In the spring of 2016, the DAO, a decentralized venture capital fund built on top of , was hacked , a third of the money that the DAO had raised.
This sparked a contentious debate within the fledgling community around the underlying philosophy of the blockchain. The developers proposed a hard fork that would essentially reverse the hack and return users’ ETH. A number of community members lashed out at this proposal. They believed that the proposed hard fork violated the immutability of : the principle that previous transactions on a blockchain ought to be treated as permanent and irreversible.
This contingent refused to adopt the new and instead continued to use the unforked version of — renamed . Much to the surprise of spectators, the Classic hard fork didn’t substantially damage the overall market cap of , and the combined market caps of and the Classic fork were actually higher than the market cap of prior to the fork.
So, how far has Classic come since the hard fork? Both and Classic aim to become decentralized, global computers that can power decentralized applications, or DApps—in that regard, therefore, the two blockchains can be seen as mutual competitors. So, we can ask the question: Has Classic’s focus on immutability really made a difference in competing with ?
Let’s see how Classic stacked up against when the two chains first forked on July 30th, 2016:
Here’s how the two compared as of last month, on February 25th, 2019:
To understand how compares with Classic nearly three years after the fork, we’ll analyze both currencies along three critical axes:
- DApp Usage: How do DApp development and usage compare across Ethereum and Ethereum Classic?
- Transaction Volume: What do transaction volumes reveal about levels of adoption between Ethereum and Ethereum Classic?
- Mining: How does mining activity compare from Ethereum to Ethereum Classic?
Examining these different factors makes it clear that while Classic’s promise to maintain immutability has allowed it to survive over the years, it hasn’t been enough to put a dent in the higher usage and seen by .
DApp usage on Ethereum is low — but DApp usage on Ethereum Classic is nearly nonexistent
and Classic both aim to be decentralized computing platforms that can power a range of decentralized applications. Despite this, there are currently very few DApps on Classic and usage is nearly nonexistent. While usage has declined since its 2017 peak, the platform boasts nearly 70x the number of DApps and 35x the daily active users of Classic.
, a registry for DApps, lists 1,403 different DApps on the network. In contrast, , a registry for ETC DApps, lists only 19 different DApps for Classic.
Part of this has to do with the fact that has a much stronger advantage in terms of ecosystem. Developer tools like and help developers write DApps, while infrastructure providers like help power them, and wallets like allow end users to transact with them. Classic developers, on the other hand, can use certain tools developed for for Classic, but it sorely lacks natively developed tools, making it harder to build and maintain ETC DApps.
While Classic has technically existed as long as , the ETC Dev team member Donald McIntyre noted that roughly moved to the new chain, leaving Classic to build an ecosystem from scratch. It’s possible that Classic is simply less mature than , leading to fewer DApps at this point in time.
Another reason for this disparity may have to do with the fact that there is simply a lot more money in the ecosystem. When launched, for investors to buy. This represents over 70% of the current supply of ETH. As ETH increased in value, developers and investors reinvested some of their earnings into helping develop the protocol. A prime example of this is , a venture capital production studio founded by Joseph Lubin, one of the co-founders. ConsenSys has helped develop . Meanwhile, Classic developers and investors who weren’t previously involved in didn’t benefit from the split.
As of February 23, 2019, there were around 8,627 daily active users across DApps, measured by the number of unique addresses that had sent a transaction to a DApp. That’s not a whole lot, but it’s significantly higher than the number of daily active users on Classic.
During the same time, there were 27 daily active users across Classic DApps.
Data around usage and DApp development suggest that, at the end of the day, developers and users care more about real-world usability than ideological principles such as immutability. While it’s true that had a more mature ecosystem prior to the hard fork, in the past three years, Classic has failed to close that gap in terms of DApp development or usage.
Ethereum processes more transactions than Ethereum Classic, but transaction volume on both chains remains flat
and Classic both seek to become a global, decentralized computer that can power transactions across decentralized applications. Growth in transaction volume for both chains depends on their ability to get people to develop DApps and use them, participate in Initial Coin Offerings (ICOs), and more.
