Our Network: Issue #8

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Welcome to Our Network #8. This week we’re covering early-stage networks. Before we dive into the on-chain insights though, I’d like to make a brief announcement.

🎉 Introducing: Crypto AMA

Today I am announcing a new project that I have been working on for the past year called Crypto AMA.

Crypto AMA is a telegram group that I run comprised of more than 600 institutional investors, operators, and researchers in the blockchain space. Each week, the group hosts founders and leaders from top crypto projects, who appear as guests and answer questions from the audience via text message in Ask-Me-Anything (AMA) format.

All of the live AMAs are moderated by yours truly, and I have had the distinct pleasure of hosting 50 talks with some of the top names in crypto, including:

  • CZ (CEO of Binance)

  • Ryan Selkis (Founder of Messari)

  • Emin Gün Sirer (Founder of Ava Labs)

  • Galen Wolfe-Pauly (CEO of Urbit)

  • Arthur Breitman (Founder of Tezos)

One piece of feedback I have received over the past year is that it would be great to share our past transcripts with the broader crypto community. This comment from Brian Kerr (CEO of Kava) particularly stuck with me:

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So today we are doing just that and publishing a huge number of our historical AMA transcripts on a brand new website, which you can view by clicking here.

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You can also subscribe and get new AMA transcripts delivered straight to your inbox as soon as they are published. For example, today we are doing an AMA with Opyn, a new trustless insurance primitive, and we will publish that transcript later this week.

Now let’s get back to on-chain fundamentals.


Network Updates

This week our contributors cover two early-stage networks: Handshake (which recently launched) and Kadena.

📌 Handshake

Contributor: Chjango Unchained

  • PoW: Handshake is secured by Proof-of-Work mining using a customized hashing algorithm that has yet been dubbed a name. It is a combination of blake2b + sha3 (keccak). Handshake mainnet went live on Feb 3, 2020. In less than 2 weeks, hashrate on Handshake has climbed to 19.46 TH/s—amounting to Bitcoin's hashrate when Bitcoin had been running in production for nearly 4 years. Notably, ~45% of the total network hashrate is currently represented by one mining pool: 6Block. However, the network has been getting more decentralized over time as more miners come online, because initially, 100% of the network was being mined by 6Block. (source)

  • Difficulty: The initial network target contained 40 leading zero bits, which required roughly 2^40 rounds of hashing to find a block. This means that the Poisson distribution of the time between Handshake blocks is around 10 minutes, or 600 seconds. But due to staggering amounts of hashrate that came online at genesis, where roughly 220 GH/s from hundreds of hardware devices began mining, this led to blocks being mined every 5 - 30 seconds in the first few days before network difficulty adjusted accordingly. Consequently, the difficulty has now risen to 54 leading zero bits (2^54 rounds of hashing), where each incremental bit equates to 2 times the amount of required hashrate from the previous hashrate. (source)

  • Airdrop: Handshake has pioneered the advent of privacy-preserving airdrops. The top 250,000 GitHub users ranked by their number of followers with a minimum of 15 followers have had their SSH and PGP keys added to a [Merkle tree](https://github.com/handshake-org/hs-tree-data). Likewise, an additional 30,000 keys were taken from the PGP WoT Strongset and added to the tree. In order to preserve privacy, each key included in the airdrop merkle tree has had a random nonce encrypted to it and posted publicly.

    For EC keys, the privacy preservation mechanism is straightforward and is something akin to HD key derivation, using the encrypted nonce as a scalar to derive a new key not known to the public. For RSA keys, a more novel approach, called [GooSig](https://interchain-fm.simplecast.com/episodes/003), is necessary. All of this is required to obfuscate the link between the key and the key owner's real world identity. Every person with a valid key has several thousands of HNS coins tied to their keys when coin transfers are unlocked after 2016 blocks, or in approximately 24 hours from the time of publication, have been mined.

  • Supply: One block yields 2000 HNS up to a total supply of 2.04 billion coins. At the time of publication, there have been 3.7 million coins mined. A third of all coins, or 680 million HNS, are mineable and the other two-thirds of all coins, or 1.36 billion HNS, are earmarked for airdrop redemption. Naturally, some coins likely won't be redeemed by airdrop recipients. There's another mechanism that further diminishes the total supply. Coins exchanged for domain names on Handshake are sent to a sort of smart contract, known as a covenant, that get locked up and effectively burned, decreasing the amount of coins in circulation.

    The below chart shows you the total number of coins mined so far. But ahead of transfers being unlocked at 2016 blocks, airdrop recipients haven't started redeeming coins from the protocol yet. Note that in the event that an airdrop recipient redeems their coins, it constitutes as equivalent to a "mining" event, such that the protocol mints new coins through a coinbase. Also note that the below Coins Burned chart shows 0 because no coins have been burned yet to buy names since transfers aren't unlocked.

    Fun fact: A unit of HNS is denominated in 1 million "dollarydoos", a Simpson's reference to the fictional Australian currency.

    Circulation:

    Burned:

  • Donations to other open-source projects: 1.36 billion coins have been earmarked to be distributed by the protocol over time to stakeholders in the greater FOSS and cryptocurrency communities who redeem their allocations by submitting various proofs.

    • Pre-Launch Blockchain Development: 7.5%

      • AKA the initial core development team

    • Financial Contributors and Pricing: 7.5%

      • AKA the initial investors

    • Free and Open Source Software Developers: 65.0%

      • The lion's share of the premine was used for a no-strings-attached airdrop to the FOSS community through crawling GitHub and the WoT Strongset for SSH and PGP keys. No cryptocurrency project in the history of this industry has done this before, and the library that was hand-written to enable this is [open-source](https://github.com/handshake-org/hs-airdrop).

