traders buying RAM today in anticipation of potential shortages tomorrow. Overall this will result in the market balancing the supply and demand for RAM over time," according to Larimer.
For now, the market has not yet reached this balancing point: the price currently stands at a 0.73 EOS (or $6.64) per kilobyte at time of press. For the sake of comparison, this is the equivalent of an eight-gigabyte stick of RAM being sold for about $53 million. The hoarding that is now occurring could lead to the same congestion the RAM market solution was intended to avoid.
The EOS community is debating what steps to take. One user proposed invalidating or even confiscating the RAM in the possession of "squatters." Some advocate returning to the earlier system in which RAM could only be sold at the price originally paid. An informal poll indicates that a slight majority supports increasing the amount of RAM. Such an increase would have to be approved by two-thirds plus one of the block producers.
This power vested in the block producers again raises concerns about authority – an already contentious issue. Since the block producers have the power to alter the amount of available RAM in the system, they consequently have the power to affect the price.
An announcement from block producer EOS New York seems to be an attempt to assuage any suspicions of price manipulation on its part. It states "EOS New York will not purchase or sell RAM for speculative purposes. We believe that the resources available on the EOS platform are meant to be used for their utility, not their ability to generate gains."