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Tag: blockchains

A Guide for Blockchain Usage Metrics

Token Used by William Mougayar We are in dire straits for token usage metrics, not just to vindicate the “utility token” moniker, but also to eventually bring some sanity into how we could evaluate some of these coins. In the long term, I believe that not all coins are equal. And not all coins deserve the same valuation metrics. Super tokens like Bitcoin or Ethereum are multi-purpose, and they might deserve extraordinary multiples in part because it helps them secure their sovereignty as bona fide consensus protocols with strong crypto-economic defenses against theoretical attacks. (although with POS the attack equation changes a bit.) Aside from technical protocol coins, most other coins will be more closely aligned with end-user traction as the primary correlation factors for their valuation. This includes all flavors of app coins including the upcoming variety of so-called governance coins. The purpose of a coin is to create economically valuable business models directly or indirectly via the ecosystems they engender. Blockchain-based transactions are arguably a key traction metric. Of course, market prices can be influenced by news instead of usage activity, or they can be artificially influenced by lopsided token distributions that affect price elasticity as a result of the scarcity of the trading pool. But these are short term, centrally manipulated tactics that eventually run their course. You can amplify and concoct your news for so long before that game is up, and you can lock your reserve tokens for so long until eventually your Token economic models catch-up with reality.

If you look at CoinMarketCap, you get a macro view of the market, but if you look hard at the project levels, the real traction will be revealed from the bottoms-up metrics related to real usage. Below is a list of the Macro vs. Traction View metrics, as I see them.

The Macro View is Top Down whereas Market Reality Traction happens Bottoms Up via Outcome and Activity metrics.

Macro View

  • Market Cap
  • Daily Trades
  • Amounts raised
  • Number of Coins
  • Number of Apps

Traction View

Outcome Metrics
  • Active Users (Daily, Weekly or Monthly)
  • Total transactions (number)
  • Value of transactions (value)
  • Balances in smart contracts (value)
  • Transactions to/from contracts (number)
  • Value of transactions to/from contracts (value)
  • Blockchain rewards to users (value)
  • Wallets value (value)

Activity Metrics (numbers)

  • Unique addresses
  • Active addresses
  • Wallets
  • Nodes
  • Transactions per second
  • Blocks per hour
  • Developers
  • API calls
  • Software downloads
  • Repositories
  • Commits
  • App downloads
  • Clients
Tracking Blockchain Metrics by William Mougayar Here is my favorite (short) list of traction metrics (Testnet transactions don’t count): Ethereum: 52% of transaction types going to smart contracts (Source: Amberdata) CryptoKitties: 2.8 Million smart contract transactions in first 6 months (Source: Dappboard) 0x: Over 100,000 lifetime trades (Source: 0x Tracker) Until there are real revenues and profits (if that applies), I’d like to see more traction metrics from blockchain companies. We need to see them soon.]]>

From Waterloo to Zug, Retracing Ethereum's Journey

The right answer is both. The first one could be argued from the technical perspective (Vitalik enrolled in Computer Science at the University of Waterloo before he dropped out), and the second from a jurisdictional side (the Ethereum Foundation Stiftung Ethereum is based in Zug).

With the theme “From Waterloo to Zug”, I’m reflecting on the famous book by Thomas Friedman, From Beirut to Jerusalem when he covered and reflected on these 2 regions during his early journalistic reporting years.

Indeed, I’ve just spent 3 days in Waterloo, Ontario at the amazing ETHWaterloo hackathon event (where I was a speaker, moderator and judge), followed straight by another 3 days in Zug, Switzerland at the Melonport M0 conference where I participated in a lively panel covering the regulatory aspects of blockchain-based asset trading and related token offerings.

In Waterloo, my presentation covered the Ethereum Ecosystem, where I enumerated a number of statistics related to the sheer depth and breadth of that ecosystem that is, without any doubt the large blockchain ecosystem, by orders of magnitudes. For comparison purposes, it has been estimated that the number of Ethereum-savvy developers is 30X the number of Hyperledger developers (Hyperledger, being a distant 2nd in the enterprise segment space).