    • Domain Name Holders: 7.5%

      • AKA Alexa Top 100,000 TLD owners are incentivized to claim their names that have been pre-reserved on Handshake.

    • CA/Naming Corporations and Other Blockchain Projects: 7.5%

      • ICANN, ENS, Namecoin, Blockstack, Cloudflare, Keybase, Verisign, Public Internet Registry, Afilias, Brave, and IdenTrust.

    • Non-Profits and FOSS Projects: 5%

      • Other non-profit organizations

📌 Kadena

Contributor: Tony Pham, Head of Marketing at Kadena

  • The Kadena public blockchain has now had over 3 million blocks mined, a 50% increase over the course of a month. The network hash rate remains consistently between 30-40 TH/s.

  • Kadena nodes are decentralized across the world. While the United States has the largest share of nodes (39.4%), the majority of nodes are running in a range of countries including China (18.2%), Japan (15.2%), and the European Union (15.2%).

  • There have been over 60,000 successful token transfers on the Kadena network. That is a 20% increase in the number of transactions taking place over the past month. Below is a visualization of the transactions:

  • Block time for KDA has been stable at ~3 seconds, making Kadena the fastest POW blockchain on the market and one of the fastest public chains overall. (For context, Ripple runs one block about every 3.5 seconds.)


Our Network is a weekly newsletter where top blockchain projects and their communities share data-driven insights. If you know someone who is interested in on-chain fundamentals, please share this post.

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Our Network: Issue #7

Updates on Nexus Mutual, PoolTogether, Stablecoins, Kyber, and 0x.

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Our Network is a weekly newsletter where top blockchain projects and their communities share data-driven insights.

Welcome to Our Network #7! (And maybe the beginning of a new crypto bull market?)

This week our contributors provide data-driven coverage on some of the marquee projects in the decentralized finance space:

  • Nexus Mutual

  • PoolTogether

  • Kyber Network

  • Stablecoins

  • 0x

Thanks for being a subscriber. Now let’s dive into the updates.


Network Updates

📌 Nexus Mutual

Contributor: Richard Chen, Partner at 1confirmation

  • $1.6M worth of smart contract insurance is currently taken out on Nexus Mutual. Active cover amount is one of the two important KPIs for Nexus (the other being capital pool size). The growth in cover amount in Dec and Feb were from large covers taken out for Flexa and ParaSwap.

  • Breaking down the active cover amount by smart contract system. Flexa ($589k), Compound ($314k), ParaSwap ($265k), and Uniswap ($210k) currently have the most money being insured.

  • The current capital pool size (insurance fund backing claims) is $2.6M or 13.1k ETH. This is the second of the two important KPIs for Nexus. Note the USD graph has been fluctuating due to the volatile price of ETH, but the capital pool which is denominated in ETH has been steadily growing.

  • The premiums for smart contract insurance are partly determined by the amount of NXM staked on a smart contract system – more NXM staked means cheaper premiums. Risk assessors earn staking rewards from the premiums of new covers taken out on the smart contract system that they staked on. So far 792k NXM (worth $2.2M) has been staked.

  • Breaking down how much is staked on each smart contract system. Risk diversification is crucial for insurance to succeed and Nexus is offering insurance for a wide variety of different dApps. For more stats see https://nexustracker.io/.

📌 PoolTogether

Contributor: Leighton Cusack, CEO of PoolTogether

  • PoolTogether is a prize linked savings protocol. As such, a topline metric is the amount of money in the weekly prize. Since launching the Dai pool the prize has grown rapidly, driven by:

    1. Increases in the Dai Saving Rate

    2. Increases in unique players contributing to PoolTogether

    3. Increase in the average deposit size to PoolTogether.

    The chart below shows the week over week increase in prize amount:

  • As noted above, part of the growth in prize value is due to an increase in unique players (measured by unique Ethereum addresses in the pool). This has been increasing an average of 36% week over week.

  • Part of the growth is also driven by an increase in the average deposit size. The later half of January saw more whales entering the pool driving up the average deposit size.

  • Total pool size broke $1 million Dai for the first time. Of this, ~$778,000 Dai is from player deposits and ~$250,000 Dai is sponsored.

📌 Kyber Network

Contributor: Deniz Omer, Head of Ecosystem Growth at Kyber

  • DeFi dapps pulling in liquidity from Kyber have increased their volumes by 87% over the last two quarters. Dapps like Fulcrum and DeFi Saver have shown especially strong growth with 499% and 284% increases respectively over the last six months. 1inch.exchange is another strong performer with continuous month-on-month growth while Nuo has seen a dip since its peak in July. (Note: volumes from DeFi integrations like Set Protocol, Dex.ag and a few others are not represented in this data as they do not have registered wallet addresses on Kyber.)

  • The number of new users (measured by the number of new addresses interacting with Kyber within that month) has been on a continuing growth trend since Kyber’s mainnet launch back in 2018. Within this time period a total of 52,393 addresses have carried out 633,946 trades worth 2,853,033 ETH (equivalent to $535M). Note: new address numbers above exclude users and addresses interacting directly through DeFi dapps like Fulcrum and Nuo.

  • Trade volumes facilitated by the top 6 reserves on Kyber increased 1,365% over the last 12 months, from $4.1M in January 2019 to $60.8M this January. Kyber’s own reserve has especially shown strong growth across ~45 different tokens it market makes for. For DAI, one of the ‘blue-chip’ tokens of the DeFi space, it is highly price competitive against Oasis with both Oasis and the Kyber Reserve supplying $17M worth of DAI trade each to Kyber in the last 3 months.

