Ether December 2018 On-Chain Volume Falls Short of DAO Hack Figures

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On January 21, 2019, Diar, a crypto-focused research group, reported the unlikely rise of ether’s on-chain transaction value on the Ethereum blockchain. Despite the market crash in 2018, the number two blockchain recorded a total movement of 115 million ETH in December last year.

December Value Transfer Tops Network’s Charts

Excluding the Decentralized Autonomous Organization (DAO) catastrophe in 2016, in which swaths of ETH were nabbed from Ethereum’s blockchain, December 2018 boasts the greatest value transfer in the platform’s life. The DAO debacle, during which roughly $150 million in ether was stolen, nearly doubled December’s volume.

To be clear, these dat points refer to the amount of ether transferred, rather than the number of operations made on-chain. The number of transactions plateaued between 400,000 to a little over 600,000 transactions between October 2018 to January 2019.

Ethereum Transaction Count

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Transactions per day from October 2018 to January 2019.

(Source: Etherscan)

This time last year, the network touched an all-time high of 1,250,000 transactions before taking a steep dive through to May. The amount of ETH transferred at this peak still falls short of the amount transferred last month, however.

On the difficulty in cultivating accurate on-chain data, CoinMetrics, another crypto data repository, explained that speaking in USD (or fiat, in general) can provide unreliable data. One of the side effects of measuring Bitcoin transactions, in particular, is that a large portion of volume from this blockchain “comes from exchanges moving money around, or from mixers, and they’re hard to identify.”

It should be noted that much of Diar’s report has sourced their information from both CoinMetrics and Etherscan to conduct their research.

Data in Context: Fees, Bitcoin, and Constantinople

Comparatively, average Bitcoin on-chain volume in December 2018 hung at around ~$13,000 and a far lower average transaction account. This information points to an asymmetric relationship between BTC; ETH, transaction count, and average transaction volume. While ETH may claim a much larger number of transactions, the Bitcoin blockchain commands larger transfers of value.

BTC vs. ETH Transaction Volume (USD)

The thin red and purple lines represent ETH and BTC transaction count respectively. The shaded red and purple portions represent ETH and BTC’s average transaction value in USD).

(Source: CoinMetrics)

A viable conclusion that can be drawn from this could be that users prefer paying higher transaction fees when moving around larger sums of value. At the time of press, the average fee on the number one blockchain is ~$0.2, while Ethereum costs ~$0.076 according to BitInfoCharts.

In the long-term, developers will likely see a further drop in transaction costs on the Ethereum network. The recently postponed Constantinople fork looks to decrease the cost of interacting with smart contracts assuming another extremely popular dApp, à la CryptoKitties, doesn’t arrive and congest the network. Following a vulnerability found in the fork’s code, the Constantinople is projected to launch in February 2019.