Coinbase Introduces Innovative Metric to Measure Blockchain Adoption

The top cryptocurrency exchange in the US, Coinbase, has recognized the need for a more precise way to gauge actual blockchain adoption than the measures now in use.

Coinbase has emphasized in a blog post the difficulties in monitoring the growth of the blockchain ecosystem as additional apps are released. Issues like spam and Sybil attacks, which entail the formation of several bogus identities in peer-to-peer networks, can render traditional measurements, such as total transactions or daily active addresses, untrustworthy. In order to address these flaws, Coinbase suggests applying the h-index, a statistic that was first intended to gauge the output and significance of scientific research.

The H-Index Adapted for Blockchain

Coinbase has adapted the h-index to evaluate blockchain activity by tracking the number of addresses that have received transactions the same number of times. This metric helps to provide a clearer picture of blockchain adoption by focusing on genuine user activity.

Explaining the new approach, Coinbase states, “The h-index originated in academia as a way to quantify the research output and impact of a researcher, calculated by counting the number of publications that have been cited at least that same number of times. We have adapted this metric to measure the activity on blockchain networks by looking at the number of addresses that have been on the receiving end of transactions at least that same number of times. In other words, an h-index of 100 means that 100 different receiving addresses had received transactions from at least 100 unique sending addresses over a given time frame.”

Using this refined metric, Coinbase analyzed the adoption levels of Ethereum Virtual Machine (EVM)-compatible chains. Their findings revealed that Ethereum (ETH) has the highest level of adoption, followed by Base, Arbitrum (ARB), Optimism (OP), Polygon (MATIC), Avalanche (AVAX), and Fantom (FTM).

“Ethereum and Base have the most widespread user activity of those measured, with Arbitrum and Polygon PoS following close behind,” Coinbase noted. This new metric offers a more reliable gauge of blockchain usage, helping to distinguish genuine adoption from activity inflated by spam or malicious attacks.

By introducing the h-index to blockchain analysis, Coinbase aims to provide a more accurate and insightful measure of blockchain adoption, reflecting the real impact and usage of various blockchain networks.