Comparison of Blockchain Networks for Token Issuance: Oct 18
When planning a token sale, projects need to closely evaluate which blockchain infrastructure provides the best fit for their product or service. In this article, I will try to provide an overview of the most relevant blockchain infrastructures for ICO tokens. As I already published an article on the topic one month ago, I’ll compare some statistics to see how things changed during the course of one month.
Market statistics
As (instant) liquidity is one of the main reasons for ICO contributions, a platform currency that itself is a liquid asset seems like a fitting choice for a token infrastructure. While market capitalization is an omnipresent value in the cryptocurrency ecosystem, it does not provide a reliable information about the liquidity of a coin. Therefore, trading volume and the number of markets may be a more fitting factor. Trading volume can (just like market capitalization) be manipulated but this is likely happening across all coins, which is why the relative interrelationship of trading volume across different currencies may still be somehow intact.
Based on trading volume and market capitalization, Ethereum is the clear number one platform, as it has by far the highest market cap and volume. For both factors, EOS is on the number two spot. As for trading volume, Ethereum Classic, Qtum and NEO also rank in the top five spots with $100m+. The projects Stellar ($54m) and Cardano ($53m) sum up the category of $50m+ and Ontology ($32m), VeChain ($15m) and ICON ($10m) are the last three with a trading volumes over $10 million. When looking at market capitalization, various projects change places. Stellar takes the number three spot with a market cap of $4.8 billion and Cardano the number four spot ($2.2b). If you divide trading volume by market cap, the percentage of daily traded supply can be identified. Qtum is a very strong outlier with 44.2%, being followed by Ethereum classic (12.8%), EOS (12.2%) and Ethereum (9.2%). By looking at all three statistics, it can be observed that both Ethereum and EOS rank very high in all three categories, being followed by projects like NEO, and Ethereum Classic. As an example, Stellar (1.2% daily traded supply), Tezos (0.2%) or NEM (0.9%) have comparatively low trading volumes combined with high market capitalizations. This may be an indicator for immature markets (i.e. Tezos) or a comparatively small circulating coin supply (i.e. Stellar).
The total number of secondary market options show a similar situation. Ethereum sits on the number one spot with 241 different cryptocurrency exchanges it is traded on. EOS (129), Ethereum Classic (103), Qtum (71) and Zilliqa (69) take the other top five spots. Over the course of one month the total number of exchanges increased across the top 12 currencies by around 10%, while the number of exchanges decreased for the comparatively smaller currencies. This shows that although trading volume decreased over the last month, lots of new exchanges entered the market that are looking to list comparatively larger coins first.
For the distribution of trading activity across different trading pairs for the top five infrastructure projects (based on the amount of exchange listings), Ethereum has the highest “non-crypto” or “non-Bitcoin” dependency. 72% of all trading activity is settled against fiat currencies or stable coins (mostly USDT). Yet, 23% is still traded via ETH/BTC, which is why the dependency of Bitcoin is still omnipresent. For the other platforms, the percentage of fiat ranges between 65% (EOS) and 54% (ETC). 7% of all EOS is traded against ETH and 26% against BTC. 28% of all Zilliqa tokens are traded against ETH because the project did not yet swap their tokens on their own blockchain and ZIL is still an ERC-20 token.
Token statistics
Based on the total number of projects on blockchain platforms, the overall market situation shows a percentage of 95% across the top 100 tokens for Ethereum-based tokens (based on market cap). Omni, Neo, Waves and Ardor combine a total of five projects. Tether, the Omni-based token, takes the number one spot based on market capitalization but it has to be mentioned that Tether also migrated to Ethereum. For instance on Bitfinex, users are able to choose whether they want to withdraw USDT as Omni or Ethereum tokens.
A similar state of Ethereum dominance can be seen in the top 500 tokens. Ethereum-based tokens make up for 90% of the top 500. NEO (14) is the only other platform with double digit projects. The amount of Waves-based tokens decreased from 8 to 5 over the course of one month and both EOS and Achain are represented with one project.
Compared to last month, the statistic for tokens above $1 million daily trading volume did drastically change. In September, 129 projects were listed in the statistic. In October only 59 tokens show a trading volume above $1 million.