I started by jokingly asking the audience if they knew what Ethereum’s most important feature was. Then, I said this was a trick question, because Ethereum’s most important feature is NOT a feature. Ethereum’s most important feature is in the title of my talk: its ECOSYSTEM.

Here are the slides from my presentation.

And this is the video to my talk which was followed by a panel discussion with Vitalik Buterin, Joseph Lubin and Julie Maupin. We covered a range of issues. I particularly liked Vitalik’s answer when I asked him what to make of the seemingly excessive attention on the token topic.

Then, off to Zug, to the Melonport conference, an event entirely focused on the topic of decentralized asset management and funds. The regulatory panel I participated included Luka Müller-, probably the single lawyer with the most experience covering token generation events (TGE is a preferred naming convention to ICOs). Luka’s Zurich-based law firm MME was retained by the Ethereum Foundation in its early days in 2014, to figure out its crypto-related jurisdictional status, and that was a pivotal moment in Ethereum’s evolution, and perhaps for the rest of the ecosystem who followed that model. More recently, Luka was the principal author of the just-published Blockchain Crypto Property framework (BCP), a thorough classification of the many token models, from a legal point of view.

On that same day, Melonport announced the formation of a new Swiss Trade Association, the Multichain Asset Management Association (MAMA). Initiated by Melonport AG, MME Legal Tax Compliance & Bussmann Advisory with the support of Canton of Zug Economic Affairs, MAMA’s 20 founding members will function as a trade body working towards a new vision for asset management using blockchain and other supporting decentralized technologies. My venture arm, Virtual Capital Ventures is one of the early 20 foundation members, and I was pleased to support them, because I believe in the future of decentralized trading, even if my recently launched WMX Blockchain Index is managed on a semi-decentralized platform.

The key themes from the Melonport conference centered around Technology-Regulated Investment Funds (Melonport’s positioning), and the recurring vision that every non-liquid asset is going to become a blockchain-traded asset, ushering an explosion in liquidity. Related to this, I ran a quick Twitter survey yesterday that confirmed what I suspected: we are still not sure about the impact of this increased liquidity, given the 51/49 split in opinion:

Time to wind down and return to Toronto which is reeling from Sibos and Swell, 2 conferences that took place within blocks of each other, representing the old finance world (Sibos) vs. the new world of crypto (Ripple), and where I’m looking forward to catching-up with Oliver Bussmann, the President of the Crypto Valley Association who attended and presented at both events. It’s ironic that he was in Toronto while I was in Zug. I will update him on what happened in Zug, while he will update me on what took place in Toronto.

The cryptoworld bridges are getting shorter and shorter. We are in it together to change the world, one region, and one country at a time.


(Re)-Explaining the Blockchain in One Slide

Screen Shot 2016-11-08 at 11.48.29 AMI’ve been obsessed with explaining the blockchain to increasingly larger audiences, without going through technical detours.

Today, I made a presentation at the Red Chalk Group Blockchain in Insurance event in Chicago where I revealed for the first time an updated slide to describe the blockchain’s potential in a single slide.

This would be my 4th iteration at explaining the blockchain in one slide. The first 3 versions were the following:

Simple Blockchain Definition

Explaining the blockchain-1

Multi-Disciplinary View of the Blockchain

Explaining the Blockchain-2

Multiple Identities View of the Blockchain

Explaining the Blockchain-3

There is nothing wrong with these existing definitions. They are valid, but unlike these previous 3 versions, I wanted to focus the next iteration on “how to think about the blockchain”, i.e. give a framework for thinking about the blockchain opportunities for your particular projects or ideas.

To start with, I categorized what the blockchain enables into 4 segments:

  1. A Software Development Environment
  2. A Global Utility
  3. Enabling Trust Services
  4. Creating New Marketplaces
Each category includes a list of 3 bullets that expands on the realm of blockchain usage within these 4 categories. Here is the slide. My hope is that it generates ideas for anyone who is thinking about implementing blockchain innovations.