  • KyberSwap users come from a very diverse range of countries across the globe with users from more than 100 countries trading on KyberSwap in the last 90 days. 37% of users come from Europe, 35% from North America, 17% from Asia, 5% from Oceania, 3% from Africa, and 3% from South America. The US makes up the single largest country and accounts for just under a third of KyberSwap’s volume.

📌 Stablecoins

Contributor: Ankit Chiplunkar, Research Lead at TokenAnalyst

  • On-chain stablecoin volumes overtook the on-chain Ethereum volume in the middle of 2019, largely due to USDT transitioning to Ethereum. A total of $211B was transacted on-chain between Jan 2019 to Jan 2020, and on-chain stablecoin volume reached a peak of $29B in Nov 2019.

  • On-chain stablecoin volumes saw a significant uptick from $11B in the month of Jun 2019 to $21B in the month of Jul 2019. One notable catalyst for that increase was Binance, which transitioned from USDT Omni to USDT ERC20 in Jul 2019.

  • Over the last 13 months:

    • 33% of the on-chain stablecoin volume was due to centralized exchanges. Exchange volume represents volumes related to inflow volumes, outflow volumes and intra-exchange volumes.

    • 8% of the on-chain stablecoin volume is due to DeFi protocols. We tag a transaction as DeFi if it emits three or more events, DeFi is composability.

    • The remaining 57% volume is due to other use-cases, which include OTC transfers, custody management, P2P transfers. It also includes exchanges which we don't track (eg. Coinbase) and DeFi transactions which don't fit our definition.

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  • During this timeframe, we can also see how different stablecoins are being used:

    • 35% of on-chain volume of USDT is due to centralized exchanges and 2% is due to DeFi.

    • 32% of on-chain volume of USDC is due to centralized exchanges and 3% is due to DeFi.

    • DAI leads the pack in DeFi with 86% of its volume due to DeFi transactions.

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Methodology: (1) This update tracks the volumes of DAI, GUSD, PAX, TUSD, USDC and USDT. (2) The volumes of both DAI and SAI tokens are used to represent the volumes of DAI token. (3) This post currently tracks the centralized exchange volumes for the following centralized exchanges: Binance, Bitfinex, Bittrex, Kraken, Kucoin, and Poloniex

📌 0x

Contributor: Alex Kroeger, Data Scientist at 0x

  • Among the changes enacted in v3 of 0x is a new system of token economics. ZRX is the governance token of the 0x protocol, but it also serves additional economic functions in the ecosystem. In previous versions, the ZRX token served as the unit in which users would pay fees to 0x relayers. In practice however, there was little overlap between addresses that traded on 0x and addresses that held ZRX. This led to the proposal and approval of 0x Improvement Proposal #31, an introduction of stake-based liquidity incentives for the 0x protocol. Under this new incentive system, there is a small protocol fee associated with each trade, which are then distributed to market makers in proportion to:

    1. the protocol fees generated from their orders

    2. the size of their ZRX stake relative to all ZRX staked

    Market makers can accrue staked ZRX beyond their own balance by creating staking “pools” and sharing rewards with third-party stakers. There is now 11.8M ZRX (~$3M) staked (source). This represents ~1.1% of the total supply and 2.9% of all ZRX holders with a balance of >1K ZRX. Around 51K ZRX were provided by market makers themselves. The rest was provided by third-party stakers, most coming in after the introduction of a frontend to interact with the staking contracts on January 9.

  • The stake-based incentive system also has big implications for governance of the 0x protocol. The 0x ecosystem is driving toward binding on-chain governance for the ZRX token. Under the new staking system, 50% of voting power of the staked tokens are transferred to the pool operators, the market makers themselves. So while non-market makers who have staked retain a large share of voting power (enough to cancel out the vote of the market maker if they choose), a great deal of voting power was transferred to market makers. The 11.2M ZRX currently staked is nearly double the largest amount of ZRX involved in past ZEIP votes (6.6M ZRX for the v3 protocol vote), and represents a major step forward for community participation.

  • In v3, every fill is accompanied by a protocol fee paid in ETH (or WETH) that is proportional to the gas price paid. While the median protocol fee is 6 cents, the distribution rises sharply near the upper tail.

    One of the primary motivations for paying high gas prices for orders is to realize an arbitrage opportunity. One of the aspects of DEXs on Ethereum that makes them different from centralized exchanges is the ability of DEXs to support atomic arbitrage. This means that multiple DEX trades can be combined into 1 transaction, so when a trader sees mispricing between two DEX protocols, they can fill all the relevant orders at once. For centralized exchange arbitrage, the trader would have to communicate with each relevant exchange and fill orders separately.

    This sounds great for the arbitrageur until you factor in competition. Other bots see the same trade and will race to fill the orders. What results are gas price battles to incentivize miners to include your transaction over those of other traders. Given competition, we would expect most of the arbitrage opportunity in the trade to accrue to miners in the form of gas fees.

    Arbitrage trades are often not beneficial to market makers. Market makers seek to profit from a spread above the market price. The fact that an arbitrageur is taking your order often indicates that it has become mispriced. One feature of protocol fees in v3 is they result in sharing some of this arbitrage opportunity with the market makers. This, in turn, should make market makers more comfortable offering tighter spreads, since they accrue some of the arbitrage gains if their orders become mispriced.

    Indeed, we see that the highest protocol fees paid thus far have been paid by contracts that we have labeled as arbitrage bots.


Our Network is a weekly newsletter where top blockchain projects and their communities share data-driven insights. Subscribe now to receive a crash course in on-chain metrics and crypto fundamentals, and never miss an issue.

About the editor: Spencer Noon leads investments for DTC Capital, a fundamentals-focused crypto fund. He actively tweets about on-chain metrics.

Our Network: Issue #6

Updates on Tezos, Ethereum, Decred, Zcash, and Bitcoin.