The change is even more dramatic when all tokens with a daily trading volume of over $100,000 are included. 442 projects were listed in September compared to the 92 in October (20% compared to September).
I already described in my last post that OMNI is a special “Tether-Blockchain” that is not used by rather new projects and Binance Coin is a special case, for instance due to its buybacks.
OmiseGo ($527 mcap) is the second biggest token on Ethereum and is listed on 99 different exchanges. 30 days ago it was only traded on 92 exchanges. Ontology Gas has a very high valuation because as of now only 16% of its supply is distributed and it is more or less not traded. This valuation will very likely decrease over time.
While Ethereum leads the pack (as usual), NEO, or Gas, looks like the only real alternative, as it is has a trading volume of $4 million and is traded on 28 different exchanges (6 more that 30 days ago).
On-chain statistics
EOS is the leader of actual transactions processed with 1.1 million, followed by Ethereum with close to 493k transactions. These two platforms lead the pack by far. Other “big cap” currencies like Stellar (1515) or Cardano (1613) have a very low amount of transactions. Ethereum has the most active addresses with 215k, being followed by EOS and Ethereum Classic with roughly 20k.
If you combine the amount of transactions and the number of active addresses, it can be seen that EOS widely varies from all other networks with a score of 55.57. One explantation for such a high score could be a highly frequented DApp (EOSBet shows 334,866 related transactions in the last 24h). As EOS has no direct transaction costs, users may also be willing to do way more transactions, or spam.
The comparison of daily active addresses for Ethereum and EOS may be an indicator to show why EOS is not yet a serious competitor but only an upcoming one. Ethereum is able maintain a solid level of 200k+ daily active addresses that does not fluctuate heavily but decreases and increases over time. The daily active addresses of EOS reach over 100k on one day and drop to 2.2k the other day, which may be an indicator that single specific events lead people to operate and transfer on EOS and it still lacks a number of alternative DApps, token sales, etc. to keep the daily active addresses up. Usability is likely also a factor. While mobile wallets and other products are well documented for Ethereum, EOS still lacks this type of usability for newcomers. Ethereum has a strong network effect. Time will tell if EOS can catch up.
DApp statistics
The comparison of on-chain data of DApp usage shows quite surprising results. Based on raw data EOS has 2x the amount of DApp users and 3x the amount of transactions processed by DApps. The fiat equivalent of the processed currency EOS also exceeds ETH by a factor of 14. At first glance, the obvious explanation of this is the scaling limitation of the Ethereum blockchain that can only process about 15 transactions per second and makes use of (direct) transaction costs. EOS is able to process thousands of transactions per second and does not have direct transaction costs. Yet, this comes with a limitation of decentralization, as EOS only has 21 validating nodes. Additionally, the state of “zero transaction costs” does not exist. Every system has transaction costs. In EOS, transaction costs are outsourced through inflation that block producers earn (and the level of centralization that theoretically allows for freezing of assets). EOS still provides an infrastructure for high throughput DApps that would not stand a chance on Ethereum. I cannot say how much of the traffic and users of the EOS DApps are fake (it’s easy to fake/spam volume if you don’t pay direct transaction costs, the statistic on the transactions per active addresses may suggest so) but the on-chain statistics are a clear sign that EOS can challenge Ethereum (keeping in mind their war chest of $4 billion). As mentioned above, EOS-based tokens are not yet commonly traded on liquid secondary markets. The upcoming release of Eosfinex will likely provide such a market for EOS tokens.
Conclusion
To this date, Ethereum remains the go-to blockchain for new projects, when using secondary market statistics as an evaluation tool. EOS looks like the only real alternative but still lacks some maturity to challenge Ethereum. Other solutions need to promote themselves through specific languages, tech, governance structures, geolocations, incubators or else.
Disclaimer: This is currently a fun project, which is why I was not able to put a lot of time in verifying information that I gathered. One goal of this post is to gain feedback to actually be able to post an update in one month with a much higher data quality and more variables. So if you have any feedback on data or variables, feel free to contact me at ante@sicos.io.