Because the vast majority of this activity takes place on rather than Classic, it’s unsurprising that does over 14 times the transaction volume compared to Classic.
Since the Classic hard fork in July 2016, ’s transaction volume spiked at a high of 1.35 million transactions a day in January 2018, following the ICO boom on in 2017 and the development of popular DApps such as .
As the, ’s transaction volume has fallen gradually over the past year, settling at a range between 380,000 and 500,000 transactions per day.
Over the same time period, Classic’s transaction volume has remained largely flat beyond a couple of short-term spikes. As of late February 2019, Classic does roughly 40,000 transactions a day, which is 18% higher than the 34,000 transactions per day it saw at the time of the hard fork.
If you look at Classic’s current transaction volume, however, three years after the hard fork, it actually looks pretty similar to a graph of ’s transaction volume, early in the history of the network. For the first two years following launch, ’s transaction volume remained essentially stagnant, before growing explosively from 50,000 to 100,000 transactions a day. In this regard, it’s possible that Classic is simply at an early stage of maturation than , explaining its low transaction volume.
While transaction volumes on and Classic have both declined over the past year, the overall transaction volume on dwarfs that of Classic. This is likely thanks to the fact that the majority of DApp development and ICOs occur on ’s network rather than on Classic’s. It’s possible that Classic is simply a younger network than , but if it wants to catch up, it will have to attract more developers and DApps to the platform.
While mining profitability is the same on Ethereum and Ethereum Classic, Ethereum commands a much higher hash rate
Both and Classic use the same Ethash mining algorithm, which means that both currencies can be mined on the same hardware. However, with a hash rate that’s currently at around 155 terahashes per second, has over 17 times more computing power devoted to mining and securing the network than Classic.
The table below compares key mining metrics between and Classic.
For both and Classic, over 40% of the recent blocks have been mined by two pools: Ethermine and Nanopool.
Pools choose what to mine based on what’s most profitable for them. As mining profitability between and Classic has remained even over time, many pools choose to mine on both and Classic.
Mining profitability evens out between the two chains because and Classic share the same Equihash consensus algorithm. If miners start contributing more hash power to , the difficulty of mining increases, leading some miners to switch to mining Classic. Since miners are rational and profit-seeking, mining profitability ends up at an equilibrium.
The overall hash rate on Ethereum, however, is much higher than it is on Ethereum Classic, which is what you’d expect given its higher market capitalization.
A higher hash rate means that it’s much more expensive to launch a 51% attack on Ethereum than Ethereum Classic. According to Crypto51, the current cost of launching a 51% attack on Ethereum is $82,803 USD per hour, compared to only $4,723 for Ethereum Classic.
This difference in hash rates came back to haunt Ethereum Classic this past January as a block reorganization revealed that the chain had been successfully . Because smaller chains like Ethereum Classic attract less hash power, they cost less to attack. Making matters worse is the fact that Ethereum Classic shares the same hashing algorithm as Ethereum. That means that an attacker can rent Ethereum mining hardware through a cloud mining service like to launch an attack. As of late February, it would take less than 4% of the hash power on Ethereum to 51%-attack Ethereum Classic. The Ethereum Classic development team is considering changing the , but until they do, Ethereum Classic remains vulnerable to similar attacks in the future.
Pragmatism beats ideology
The original split between Ethereum and Ethereum Classic arose as a matter of ideology, with Ethereum Classic promising to maintain the immutability of the blockchain. In the years that have followed, it appears that developers and users have favored pragmatism over ideology. While Ethereum Classic offered an alternative to Ethereum on the basis of immutability, actual usage in terms of DApps, transaction volume, and mining activity haven’t kept up.
Perhaps, then, one possible solution is for Ethereum Classic to not be a competitor to Ethereum, but rather a collaborator with Ethereum: some, such as ETC Cooperative Director , believe that both chains stand to benefit by working with each other towards common goals, rather than trying to undermine each other. Given the current state of Ethereum vs. Ethereum Classic, that might very well be a favorable outcome in the long-run.
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Published at Thu, 21 Mar 2019 16:42:27 +0000