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Welcome to Our Network, a weekly newsletter where top blockchain projects and their communities share data-driven insights about their networks.

This week our contributors cover Layer 1 cryptocurrencies:

  • Tezos

  • Ethereum

  • Decred

  • Zcash

  • Bitcoin


Network Updates

📌 Tezos

Contributor: Alexander Eichhorn, Founder at Blockwatch Data

  • Staking: Custodial staking continued to gain traction in Tezos. Throughout January 2020 staked balances at exchanges increased by +1.3% (26M) to 14% (89M) of all staked coins. Staking participation overall increased by +18M to a new ATH of 77.3% (635M). At the same time staking yield dropped to an all-time-low of 1.48% above inflation. At current prices you needed to stake 1.2M tez to make a base income for a decent living in Berlin.

  • Validators: Despite diminishing yield the number of consensus participants (bakers) remains relatively stable at around 430. We show unique roll owners here because Tezos assigns validation & voting rights based on rolls with one roll equal to 8000 tez. About 50% (207) of all validators are self-baking entities, meaning they have <= 1 incoming delegation. 160 of them own less than 100k tez in staking balance, 10 self-bakers are whales with balances between 1-5M tez.

  • Centralization: Although the amount of unique validators is high (430) the distribution of their weight tells a slightly different story. 50+% of Tezos staking is controlled by only 9 different entities while the top 100 bakers control 92% of the network. The largest entity (the Tezos Foundation) validates 27% of all blocks, the next largest are Coinbase (5.84%), Polychain (4.42%) and Cryptium Labs (3.62%), Binance (3.16%), Kraken (1.96%), P2P Validator (1.93%), Airfoil (1.72%) and FlippinTacos (1.71%). This is not troubling for consensus since rights are assigned randomly, but it plays a relevant role in governance. The foundation and some of the large bakers have historically abstained from voting. With the rise of custodial staking exchanges suddenly find themselves under pressure by the community to vote and build tools to let their delegators contribute.

  • Growth: Funded accounts on Tezos continued to grow by +7% (+24k) throughout January, but the number of economically relevant accounts with more than 100tz balance increased only by 938 to 24.6k, which represents 6.6% of all 376k funded accounts. Overall, the top 1k accounts hold about 67% of total supply which is close to Litecoin (64%) but much higher than Bitcoin (35%).

  • Adoption: Smart contract usage on Tezos mainnet has not picked up speed yet. Throughout January mainnet has seen a meager 55 new contracts and 3.5k contract calls, the most prominent deployed contract has been StakerDAO. The real action in Tezos still happens on various testnets hinting at a quickly growing developer base. The most active one is Babylonnet which has seen an all-time high in deployed contracts 4,647 (+1,456 from Jan 1st) and an unprecedented growth in smart contract calls (+62k since Jan 1st which is a 2.6x growth in one single month).

📌 Ethereum

Contributor: Maksim Balashevich, founder of Santiment

  • Miners' ETH holdings poised to breach all-time-high. Across the entire Ethereum miner ecosystem, the last three months were marked by stable and undisrupted accumulation. As a result, the cumulative balance of all ETH mining pools is currently hovering at an all-time-high of 1.69M ETH (which has a current value of ~$300M). These periods of accumulation tend to suggest high confidence levels in the project among the majority block creators, at the very least relative to the current market conditions. On the other hand, major miner sell-offs have often been followed by quick and significant price corrections historically. The last time the network’s miners held on to this much ETH was back in late October of 2019, when a drop below $170 prompted some to offload their holdings. Barring major market volatility this time around, we’re likely to breach this milestone within the next few days.

  • Ethereum’s coins continue to age “gracefully”. Mean coin age is a relatively new method of measurement to observe a network’s behavior in aggregate. For each coin, we calculate how long it has stayed in its current address and we compute the average of all those ages. Major drops in mean coin age indicate that previously dormant coins are starting to change addresses, and often correlate with increased market volatility. An undisrupted incline on the chart signals a growing average age of all coins on the network.

    The current view of Ethereum’s Mean Age highlights a year-long period of relative token inactivity (barring a few minor bumps at short-term price increases). On aggregate, previously dormant coins aren’t moving or being interacted with, and the average age of ETH (network-wide) continues to grow. This is further reinforced by the declining share of Ethereum tokens that have moved within the last 365 days; On January 1st, 2019, 54.6% of all ETH in existence was active within the past year. At the end of January 2020, this number has dropped to 39.6% of the total ETH supply. Both data points highlight the same trend - ‘old’ coins remain relatively unutilized, and the share of active coins continues to decrease. With the explosive growth of ‘ETH locking’ mechanisms and DeFi solutions, this is likely to become the norm in years to come.

    It will be interesting to see how this trend affects various valuation models that draw from network activity and health indicators. NVT, for example, posits that the more value transferred on the network (using on-chain trx volume as a proxy), the more valuable the network is itself. Given that several of Ethereum’s emerging use cases warrant relative coin inactivity, it could likely prompt the creation of new and/or modified approaches to ‘traditional’ blockchain network valuation.

  • From a network activity perspective, Ethereum has had a fairly slow start to the year to this point - at least compared to Januaries prior. Over the last 30 days, the network added 1,184,476 new addresses - a 9.5% decrease compared to Jan 2019 and an 82.4% decrease compared to Jan 2018. Of course, the latter is to be expected considering the market-wide conditions of early 2018. However, the same can’t really be said for Ethereum’s current decline in network growth relative to 2019. The two Januaries are much more comparable from a market standpoint: Ethereum was priced at $135 on January 1st, 2019; it was $131 on January 1st, 2020.

