Coin Metrics’ State of the Network: Issue 18

Weekly Feature

Stellar Airdrops Are Mostly Transferred to Exchanges or Unclaimed

On November 6th, 2018, announced it was creating the “largest crypto giveaway in history” in partnership with the Stellar Development Foundation (SDF). The plan was to distribute $125M of Stellar (XLM) among Blockchain’s 30M wallets. Users first needed to complete a KYC process in order to be eligible for the giveaway. Similarly, recently announced a plan to distribute at most 2B Lumens to its users.

Stellar is a crypto-asset created in 2014 whose development is overseen by the SDF. Over its history, the foundation created (or assisted) strategies to distribute Lumens (Stellar’s native token) to many users around the world. At the genesis of Stellar, 100B Lumens were created and granted to the SDF which over time distributed them. Currently, around 20B out of those 100B are outside of SDF control.

An “airdrop” is essentially a cryptocurrency giveaway that is commonly used as a way to distribute new tokens. The sender of the airdrop typically covers all associated transaction fees so there are no costs for the receivers. Airdrops serve as a way to bootstrap new currencies, because they allow the currency creators (or whoever is sponsoring the airdrop) to distribute the currency to a large amount of addresses in a short amount of time. They are often also described as a way to increase a currency’s decentralization, since tokens can be sent to many users who can then do whatever they want with them.

Since airdrop senders cover the fees, they do not even necessarily need the receiver’s permission to airdrop them tokens – the senders simply need a list of addresses that they would like to distribute to. However, this also means that the airdropped currency may never be claimed since some receiving addresses may be inactive or uninterested. 

Given our expertise in on-chain data analysis, Coin Metrics decided to analyze the Blockchain and Keybase airdrops and look at the distribution and activity after the initial transfers. Airdrop

Our analysis, supported by comments from the airdrop recipients, show that two addresses were used to airdrop XLM on’s users. First, GARAR5 was used from Nov 6th 2018 to Jan 9th 2019, then GDNWRV from Jan 9th 2019 onward. On July, 15th 2019, announced that the airdrop was over.

Between Nov 6th 2018 and July 15th 2019, those two accounts created 1.2M accounts and credited them with around 400M XLM (worth $27M at current prices, $100M at the announcement of the airdrop). When valuing the XLM at the time it was credited, we find that overall, airdrop claimants received $45.7M. 

As of Sept 23rd, only 804,309 of those accounts still held more than 1 XLM (minimum balance requirement) and held a combined 101M XLM. Only 8,465 accounts that received Stellar from during the airdrop period still own more than initial amount they received when they were created.

The vast majority of the airdropped XLM that was sent to users was then sent to various exchanges. This implies that many recipients of the airdrop sold their XLM in exchange for fiat or other cryptocurrencies. Airdrop

On September 9th, 2019, announced a “surprise gift” to its 300K users from the Stellar foundation in the form of a 100M XLM airdrop (worth $5M at the time). Furthermore, it was supposed to be the first of a series of airdrops to Keybase users, for a total of 2B XLM (roughly 2% of the total XLM supply) to be airdropped to Keybase users in monthly tranches over the next 20 months.

In order to analyze the airdrop, we first looked into how the XLM was distributed to users. It turns out that all the 100M XLM were pre-distributed to 274,864 accounts between Sept 9th and Sept 14th. This is visible when looking at the sharp increase in the number of XLM accounts owning between $10 and $100 (the airdropped amount was ~$20) during that period.

Looking deeper into the chain, we identified GDV4KE as the creator of all those accounts. Furthermore, this account was the biggest account creator by far during the airdrop period ruling out other accounts being used.

The initial balances of the accounts created by GDV4KE are consistent with the amounts received by Keybase airdrop beneficiaries and the number of accounts created is consistent with the number of users claimed by Keybase (280-300K).

Furthermore, we identified two distinct categories of accounts created for this airdrop:

  • A minority (8.8K) received 356.3817276 XLM
  • The majority (266K) received 356.2904939 XLM

The first batch was created on Sept 9th. The latter batch was created from Sept 10th to 14th. The difference in start dates probably explains the small difference in value given out to users.

Given that the airdropped amounts were pre-credited to users, we looked at the airdrop’s uptake among Keybase users to see if they were actually claiming their free tokens. We define an airdrop as “claimed” if the account created by Keybase/Stellar had any activity.

