Abstract
In this study, we analyse the aggregated transaction networks of Ether (the native cryptocurrency in Ethereum) and the three most market-capitalised ERC-20 tokens in this platform at the time of writing: Binance, USDT, and Chainlink. We analyse a comprehensive dataset from 2015 to 2020 (encompassing 87,780,546 nodes and 856,207,725 transactions) to understand the mechanism that drives their growth. In a seminal analysis, Kondor et al. (PLoS ONE, 2014, 9: e86197) showed that during its first year, the aggregated Bitcoin transaction network grew following linear preferential attachment. For the Ethereum-based cryptoassets, we find that they present in general super-linear preferential attachment, i.e., the probability for a node to receive a new incoming link is proportional to kα, where k is the node’s degree. Specifically, we find an exponent α = 1.2 for Binance and Chainlink, for Ether α = 1.1, and for USDT α = 1.05. These results reveal that few nodes become hubs rapidly. We then analyse wealth and degree correlation between tokens since many nodes are active simultaneously in different networks. We conclude that, similarly to what happens in Bitcoin, “the rich indeed get richer” in Ethereum and related tokens as well, with wealth much more concentrated than in-degree and out-degree.
Highlights
Bitcoin and Ethereum are the two pioneering blockchain-based platforms
By analysing a complete and unique dataset encompassing the first 5 years of Ethereum platform, i.e., 856,207,725 transactions and 87,780,546 addresses, we show that the native cryptocurrency of the Ethereum platform, Ether, and the most active tokens on it show a form of preferential attachment, with signs of superlinear PA
We study the dynamics of the aggregated transaction network in Ether (ETH), the native token of Ethereum, and in three key ERC-20 tokens built on top of Ethereum: Binance (BNB), Tether (USDT), and Chainlink (LNK)
Summary
Bitcoin and Ethereum are the two pioneering blockchain-based platforms. Nakamoto [1] created Bitcoin: the first and most popular cryptocurrency system since its launch in January 2009 and, so far, the one with the highest market capitalisation according to coinmarketcap [2]. Price [18] calls this effect as “cumulative advantage”; Barabási and Albert [19]; Albert and Barabási [20]; Barabási and Pósfai [12] refer to it as “preferential attachment” (PA) This effect usually creates power-law degree distributions, facilitating the mathematical characterisation of a growth pattern in complex networks [21]. Preferential attachment refers to the specific case in which the probability of receiving a new link is directly proportional to the node’s degree k, producing a scale-free network characterised by a power-law degree distribution pk ∼ k−c with exponent 2 ≤ c ≤ 3, as in Barabási and Pósfai [12]; Alstott et al [22].
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