    We’re also seeing the same downtrend in Ethereum’s active addresses this January. Over the last 30 days, 5,801,553 ETH addresses interacted with the network - a 14.1% reduction compared to Jan 2019. This is unlikely to be a cause for concern, however, as much as further validation of Ethereum’s cyclical growth. The network has followed the same growth pattern several times in the past already - a sluggish start to the year followed by major adoption cycles in Q2 and late Q4. For example, below is the plot of new addresses added to the Ethereum network in the last 12 months. Of course, much of the network rhythm continues to be dictated by the coin’s price action and general market conditions, but the growing sample size continues to make the case for Ethereum’s seasonal appeal to new and existing users.

  • Divergence in Ethereum’s Holder Demographics. Over the past three months, we’ve been seeing a notable discrepancy in the behavior of micro and retail ETH holders on the one side, and the proverbial whales on the other. Cumulatively, the first category has continued to accumulate ETH at a high clip and across demographics, coinciding with the rising popularity of retail DeFi solutions. Here’s a short breakdown:

    • Addresses holding <0.001 ETH: +24.7% (+1,055 ETH)

    • Addresses holding 0.001-0.01 ETH: +10.3% (+4,426 ETH)

    • Addresses holding 0.01 - 0.1 ETH: +6.1% (+10,000 ETH)

    • Addresses holding 0.1-1 ETH: +1.4% (+7,600 ETH)

    The same can’t be said for large ETH addresses, however, which have been reducing their holdings (sometimes significantly) throughout the same time frame.

    • Addresses holding 1000-10000 ETH: -0.02% (-4000 ETH)

    • Addresses holding 10k-100k ETH: -1.24% (-33000 ETH)

    • Addresses holding 100k-1m ETH: -5.06% (-1.8M ETH)

    The only major ETH demographic that has remained ‘in the green’ is also the largest one: addresses holding 1m-10m ETH, which are mostly made up of exchange wallets. In the past 90 days, these wallets have added 40.9% to their cumulative holdings, or a total of 3.1M ETH.

📌 Decred

Contributor: Checkmate, Decred contractor

  • Decred is approaching its fourth birthday on 8-Feb-2020 and to celebrate, this week will be covering an array of achievements by the Decred chain to date. Decred has finalized over $11.44 billion in USD denominated value over its lifetime, accounting for the movement of over 409 million DCR units. A dominant component of these on-chain flows comes from DCR tickets (~50%), which represent long-term holders participating in PoS security and governance.

  • ASIC hardware was first released for Decred in January 2018, approximately two years after launch and at the peak of the 2017-18 bull run. Decred hashrate has grown by 1,000x following ASICs coming online. Given the prolonged bear market, the Difficulty ribbon is currently squeezed although showing early signs of recovery. Interestingly, the acceleration in hash-rate growth and subsequent squeeze/plateau of the difficulty ribbon are reminiscent of Bitcoin throughout the the 2015 bear market.

  • Decred is unique in that it supports both Miners and Stakeholders with coins continually circulating via DCR Tickets. Observing the aggregate behavior of both parties shows each creates fundamental support/resistance levels during price discovery.

    • A cumulative $5.6 Billion has been locked in DCR tickets and this commitment line (green) has been a magnet for price in a Bull Market.

    • The cumulative reward paid to PoW miners (incl. fees) now totals $147 Million and supports the notion that miners support bottoms for Bear Markets.

    • The Realised Price acts as a dynamic support and resistance line in response to changing ticket flows in Bull/Bear conditions.

    • The Realised Price and PoW Income line are currently squeezed, much like in early 2017.

  • The Decred Treasury is a central component of Decred's value proposition, enabling sustainable and self-sovereign development into the future. The treasury receives 10% of the DCR block subsidy for deployment by DCR stakeholders. To date, the Decred Treasury has accumulated over 639,600 DCR, equivalent to $11.5 Million at $18/DCR. The project has a spend ratio of 32% of inflows to-date and 14% of the final inflow of 2.1 Million DCR, at the end of the block subsidy. Pricing all Treasury expenditure outflows on the day of the transaction, the Decred treasury has spent $6.96 Million USD to bring the protocol from genesis to its current state.

  • Decred is currently undergoing its fifth on-chain vote to upgrade the consensus rules. The DCP0005 change restructures block headers and filters to improve SPV security and optimize the interaction between PoS votes and PoW miners. The DCP0005 codebase lies dormant in the new node software and now that 95% of Miners and 75% of Stakers have upgraded, the vote to activate it is live. A minimum quorum of 20% of Stakeholders must vote with 75% consensus to activate the new code. The current approval rate has 99.94% of tickets voting Yes, out of a 59.68% participation rate (note that abstain is default and only yes/no votes count as participation).

📌 Zcash

Contributor: Elena Giralt, Product Marketing at Electric Coin Company

  • The dev fund polling has completed and community sentiment is clear. In addition to Electric Coin Co and Zcash Foundation funding, there is now a new grant pool (40% of the dev fund) for other 3rd parties to receive funding for Zcash work.

  • While the number of shielded transactions is a small fraction of the total number of transactions on the Zcash blockchain, every single shielded transaction increases the anonymity set as a whole. Because of this, the anonymity set for Zcash is significantly larger than protocols that achieve privacy through obfuscating or mixing. This past month, 13.2% of Zcash transactions were shielded.

  • According to OnChainFX, Zcash is 25th by market cap but in Real Volume it ranks 12th, Adjusted Transaction Volume (9th) and Active Addresses (12th).

  • Developer activity and collaboration are increasing. ECC recently developed an internal dogfood wallet and mobile wallet SDKs. Zcash Foundation issued grants to support community developers working on core protocol as well as wallet applications. According to Flipside Crypto, Zcash developer behavior has increased by 2.75% in the last 10 days.