Given the low size of the first batch, its high claim rate and the fact that it was first, we assume it was a test batch given to active Keybase users.

So far, around 19M XLM ($1.3M at current prices) has been claimed out of the 100M XLM currently distributed and 2B maximum distributable. Compared to the airdrop, so far only a small fraction of the airdrop (around 1M XLM) has ended up on exchanges so far.


Airdrops have been touted as ways to improve an asset’s decentralization, popularity, or usage by fairly distributing some of its supply among individuals which can then use it as they see fit.

Our analysis shows that despite it being literally free money, only a minority of the targeted population actually claim their airdrop money (1.2M addresses out of 30-40M wallets for, around 20% of Keybase users).

Furthermore, most people decide to exchange this new money for another one (either fiat, a stablecoin or Bitcoin) and only a few of them keep using the cryptoasset by getting more of it on open markets or through other means. These findings call into question the efficacy of airdrops, as most of the coins are sold immediately

Network Data Insights

Summary Metrics

The major crypto assets rebounded this past week and had positive gains in most metrics.  ETH’s market cap grew by 15% week over week, leading all five of the major assets.

ETH’s daily transaction fees also continued to rise (as we covered in State of the Network Issue  17), growing by over 53%. BTC fees grew by 4.2% over the same period. Average BTC fees were still higher, however, than ETH fees over the last seven days.  BTC’s average daily fees were $307k over the past week, compared to $254k for ETH.

Network security for both BTC and ETH  also continues to grow stronger. BTC’s average difficulty and hash rate grew by 6.9% and 6.5%, respectively. Similarly, ETH’s difficulty and hash rate grew by 6.1% and 6.4%.

Network Highlights

After reaching all-time highs in gas usage last week, as we reported in State of the Network Issue 17, the ETH block gas limit has increased. On September 20th, the ETH block gas limit increased to a new high of 6.42B gas. 

But despite the block gas limit increase, blocks are still at historically high rates of utilization. As of September 22nd, ETH blocks were 93.86% full, which is relatively close to the all-time high of 96.90%.

This is because ETH gas usage continued to rise after the gas limit was increased. ETH gas usage hit new all-time highs this past week, reaching 60.1B gas used on September 20th.

Market Data Insights

The trend of smaller assets outperforming Bitcoin continued this past week. This phenomenon has been rarely observed since the market peaked starting in January 2018. Notable performers over the past week include Ethereum (+11%), XRP (+8%), and Stellar (+17%), while Bitcoin declined by 3%. The sustained and concentrated nature of these price increases, in combination with a growing narrative of healthier than expected on-chain metrics for Ethereum, has presented market participants with perhaps the first credible instance this year that altcoins may be back on the rise. 

Impact of Binance U.S. Trader Restriction Announcement Has Been Priced In But Restriction Still Not in Effect 

The general trend of Bitcoin outperformance this year is at least partially attributable to exchange operators delisting small, illiquid assets and restricting U.S. investors from trading in certain assets. Bittrex and Poloniex both took aggressive steps this year to restrict several assets from U.S. traders. Most other major exchanges which have already banned U.S. users in policy but allowed them to trade in practice have stepped up their KYC and geofencing measures and cracked down on users using means to circumvent their restrictions. 

Most notably, Binance announced in June of this year that all U.S. traders would be restricted from trading on their platform which coincides with the start of a period of extremely strong Bitcoin outperformance. As one of the only remaining trading venues available to U.S. traders and the primary trading venue for several altcoins, the announcement of this restriction served as a catalyst for some traders to liquidate their altcoin holdings into Bitcoin or Tether (the primary quote currencies for most markets on Binance). 

Trading volume supports this theory as Binance’s volume has been declining sharply after achieving a local peak in June. According to Binance’s updated terms of service, the ban of U.S. traders was supposed to go into effect on September 12, although several individuals have reported that this ban is not currently being enforced. 

Nonetheless, the impact of lowered demand for these smaller assets due to the heightened regulatory environment appear to be mostly priced in, and most traders who anticipated the September 12 deadline have already sold their positions. The reversal we have seen in these smaller assets’ prices may just be a slight normalization in prices following a period of liquidations. Future trends in Bitcoin-altcoin price movements may depend on how the regulatory environment develops relative to current market expectations. 