A Framework for Thinking About the Blockchain

How To Think About the Blockchain


Public Blockchains: The Community vs. The Ecosystem

insight communityIn the recent blockchain related debates pertaining to forking or block size decisions, we always hear the word “community” as a reference to the body of players who are supposed to be the stakeholders that care the most about such or such blockchain. Given that blockchains are decentralized organisms, their “community” reflects this topology by being a sprawling entity made up of eclectic and dispersed actors and players.

Why is it important to understand who the community is?

According to blockchain theory, the community is supposed to determine the future of a given blockchain via the proverbial decentralized governance magic of consensus. Consensus decision-making is at the heart of blockchains, because a plain majority can sway it one way or the other. Just like an election, more or less. The baseline of a blockchain rests on its economic soundness, and the reality is that some players hold the strings to this economic soundness more than others. Economic soundness also directly relates to blockchain security, but let’s not digress on that (yet important) tangent.

With such deciding power on the future of public blockchains, the Community is an important body, because they represent the current governance.

So I went on a research investigation to figure out the composition of a typical blockchain Community because they have been the most vocal about being who they are. What I found is that this deciding community is a subset of a larger ecosystem. The Community represents the Base Players that have had an earlier economic role in the ecosystem. They are mostly the insiders, and they have an advantage in being more in-the-know that others. Their voices are louder, and their collective actions (or inactions) can effectively determine a blockchain’s trajectory.

There is something contrarian about cryptocurrency communities. In the traditional sense, most companies will firstly gain users or customers, either as end-users or as developers. Then the body and variety of users becomes the community. In the cryptocurrency space, that sequence seems to be inverted. We start with the community of core supporters before we get to a large set of end-users. That’s ok, and perhaps a characteristic of fundamental technologies that need to garner a strong base before it flourishes.

Generically, the Base Players of a cryptocurrency “Community” are largely this group:

  • Token/Currency Holders (mostly owning it via wallets, not exchanges)
  • Core Developers
  • Tools Developers (software tools that are close to the blockchain)
  • Miners
  • Exchanges
  • Cryptocurrency Researchers and Scientists
  The larger ecosystem involves several other participants. It can be portrayed to include the Base Players, in addition to:
  • Venture Capitalists
  • Software Applications Developers
  • Startups with thousands of ideas and projects
  • 90% of Token Holders (the rest of us)
  • Regular Users waiting for mainstream Apps and who haven’t participated yet
  • Large Services Providers who can implement large scale solutions
  • Corporate Developers who want to bring these technologies inside the enterprise
  • Governments who are like other corporate users, but they can serve the public with blockchain-based services
  • Influencers, Analysts and Supporters

Cryptocurrency Community Ecosystem

Let us take the cases of the recent Ethereum hard fork decision, and the Bitcoin block size debate epitomized by the Scaling Bitcoin conference. In both instances, the deciding community was mostly formed of the respective Base Players. But these Base Players are a relatively small group. In the Bitcoin case, the number of influential attendees to the widely publicized Scaling BItcoin process was probably under 100. And in the case of Ethereum, when the Carbonvote was tallied, only a total of 1,325 addresses voted, which is a relatively small number compared to the overall number of ETH holders, considering there is an available supply of 82 million ETH.

I hope we eventually use the word Ecosystem instead of Community, because it is more representative of a marketplace in the making. And I wished that a part of this larger ecosystem would also have a voice into the future of these public blockchains. Currently, the larger ecosystem is mostly a powerless silent majority that is watching events unfold, while being hopeful that the vocal and more powerful minority is going to lead the market in the right direction.

Eventually, any large scale public blockchain will need to reach a more balanced state where community leadership and ecosystem inclusion work together to strengthen its longevity and sustainability potential.

The Base Players are the Community today, and they are steering the boat right now, but will they in the future?


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