  • Since 2016, Zcash has maintained a regular and predictable release and network upgrade schedule. Going forward, Zcashd will have new releases approximately every six weeks and there will be roughly two network upgrades per year.

📌 Bitcoin

Contributor: Nate Maddrey, Research Analyst at Coin Metrics

  • Bitcoin estimated hash rate has surged to all-time highs over the start of 2020. The following chart shows the estimated hash rate smoothed using a seven-day rolling average. Estimated hash rate topped 120M TH/s on January 25th, up from about 113M on January 1st.

  • Bitcoin realized cap is also approaching all-time highs. Realized cap values each coin at the time it last moved (i.e., transferred between two distinct addresses) on-chain. So if a coin last moved in 2017 when the price of the asset was $2,500, that particular coin would be priced at $2,500 instead of the current market price. The sum of the prices of all coins priced this way gives the realized cap. Realized cap can be thought of as an estimate of the average cost basis of all holders of an asset. Bitcoin realized cap peaked at a little over $103B on November 4th, 2019. As of January 9th, Bitcoin realized cap is $102,945,486,900.

  • Bitcoin supply appears to be getting increasingly distributed. The below chart shows the total supply held in addresses with balances greater than 1 in X of the total Bitcoin supply (where X ranges from 1K to 10B). For example, the blue line shows the aggregate supply held by addresses that each individually hold at least 1/1000th of the total Bitcoin supply (1/1000th Bitcoin supply is about 18,188 BTC at time of writing). The total supply held by addresses with balances of at least 1 in 1K has decreased since mid-2019, while the total supply held by addresses with smaller balances has been steadily increasing. This signals that supply is moving from addresses with larger balances to addresses with smaller balances.

  • The amount of daily active addresses receiving Bitcoin (i.e. addresses that are sent a transaction) is almost even with the number of daily active addresses sending Bitcoin (i.e. addresses that send transactions). This is a relatively healthy signal, since a higher proportion of receiving to sending active addresses can be a sign of chain spam.


Our Network is a weekly newsletter where top blockchain projects and their communities share data-driven insights. Subscribe now to receive a crash course in on-chain metrics and crypto fundamentals, and never miss an issue.

About the editor: Spencer Noon leads investments for DTC Capital, a fundamentals-focused crypto fund. He actively tweets about on-chain metrics.

Our Network: Issue #5

Updates on MakerDAO, Synthetix, Set Protocol, and Uniswap.

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Welcome to Issue #5 of Our Network, a weekly newsletter where top blockchain projects and their communities share data-driven insights about their networks.


Network Updates

This week our contributors cover DeFi:

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📌 MakerDAO

Contributor: Primož Kordež, MakerDAO Interim Risk Team and founder of BlockAnalitica

  • The introduction of the DSR in Multicollateral DAI has produced a more competitive landscape for secondary lending platforms. MakerDAO overtook the #1 spot for DAI lending market from Compound, also because Compound implemented DSR for its unutilized supply. dYdX marketshare also significantly decreased as its value of DAI deposits dropped by about 80%. The total value of DAI deposits across major lending platforms represents about half of the current DAI and SAI total supply, which is interestingly less than the ATH of 66% reached during September of last year. This may be due to the less active remaining SAI lending markets and the higher interest rates seen last year (savers could earn 13% yield during summer last year versus 6% currently).

  • Marketshare of DAI borrowing has also dropped significantly for secondary lending platforms. The total value of DAI and SAI outstanding loans on secondary platforms is currently 22m, or only 15% of MakerDAO’s borrowing or total supply. This ratio was much higher in the past. For example, last year in September, 36m SAI or 46% of total supply was borrowed on secondary lending platforms. The recently increased marketshare of MakerDAO borrowing is probably related to lower borrowing rates on MakerDAO that were voted on for migration purposes.

  • MakerDAO governance is currently in the midst of a discussion about the Emergency Shutdown of Single Collateral DAI. We have witnessed a bit of a drop in the pace of CDP migration, which is supported by increased SAI inventory in the migration contract. Analyzing a sample of the top 100 remaining SCD CDPs reveals that almost half of SAI sampled debt is represented by CDPs which were totally inactive during the migration period. Only about 20% of sampled debt is held by CDPs which are showing signs of unwinding their debt position. Further, 4m SAI debt is represented by CDPs which were still active in SAI minting during migration. These users may prefer using SCD instead of MCD for some reason or perhaps they are speculating on other potential benefits of holding SAI as it experiences a liquidity shortage.

  • Speaking of a SAI liquidity shortage, there has been a huge drop in SAI trading activity across DEX venues. Currently only Uniswap and Kyber offer decent liquidity for SAI, having daily trading volumes averaging $250k in the last week. Uniswap SAI liquidity is at $1.2m, whereas DAI liquidity is at $2.9m. This has become a serious problem for the remaining SCD CDPs who want to deleverage, particularly for those trying to increase their collateralization ratios in order to protect themselves from getting liquidated in the event of the price of ETH collapsing.

  • DAI locked in the DSR has been steadily increasing since the beginning of the migration period. The most notable increases were in the third week of December when Compound implemented the DSR for its unutilized DAI and during the second week of December when the DSR rate increased from 2% to 4%. The recent rate increase of the DSR from 4% to 6% continued the linear pace of DAI being locked in DSR until last week when DSR utilization fell to previous levels seen before the rate increase. This happened due to one large withdrawal of DAI from the DSR and can be also partially explained by an increase in DAI minting in 2020 that has outpaced the amount of DAI locked in the DSR.