CM Bletchley Indexes (CMBI) Insights

Is the elusive and ever evasive alt-season finally nearing? Weekly CMBI returns indicate that there is renewed interest in mid and small cap crypto assets, which produced weekly returns against BTC of 6% and 5% respectively. However, perhaps the best weekly performer was Ethereum, which lead the large cap assets, returning 14% against the US Dollar and 18% against BTC. 

Medium and small cap crypto assets still have a long way to go before any meaningful recovery takes place. However, as highlighted in last week’s SOTN (Issue 17), increased on-chain activity for Ethereum coupled with a few consecutive weeks of strong performance, such as the below, could indicate a change in investor sentiment.

Coin Metrics Updates

This week’s updates from the Coin Metrics team:

  • Coin Metrics is hiring! We recently opened up 7 new roles, including Blockchain Data Engineer and Data Quality and Operations Lead. Please check out our Careers page to view the openings.

As always, if you have any feedback or requests, don’t hesitate to reach out at [email protected]

Subscribe and Past Issues

Coin Metrics’ State of the Network, is an unbiased, weekly view of the crypto market informed by our own network (on-chain) and market data.

If you’d like to get State of the Network in your inbox, please subscribe here. You can see previous issues of State of the Network here.

Check out the Coin Metrics Blog for more in depth research and analysis.

CM Network Data Pro Version 4.2 and Community Updates Release

Coin Metrics is pleased to announce the version 4.2 release of our end-of-day CM Network Data Pro Daily Macro (NDP-EOD) feed. Concurrent with this release, Coin Metrics has added a number of assets to our Community Network Data offering.

NDP-EOD Version 4.2

Version 4.2 includes the below items. 

Asset Additions

Version 4.2 adds one new asset:

  • Huobi Token

Metric Additions

Version 4.2 adds a large number of new metrics:

  • More block metrics including the difficulty of the last block and the mean block weight
  • Breakdowns of transaction and transfer counts by type (e.g., by contracts, contract calls, and tokens on Ethereum; OP_RETURN transactions on Bitcoin and its derivatives and more)
  • Deeper contract metrics (contracts created/destroyed and more)
  • More coin age metrics including a new original metric: revived supply
  • More exchange flow metrics including the number of transfers to and from exchanges
  • Further breakdowns of supply/address bands
  • Supply in Zcash’s shielded pools

Community Network Data

Concurrent with the release of CM Network Data Pro Version 4.2, the following assets have been added to our Community Network Data:

  • LINK
  • LEO (Ethereum)
  • LEO (EOS)
  • EOS (ERC-20)
  • Huobi Token

Please reach out to Coin Metrics ([email protected]) for more information on CM Network Data Pro or Community Network Data.

Coin Metrics’ State of the Network: Issue 17

Weekly Feature

ETH is Overtaking BTC in Daily Transaction Fees, Driven by Tether

ETH is on the verge of overtaking BTC in daily transaction fees. As of September 15th, ETH had $182,899 daily transaction fees compared to $185,993 for BTC:

ETH has overtaken BTC’s daily transaction fees several times before over the course of 2019. The below chart shows the ratio of BTC daily fees to ETH’s daily fees (i.e. BTC Fees/ETH Fees), both in USD. 

If BTC’s fees are higher than ETH’s, the ratio is above 1, while if BTC’s fees are lower than ETH’s the ratio is below 1. For example, ETH’s daily transaction fees surpassed BTC’s daily fees on February 19th, 2019 and March 18th, 2019. This causes the BTC/ETH fees line to dip below 1 on both of those dates in the below chart. 

Thank you to Spencer Noon for tweeting about this and inspiring the following charts:

There has been debate in the past about whether highs fees are detrimental to a crypto network. But ultimately, transaction fees represent real network demand and usage. Importantly, high fees are critical to long term network security. When block rewards decrease over time, fees become a larger and larger percentage of total miner revenue. Total fees therefore are a strong signal of overall network health and long-term sustainability. 

The below chart shows BTC/ETH fees ratio from the beginning of 2018 onward (we omitted prior data because BTC fees were consistently at least 10-25x ETH’s before 2018). There were brief periods in 2018 when ETH had more daily transaction fees than BTC, but for the most part BTC has been on top. In fact, from early April to mid August 2019 BTC’s daily transaction fees surged ahead of ETH’s, mostly remaining 5-10x ETH’s over the four month stretch:

But over the last thirty days, BTC’s fees have come crashing down while ETH’s have shot up. There are probably many factors involved in this recent swing. However there is one big recent change that has likely played a major role in driving the latest fee reversal: Tether’s migration from the Bitcoin based Omni protocol to Ethereum.

