Ethereum [ETH], the third biggest cryptocurrency by market cap, is currently the center-point of the cryptocurrency space because of the recent comments made against the project by Tuur Demeester, the Founder of Adamant Capital. The Founder outlined the reasons he is against the leading project on his official Twitter handle, which resulted in gaining the attention of several well-known influencers in the space.
Demeester started by stating that even though Ethereum claims to offer the same solutions like decentralization, immutability, and smart contracts, like that of Bitcoin, the architecture and culture is the complete opposite. He added that since it is considered a crypto blue chip, it “colors perception of uninformed newcomers.”
This was followed by the Founder stating that he has been following up with Ethereum since 2014 and that it is his responsibility to share his “concerns”. According to him, the third biggest cryptocurrency “is at best a science experiment” and the current valuation, i.e., $13 billion is too high.
Following this, Demeester remarked that he is in complete agreement with the statement made by Vlad Zamfir, an Ethereum developer’s statement made in early 2017. Here, the developer had stated that Ethereum is neither safe not scalable, but was merely an “immature experimental tech.” The developer had even advised people to not work on the network for mission-critical apps unless absolutely necessary.
Additionally, the Founder also pointed out the criticism made against Casper’s white paper, stating that “it does not live up its own claims”. The peer review was conducted by a group of developers including Vlad Zamfir, wherein he states that the white paper does not result in neither the “theoretical sound nor practical useful treatment of Byzantine fault-tolerance”. It mainly points out that it is unclear whether the definition of Casper protocol family “provides any meaningful safety guarantees” for the Ethereum blockchain, or whether this approach could be applied to scale blockchains.
He further stated:
“8/ On the 2nd layer front, devs are now trying to scale Ethereum via scale via state channels (ETH’s version of Lightning), but it is unclear whether main-chain issued ERC20 type tokens will be portable to this environment.”
Demeester went on to compare this with the evolution of Bitcoin’s Lightning Network and stated that it is currently live and is witnessing growth at a “rapid clip”. He said:
“11/ In 2017, more Ethereum scaling buzz was created, this time the panacea was “Plasma”. 12/ However, upon closer examination it was the recycling of some stale ideas, and the project went nowhere: 13/ The elephant in the room is the transition to proof-of-stake, an “environmentally friendly” way to secure the chain. (If this was the plan all along, why create a proof-of-work chain first?)”
He went on to say that his main concern is that “sophistry and marketing hyper” are the main factors contributing to Ethereum’s success so far. The Founder added that the overly “inflated expectations” has resulted in an “inflated market cap”.
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Coin Metrics data reveals inaccuracies in Kik’s claim of being as dominant as BTC, ETH blockchains
Upon investigating Kik’s claims in response to SEC’s lawsuit filed earlier this month, CoinMetric data reported inconsistencies in the on-chain activity and adoption rate of its native token, Kin.
In a study dubbed, “An Analysis of Kin’s On-Chain Activity,” the crypto-asset elaborated on the two assertions made by Kik in its letter to the US Securities and Exchange Commission.
Kik’s first claim was regarding its blockchain activity. Its in-house token, Kin, supposedly exceeded Ether and Bitcoin to record the fifth highest daily blockchain activity. This was debunked by CoinMetric’s investigation after taking into account its “Operation Count” [the same metric used by Kik to support their claim] and “Transfer Value.”
In terms of the Operation Count, the report explained,
“According to Kik’s source for the metric, “blockchain activity” is defined as “the number of operations on the blockchain in the last 24 hours.” Operations are broadly defined as any type of action that could be recorded on chain. But operations are not standardized across blockchains which makes comparing across chains difficult.”
Besides, drawing parallel comparisons across blockchains with radically different use cases and operations is difficult.
Although Kik’s original research showed a high number of account creations, Coin Metrics data revealed that many of these accounts were empty.
Additionally, Kin’s “create account” operation has a fee of .001 Kin. The report highlighted that a metric such as “operations count” for the purpose of blockchain activity cannot be used as a measurement tool since Bitcoin and Ethereum blockchains do not track account creations on-chain.
In terms of Transfer of Value, the report elaborated,
“Theoretically, high daily transfer value should signify high activity. But transfer value is often quite noisy, especially on low fee blockchains where there are minimal costs to sending transactions. Some transfers might simply be users moving money around between addresses they own”
Instead, Coin Metrics contrived “adjusted transfer value” metric to eliminate what it called, “noise and certain artifacts like self-sends, or deliberate spammy behavior.” Coin Metric noted that this gives a clearer picture of the on-chain activity, resulting in a decreased transfer value when compared to other blockchains, even if it had a high number of daily blockchain operations.
Additionally, Kin’s average transaction value was also low, when compared to other blockchains. For the first claim, Coin Metrics concluded that the Kin platform had more micro-transactions than Bitcoin and other dominant blockchains, while highlighting the fact that the latter blockchains are not primarily used for such transactions.
Regarding Kik’s second claim that said that over 300,000 users were earning and spending Kin as a currency, Coin Metrics assessed its blockchain usage. The number of addresses is not necessarily equal to the number of users since a single user could have multiple addresses. Hence, Coin Metrics took the number of active users into account, which the report defined as “the number of unique addresses that were active in the network [either as a recipient or originator of a ledger change] during that day.” The report noted,
“Kin 2 has significantly more originating active addresses than Kin 3. Although Kin is in the process of migrating to Kin 3, it appears that Kik is using data from the Kin 2 chain to support their claims about usage.”
Further, Kin 2 and Kin 3 had more active addresses that received payments than originated payments, which meant that there were more “earners” on Kin than “spenders,” also noting that only 35,000 addresses held over 10,000 kin [nearly $0.23]. The report added that the figures are lower than other blockchains which have a minimum of 1,000,000 addresses with at least $1.
After examining multiple critical aspects, Coin Metrics concluded that Kin fell below dominant blockchains in terms of daily active addresses, despite maintaining steady growth. It said,
“A majority of Kin’s active addresses have small account balances. While this makes sense for a network built around micropayments, when viewed across multiple metrics, our data show that Kin is not more widely used than dominant chains such as Bitcoin or Ethereum.”
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