📌 Synthetix

Contributor: Jordan Momtazi, VP Partnerships at Synthetix

  • 81.6% of SNX (the native token of Synthetix) is currently staked, which is one of the highest staking ratios in crypto. Because of this, the network supports over $19m of synthetic assets (called Synths). Synths range from synthetic commodities to currencies to cryptoassets.

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  • The target collateralization (c-ratio) across the network is 750%, which is quite high relative to other systems in DeFi. The ratio has been deliberately set at this level as a way to buffer from any shocks that may occur early in the life of the protocol. The target number itself (750%) may go up or down based on how the network responds to various scenarios and/or community feedback in the future. Longer-term, we envisage this ratio will come down and enable a more capital-efficient system.

  • The active c-ratio is determined by looking at all of the wallets that are staking and calculating their total SNX value against the value of Synths issued. This number (currently 786%) is dynamic and fluctuates based on the price of SNX and the debt (total Synth) value within the network. Below is a look at the c-ratio since June of 2019. Note that the system increased the required c-ratio from 500% to 750% in June and the network responded as designed due to the incentives for Stakers to be over collateralized.

  • Finally, below are metrics from the top 35 SNX wallets. To maximize rewards, a staker would need to have 100% of their SNX value locked and be as large of a percentage of the debt pool as possible. This percentage is simply what portion of total Synths you have issued relative to the entire pool.

📌 Set Protocol

Contributor: Anthony Sassano, Product Marketing Manager at Set Protocol

  • The total value locked (TVL) in Set Protocol has been growing steadily and is almost back at an all-time high. TVL fell in December because a couple of the larger Sets made some bad trades which resulted in under-performance. However, since then these same Sets have been outperforming the market against both ETH and USD. We've also seen a nice uptick in activity since we introduced Set Social Trading onto the platform.

  • Over the last 90 days, the number of unique addresses holding a Set has grown by ~48% from 1,300 to 1,920. You'll also notice on the chart below that the launch of Set Social Trading on January 21st contributed significantly to this growth.

  • Since the launch of Trend Trading on TokenSets roughly 6 months ago, we've managed to cultivate a healthy and competitive rebalancing marketplace that 35 unique addresses have participated in. This is due to Set rebalances being open for anyone to participate in through using our Rebalancing Dashboard located here. The top 10 addresses that participate in rebalances are shown below (sorted by dollar volume).

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  • Finally, cumulative Set purchase volume increased from $6.5 million to $8 million over the last ~30 days. This is likely due to the recent outperformance of most Sets and the launch of Set Social Trading.

📌 Uniswap

Contributor: Caleb Sheridan, co-founder of Blocklytics

  • Uniswap net deposits are growing and healthy. January 17, 2020 was a major outlier: about $10m worth of liquidity was added. MKR, REP, and USDC pools have benefitted the most.

  • More liquidity is a requirement for facilitating big trades. Uniswap's design is often criticized since big trades generate slippage. However, that's generally been improving as pools are getting deeper. Looking at the top MKR trades this year, we can see how much slippage the biggest trades experienced. Note the 200+ ETH trade fulfilled with <1% slippage after the January 17th liquidity boost.

  • Uniswap has nearly 2000 exchanges. Anyone may create an exchange for any token. Anecdotally, we see the community taking to this concept (examples follow). And, reviewing the number of new markets per day, we also see an upward trend with a record 22 new markets created on January 7, 2020.

  • Uniswap has become the go-to exchange for starting innovative markets for tokenized goods, services and more. Examples of recent launches include $PEW (tokenized retweets), $MAGIC (hours for consulting), $CAFE (roasted coffee), and $FAME (apparel).


Our Network is a weekly newsletter where top blockchain projects and their communities share data-driven insights. Subscribe now to receive a crash course in on-chain metrics and never miss an issue.

About the editor: Spencer Noon leads investments for DTC Capital, a fundamentals-focused crypto fund. He actively tweets about on-chain metrics.

Our Network: Issue #4

Updates on Cosmos, Near, The Graph, Polkadot, and Kadena.

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Note from the editor.

Welcome to Issue #4 of Our Network, a weekly newsletter where top blockchain projects and their communities share data-driven insights about their networks.

This week our contributors cover some of the premier early-stage crypto networks:

  • Cosmos

  • Near Protocol

  • The Graph

  • Polkadot

  • Kadena

And I’ve gotta say, I’ve been excited about this issue for a long time because it is my belief that there is not enough mindshare being dedicated to evaluating the health of projects early in their lifecycles. While the crypto community has developed robust frameworks to evaluate mature networks like Bitcoin and Ethereum, we really haven’t settled on solid methodologies to analyze ones that are just getting off the ground.

I’m hoping this issue kickstarts more data-driven efforts in this area.

— Spencer


Network Updates

This week our contributors cover early-stage networks:

📌 Cosmos

Contributor: Chjango Unchained, Director of Community at Cosmos

  • We've seen a slight improvement on voting power distribution from Cosmos Hub-1 to Cosmos Hub-3, the latest chain id of the Cosmos Hub. Currently, 25 of the highest stake-weighted validators hold 72.17% of the voting power compared to previously, where the top 20 validators held 79.25% of the total voting power (source).

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  • There have been 23 governance proposals to date (source). The conversation trends toward the questions of how to facilitate greater distribution of voting power amongst the validator set and how best to spend funds from the community tax pool. Some background, if you're not familiar—the Cosmos Hub automatically deducts 2% of staking rewards every block and siphons it into a "tax pool" which the ATOM holder community could then vote to decide how to spend the funds.

  • Here is a breakdown of the categories the Interchain Foundation has funded in 2019. You can also read more about project specifics here.

  • Cosmos continues to experience a strong staking ecosystem. Peak delegation activity from the last 30-day period was on Dec 23, 2019, where 909k ATOM (~$4m at today’s prices) were bonded just days before Christmas (source).