Tether (USDT) was initially built on the Omni protocol, which is built on top of the Bitcoin blockchain. But Tether now also supports a version of their token on the Ethereum protocol (USDT-ETH). Over the course of 2019, Tether users has been migrating from the Omni version of Tether to the Ethereum version. Despite the change, Tether is still by far the most dominant stablecoin, as we covered in State of the Network Issue 15

USDT on OMNI was growing over most of the course of 2019. In fact, USDT transaction count even began hitting new all-time highs starting around April, 2019, peaking at 91,513 on August 7th. 

But since then, USDT-ETH has skyrocketed. The Ethereum version of Tether hit a new all-time high of 187,912 daily transactions on September 9th. USDT-ETH is generating so many transactions that it recently accounted for over 25% of all Ethereum transactions on September 8th, and has consistently accounted for more than 10% of all Ethereum transactions since mid August:

Similarly, USDT-ETH also recently vaulted past USDT (Omni) in daily adjusted transfer value after USDT (Omni)  reached transfer value all-time highs. The below chart shows adjusted transfer value smoothed using a seven day rolling average.

Addresses with balances of at least $10 show a similar pattern. The below chart shows the number of unique addresses holding at least $10 on USDT (Omni) and USDT-ETH. We typically use addresses with at least $10 to approximate users since it is small enough to potentially represent a retail investor (as opposed to an institution) but large enough to be a non-dust account (however this is only a proxy – in reality, many users have more than one address). The Ethereum version is now about even with the Omni version, after the Omni version surged to all-time highs, peaking in July.

Ethereum total daily gas also recently reached an all-time high, likely due to USDT-ETH’s recent surge. According to ETH Gas Station, Tether is the biggest gas spender out of all Ethereum contracts over the last 30 days. 

Lastly, the below chart shows ETH and BTC fees as a percentage of total miner revenue (i.e. fees + block rewards). ETH has started to climb ahead of BTC over the last 30 days.

All of this suggests that the recent ETH/BTC fee flip is likely being driven by the switch from USDT (Omni) to USDT-ETH. If this is the case, the fee flip could continue to grow moving forward as more users switch from over to the Ethereum version of the protocol. We will continue to monitor this and provide updates in future version of State of the Network.

Network Data Insights

Summary Metrics

Crypto networks were relatively stable over the last week, outside of a few metrics. As noted in this week’s weekly feature, BTC’s fees dropped by over 12% this past week, while ETH’s fees grew by 48.1%.  BTC and ETH’s hash rate and difficulty both increased, however, which is a positive signal for overall network security.

BCH, on the other hand, had a relatively volatile week. While adjusted transfer value grew by 18.4% week over week, BCH transaction count dropped by 23.6%. Similar to BTC, BCH’s fees dropped, while the hash rate and difficulty grew significantly.

Network Highlights

ZEC is approaching $1 billion cumulative mining revenue (aka thermocap). As of September 15th, ZEC has generated $994,842,737 of total mining revenue.

BCH supply recently surpassed 18,000,000. BCH passed the milestone on September 13th. Comparatively, BTC’s supply was 17,934,192 on September 13th. BCH is currently on pace to hit its next block reward halving sooner than BTC. BCH is expected to hit its next halving on April 8th, 2020, while BTC’s next halving is expected on May 15th, 2020.

Market Data Insights

Limited Response to Global Events from Bitcoin This Week

Earlier this year, the narrative that Bitcoin serves as a store-of-value and haven asset in times of increased geopolitical risk was supported by empirical data as both Bitcoin and gold (along with other traditional haven assets) rose in price. 

In theory, the intrinsic qualities of Bitcoin support this narrative — under market environments in which geopolitical or financial instability is increasing (more than what’s priced in), the need for store-of-value assets that are immune from policy errors increase. Moreover, we should also expect to see an inverse relationship in Bitcoin’s price to changes in real yields. As nominal interest rates decline, the opportunity cost for holding a non-yield producing asset like Bitcoin declines. And as inflation rises, the need for wealth-preserving qualities of Bitcoin grows. 

The problem with this narrative is the inconsistent empirical data. This week, two significant events impacted major financial markets: the European Central Bank’s announcement of monetary policy easing by cutting a key interest rate and restarting its quantitative easing program, and an attack on one of Saudi Arabia’s key oil processing facilities which led to the largest sudden supply disruption in history. Despite major moves in certain financial markets, including a 20 percent change in oil prices and a corresponding bid in haven assets, Bitcoin remained nearly unchanged. This indicates that previous examples of safe haven behavior are spurious in nature or that its reaction function to geopolitical and macroeconomic events is still not fully understood. 

Strong Weekly Performance for Ethereum and Cosmos 

Ethereum (+6%) saw gains this week marking the second week in a row in which Ethereum was a notable outperformer. This has moderated the strong long-term trend of Bitcoin outperformance that has been in place since the peak of the previous market cycle. Cosmos (+16%) also experienced strong gains this week. 

CM Bletchley Indexes (CMBI) Insights

This week all Bletchley Indexes experienced minor losses after a week characterized by low volatility across the market. The Bletchley 20 and Bletchley 40 continued to fall against Bitcoin, still printing new lows on a weekly basis. This trend has persisted since early 2018 but over the last month has recently flattened out, potentially indicating some strength for mid and small cap assets.

Coin Metrics Updates

This week’s updates from the Coin Metrics team:

  • Coin Metrics is hiring! We recently opened up 7 new roles, including Blockchain Data Engineer and Data Quality and Operations Lead. Please check out our Careers page to view the openings.

As always, if you have any feedback or requests, don’t hesitate to reach out at [email protected]

Subscribe and Past Issues

Coin Metrics’ State of the Network, is an unbiased, weekly view of the crypto market informed by our own network (on-chain) and market data.

If you’d like to get State of the Network in your inbox, please subscribe here. You can see previous issues of State of the Network here.

Check out the Coin Metrics Blog for more in depth research and analysis.

Coin Metrics’ State of the Network: Issue 16

Weekly Feature

Bitcoin and Tether Volume Distribution by Exchange

Exchanges are a crucial piece of the crypto ecosystem. Successful exchanges can help fuel tremendous growth. But exchanges also represent potential systematic risks; if a popular exchange fails or is hacked, it affects the entire crypto market. This risk is amplified if trading is heavily concentrated in a single exchange, as was the case with Mt. Gox, which was reportedly handling 70% of BTC trading at the time it was hacked.  

For this week’s State of the Network, we conducted an analysis of how Bitcoin and Tether trading volume is distributed among exchanges. Nine Bitcoin-U.S. Dollar (BTC-USD) markets and nine Bitcoin-Tether (BTC-USDT) markets were selected. Data from April 1, 2019 to present is used to examine the current state of cryptocurrency markets. 

The following chart shows the volume of Bitcoin-U.S. Dollar markets by exchange where volume is defined as hourly units of Bitcoin, smoothed with a 7-day rolling average. The majority of trading takes place on Coinbase, Bitfinex, Bitstamp, and Kraken. In total, these four exchanges consist of roughly 85 percent of total traded Bitcoin-U.S. dollar volume. The remaining exchanges, including Gemini, itBit, and Bittrex each have volumes that are an order of magnitude less than Coinbase, the leading exchange. 

Average hourly volume can vary greatly depending on price action and news-related catalysts. For example, Coinbase’s average hourly volume ranges from a low of 300 BTC to a high of 2,000 BTC during this time period.

Coinbase gradually increased its market share from 24 percent to 32 percent during this period, taking share primarily from Bitfinex which fell from 25 percent to 19 percent. Bitfinex’s reduction in market share is understandable given its longstanding issues with timely withdrawals and a heightened regulatory environment. As more exchanges limit access to U.S.-based traders, we expect more trading activity to concentrate on Coinbase, the primary Bitcoin-U.S. Dollar market.

Bitcoin-Tether markets show a similar level of concentration with trading activity heavily concentrated on Binance and Huobi. LBank, HitBTC, and ZB.COM also have moderate levels of reported volume, although Coin Metrics’ internal scoring framework indicates that these exchanges are likely to report a higher fraction of fake volume. In total, these five exchanges consist of roughly 95 percent of reported traded volume. Volume in Bitcoin-Tether markets are greater than Bitcoin-U.S. Dollar markets – Binance’s peak average volume is roughly twice the magnitude of Coinbase’s peak average volume.