  • Transaction volumes over the last 30 days peaked at 5162 total transactions as of yesterday (1/15/20). Relative to stablecoin volumes, for instance, this is pretty anemic, but the result is not too surprising, as the ATOM is functioning in line with its stated utility—that of a staking token. 74.13% of the entire token supply of the network is currently bonded or locked up (~185M out of a total 250M ATOMs in circulation).

📌 Near Protocol

Contributor: Kendall Cole, Product Manager at Near Protocol

  • Near’s sharded testnet has been running since October 2019, currently with 8 shards. Sharding happens within each block (each shard produces a “chunk” per block) rather than in separate chains, so there is still just one blockchain in Near’s design. Recent activity can be seen in our blocker explorer (link).

  • The number of contracts deployed to the Near testnet is growing steadily. There are 258 unique accounts with contracts deployed to them. As Near supports contract redeployment, 866 contract versions have been deployed to these 258 accounts.

  • There are currently more than 13 teams building smart-contract based products on Near in both Rust and TypeScript. These include Flux (prediction markets), Stardust (game marketplace and API), Snark.art (collectible art), Outplay (gaming tournaments), Close (unstoppable messaging), Zod (video transcoding), Boxscore (sports trivia), and ArTerra (fan collectibles).

  • Near Studio, the Near Protocol developer web IDE, has seen a recent uptick in the number of projects started. From January 1 to January 15, there were 774 new projects, compared to 1217 in November and December.

  • Each account in Near has a human-readable name (similar to ENS names), and there is a one-to-many relationship between accounts and keys. Accounts are created with a transaction, usually through an app or wallet. The majority of accounts were created using the Near Wallet, totaling 852 since October (sharded testnet launch). Of these, 127 were active on a monthly basis.

📌 The Graph

Contributor: Eva Beylin, Ecosystem Strategy at The Graph

  • Since Graph Explorer launched in January 2019, The Graph has seen strong growth in developer activity. There are over 1,000 developers with 996 subgraphs deployed, growing at 13% and 23% per month respectively. More public stats will be available when the decentralized network launches later this year.

  • Instead of building a centralized indexer, developers can deploy subgraphs which save engineering teams time and money. Subgraphs define how Web3 data sources like Ethereum and IPFS should be indexed for easy consumption by front-end applications. Applications can then query organized data like trade volumes, voting results, in-game assets and more. dApps and protocols like Livepeer, Moloch, ENS, Aave, and Sablier are using subgraphs today.

  • To promote subgraph development, The Graph hosted 2 online hackathons, with nearly 100 developers deploying more than 30 subgraphs and demo apps. Subgraphs were built for Argent Wallet, Kickback, UMA, Nexus Mutual, Bloom, Giveth and more! The top uses for subgraphs today are DeFi, DAOs, Games & Entertainment, and Art & Collectibles. As more subgraphs get built, The Graph will keep growing in utility for dApp developers that want to access curated data on an open API.

  • Through Graph Explorer, you can query individual subgraphs via their playgrounds. Above we can see the playground for Compound and a query for the top 3 markets ranked by total supply in descending order. USDC, DAI and ZRX (0x) are the markets with the greatest liquidity on Compound. If you’re interested in DeFi, there are several other subgraphs that can be queried for data, like Uniswap, Synthetix, Betoken, USDC, PoolTogether and more.

📌 Polkadot

Contributor: Bill Laboon, Technical Education Lead at Web3 Foundation

  • Although the Polkadot mainnet has not yet launched, the Kusama "canary network" is running strong with at least 324 known nodes currently running. At least six other networks, totaling at least 241 known nodes, are also running their own blockchains developed with Substrate, the blockchain framework underlying Polkadot. All of these blockchains can eventually become parachains and connect to the Polkadot or Kusama relay chains.

  • Kusama token holders have already voted on 20 referenda in the on-chain governance system. Topics have ranged from as small as setting the number of validators to updating the entire runtime code. View them here.

  • Validators on the network have now produced and finalized over 650,000 blocks, containing over 104,000 transactions and over 118,000 module events (source). The number of active validators in the validator set has increased from 50 at launch to 150 now. Polkadot currently has 150 validators validating with over 2 million KSM (~USD $2,000,000) staked. There are also 120 other running validator nodes that are not part of the active validator set.

  • Although the Polkadot mainnet has not yet launched, we are actively preparing for the full Polkadot ecosystem. This includes our grant program which has given out 63 grants since inception. These grants include development tools, alternative runtimes, infrastructure tools, browser plugins, and other projects to help improve developing for, running nodes, and using distributed applications on Polkadot.

  • The Polkadot Ambassadors Program continues to grow, with 120 members currently on-boarded as Apprentices and 30 as full Ambassadors.

📌 Kadena

Contributor: Tony Pham, Head of Marketing at Kadena

  • Since Kadena opened up mining on 10/30/19, over 2 million blocks have been mined on its sharded proof of work blockchain. For some context, it was 2 years before Ethereum had 2 million blocks mined. Also, the current network hash rate is consistently at ~30-40 TH/s.

  • Kadena enabled token transfers on 12/17/19, and there have been over 50,000 successful transactions. Here is a visualization of those transactions:

  • Kadena's network computing power with parallelized and scalable Proof of Work has reached 1.3 TH/s since launch. For some context, it took Ethereum 7 months to reach this figure.

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Our Network is a weekly newsletter where top blockchain projects and their communities share data-driven insights. Subscribe now to receive a crash course in on-chain metrics and crypto fundamentals, and never miss an issue.

About the editor: Spencer Noon leads investments for DTC Capital, a fundamentals-focused crypto fund. He actively tweets about on-chain metrics.

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