Exchange market share for Bitcoin-Tether markets is volatile over short time periods likely due to inflated reported trading volumes by certain exchanges. Over this time period, the leading exchange has been held by three separate exchanges.

Network Data Insights

Summary Metrics

Bitcoin rallied this past week. It was up in every major metric except for adjusted velocity, which dropped by only 0.1%. Notably, BTC’s hash rate, mean difficulty, and total mining revenue continue to rise, which is a good sign for BTC’s overall network security. BTC realized market cap (realized capitalization is a metric created by Coin Metrics that is calculated by valuing each unit of supply at the price it last moved) also continues to grow, increasing by 0.7% week over week.

Realized cap decreased, however, for ETH, XRP, and LTC. ETH led the way with a 0.9% drop from last week, while LTC decreased by 0.5% and XRP dropped by 0.2%. XRP, LTC, and XRP continue to show high volatility from week to week, decreasing by 43.1%, increasing by 19.8%, and decreasing by 42.3% respectively. 

Network Highlights

BSV’s realized cap recently surpassed $1 billion. As of September 8th, BSV’s realized cap is at an all-time high of $1,016,050,480.35.

However, BSV’s hash rate market share (compared to BTC and BCH) is approaching all-time lows. The following chart shows BSV’s percent share out of the total hash rate of BTC, BCH, and BSV combined.

Zcash’s (ZEC) hash rate recently hit an all-time high on August 13th. However, as ZEC’s hash rate has been growing, its active address count has been falling. The timing of this shift coincides with Bitmain’s introduction of an ASIC capable of mining ZEC in May, 2018, and ZEC’s vote against ASIC resistence in late June, 2018. This suggests that GPU miners were likely responsible for a lot of ZEC’s on-chain usage.

Market Data Insights

Some Signs of Assets Outperforming Bitcoin 

Volatility was muted over the past week with the exception of few assets. Notable movers include EOS (+15%) and Cosmos (+31%). There was a brief moment over the weekend where some assets showed signs of outperforming Bitcoin, momentarily reversing the long-term trend of Bitcoin outperformance which started at the peak of the previous bubble. 

Volatility Increasing Only for Bitcoin 

Decreased trading activity for many assets has caused volatility to fall to all-time lows, or lows for this market cycle. Annualized volatility for many coins is now at a level similar to Bitcoin of around 80 to 90 percent whereas volatility during the previous peak regularly reached levels in excess of 200 percent. 

Notably, only Bitcoin’s volatility has been increasing in recent months in part because of its inconsistent sensitivity to geopolitical and macroeconomic events, increased use of leverage via futures contracts, and the occasional attempts at engineered price movements.

Bitcoin Store-of-Value Thesis Revisited 

Although in theory Bitcoin’s intrinsic properties make it a compelling store-of-value, empirical observations supporting this thesis are limited. While some of the limited empirical evidence is compelling, Bitcoin’s reaction function to macroeconomic surprises, geopolitical events, and safe haven flows is likely more complex than the standard narrative. 

The latest observations show an inconsistent relationship between Bitcoin and gold. Gold has continued to rally this summer in response to flaring U.S.-China trade war tensions, anticipation of quantitative easing by the world’s major central banks, and central bank buying. But Bitcoin has stopped responding to the same events. 

Earlier in the summer, the 30-day correlation between Bitcoin returns and gold returns peaked at +0.50, a level reached only two other times in its existence. Since then, correlation has dropped sharply to +0.15 which calls into question the stability of the Bitcoin store-of-value narrative. 

CM Bletchley Indexes (CMBI) Insights

This week the large cap crypto assets performed best, with the Bletchley 10 and Bletchley Total (which is 95% composed of the Bletchley 10) returning 6%. The mid cap and small cap markets stalled again with the Bletchley 20 and Bletchley 40 both returning -2% over the week. As has been the case for the majority of 2019, investors are finding the best returns chasing the liquidity of the large cap assets, with mid and small cap assets experiencing low buy volumes, leaving them susceptible to greater downside in market sell offs.

All Bletchley Indexes also experienced large turnovers in September, with the below changes being made. This level of turnover is a testament to the large levels of volatility that the asset class has experienced over the last month.

Coin Metrics Updates

This week’s updates from the Coin Metrics team:

  • Coin Metrics is hiring! We recently opened up 7 new roles, including Blockchain Data Engineer and Data Quality and Operations Lead. Please check out our Careers page to view the openings.

As always, if you have any feedback or requests, don’t hesitate to reach out at [email protected]

Subscribe and Past Issues

Coin Metrics’ State of the Network, is an unbiased, weekly view of the crypto market informed by our own network (on-chain) and market data.

If you’d like to get State of the Network in your inbox, please subscribe here. You can see previous issues of State of the Network here.

Check out the Coin Metrics Blog for more in depth research and analysis.

Coin Metrics’ State of the Network: Issue 15

Weekly Feature

Stablecoin Summer Review

The stablecoin wars heated up this summer. Now that summer is nearing an end, we took a look back at how the major stablecoins fared over the last three months. 

Paxos (PAX), USD Coin (USDC), and Dai (DAI), all exhibited strong growth over the last three months, measured by the total number of addresses holding at least $10. TrueUSD (TUSD) and Tether (”Tether” includes both USDT, which is the Omni version of the Tether protocol, and USDT-ETH, which is the Ethereum version) both had moderate growth, while Gemini Dollar (GUSD) declined. The below chart shows the growth of stablecoin addresses with at least $10 from June 1st to September 1st. 

Total number of addresses that hold at least $10 worth of an asset can be used to get an approximate measure of total users. The $10 cutoff is somewhat arbitrary; alternatively, we could look at addresses with at least $1, or $100. But we typically use $10 to approximate users since it is small enough to potentially represent a retail investor (as opposed to an institution) but large enough to be a non-dust account. 

Although Tether (both USDT and USDT-ETH) did not grow as much as some of the other stablecoins over the last three months, USDT-ETH (i.e. the Ethereum version of the protocol) experienced rapid growth. However it came at the expense of the Omni version of the protocol. The transition from USDT to USDT-ETH is happening relatively quickly, with USDT-ETH poised to surpass USDT in most major metrics over the coming months. The following chart shows the total amount of addresses with greater than $10 worth of USDT and USDT-ETH, respectively. 

Additionally, Tether remains the dominant stablecoin in terms of overall users. Although PAX, DAI, and USDC are growing faster than Tether, they are still orders of magnitude behind both USDT and USDT-ETH in terms of the total number of addresses holding at least $10. The following chart shows the number of addresses with greater than $10 as of September 1st:

Total supply is another important metric to track for stablecoins. Total supply represents a stablecoin’s approximate market cap, assuming that each stablecoin is worth $1.00 USD. PAX, USDC, and Tether supply all grew over the summer (June 1st to September 1st), while DAI, TUSD, and GUSD all declined.

However, similar to addresses with at least $10, Tether still dominates all other stablecoins in terms of total supply. The below chart shows stablecoin total supply as of September 1st.

Lastly, looking at a stablecoin’s price growth percentage over the last three months (i.e. daily growth compared to June 1st) shows an approximation of price stability. This is an important consideration for stablecoins, since the price should ideally stay stabilized (hence the name). As shown in the below chart, DAI, GUSD, and Tether all experienced relatively volatile periods over the last three months, while PAX and USDC were more stable.

Network Data Insights

Summary Metrics

Last week was relatively volatile for most of the major crypto networks. Market cap decreased for BTC, ETH, XRP, LTC, and BCH. However, transaction count increased for all of those assets, except for ETH, which fell by only 0.2%.

BCH had a huge spike in active addresses and transactions, both increasing over 200% over the past week. However, BCH’s adjusted transfer value only grew by 3.5%. Although BCH had a large increase in both transactions and transfers, those transactions likely included relatively small amounts of BCH.

Network Highlights

The number of addresses holding at least 10 Bitcoins recently hit an all-time high. As of September 1st, there are 157,216 addresses holding at least 10 BTC.

The number of Ethereum addresses holding at least one ten-billionth of current supply also recently hit an all-time high. As of September 1st, 5,923,953 ETH addresses hold at least one ten-billionth of ETH supply. Currently, this is the equivalent of holding at least 0.0108 ETH (worth $1.86 USD at current prices), given ETH’s supply of 107,568,118 as of September 1st.

Market Data Insights

Bitcoin Outperformance Continues

Major assets declined this week with the exception of Bitcoin (+4%) and Bitcoin Cash SV (+0.4%). Bitcoin outperformance continued over this time period. Despite a market-wide sell-off earlier in the week, Bitcoin has since rallied and recovered all its losses while other assets are still significantly down. 

Market action over the past week confirms the longer-term trend of Bitcoin outperformance. Over the past three months, Bitcoin has experienced strong returns (+37%) while other assets are struggling and have lost as much as half of their value, including EOS (-47%), Stellar (-48%), and TRON (-53%). 

No Signs of Market Manipulation on August 28 Sell-Off

The pattern of sharp market-wide movements in price continues. Coin Metrics has written extensively about this in past State of the Network issues. Futures exchanges (most notably BitMEX and CME) are important venues where significant trading activity and price discovery take place and allow traders to use leverage for either long or short positions. Due to these factors, certain market participants are incentivized to trade in a manner to maximize price impact on more illiquid spot markets to engineer price movements that can trigger forced liquidations, short squeezes, and margin calls. 

Despite previous examples of this type of activity, the sell-off that occurred on August 28 did not leave any of the standard signs of market manipulation. 

The earliest indication of increased trading activity occurred on Coinbase’s BTC-USD market during a 20-second window around 17:54 UTC. Three large sells were executed at $10,240 in which a total 72 Bitcoin were sold, equivalent to roughly $740,000. Such concentrated activity was unusual as there was no news-related catalyst immediately prior to this, prices were fairly stable immediately prior, the size of the three trades were extremely large, and no similar increase in trading activity was observed on other exchanges. 

While this aggressive selling may have triggered the sell-off, no indication of sustained selling or large spreads between major markets were observed, so market manipulation is likely not present in this case. One possible explanation is that the large sells on Coinbase’s market may have triggered a response from several trading algorithms employed by market-makers and quantitative traders. Under a period of relative calm in the markets, algorithms may interpret the presence of sudden, concentrated selling as an informed trader (that knows potentially market-moving information) and adjust their bids and offers accordingly. The initial response can then snowball as small abrupt changes in price can trigger liquidations of leveraged futures positions which in turn trigger further declines in price. Importantly, Coinbase is a constituent exchange in both BitMEX’s Bitcoin price index and CME CF’s Reference Rate, so trading activity on this exchange is closely monitored. 

Smaller Assets Led the Sell-Off But Were Not the Initial Catalyst 

Smaller assets declined first during the sell-off on August 28 but likely were not the catalyst. Coin Metrics investigated trading activity in key assets during this time period and did not detect the presence of any suspicious trading activity. 

Here we show Coin Metrics’ Real-Time Reference Rates, which generate prices once a second and are generated using a robust market whitelisting framework and a calculation methodology that is resistant to manipulation and data errors. Notably, price movement in the smaller assets occurred starting at 17:55, one minute after the concentrated selling was observed in Coinbase’s BTC-USD market. 

CM Bletchley Indexes (CMBI) Insights

There was a market wide sell-off of crypto assets this week off the back of Bitcoin falling below the psychological $10,000 barrier. This led to a greater sell-off in the less liquid medium cap and small cap assets as demonstrated in the returns of the Bletchley 20 and Bletchley 40 below.

Further, for the second consecutive month all Bletchley Indexes experienced drawdowns with low market cap assets performing the worst. Despite reporting the increased strength of the mid cap and small cap indexes in the last two SOTNs, after the dramatic price falls this week, both continue to reach new lows in relation to Bitcoin’s price.

Coin Metrics Updates

This week’s updates from the Coin Metrics team:

  • We’re excited to announce the release of our Real-Time Reference Rates Beta! Read more about the details of the release here.
  • In conjunction with the release of the beta version of CM Real-Time Reference Rates, we have provided a summary of Coin Metrics’ substantial research and backtesting. You can read the summary here.
  • Additionally, we added support for two new assets: LEO and LINK. Read more details here.
  • Coin Metrics is hiring! We recently opened up 7 new roles, including Blockchain Data Engineer and Data Quality and Operations Lead. Please check out our Careers page to view the openings.
  • State of the Network (SOTN) was published on Wednesday this week due to the Labor Day holiday. SOTN will move back to its normal publication time (Tuesday, 8:00 AM EST) next week.

As always, if you have any feedback or requests, don’t hesitate to reach out at [email protected]

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