The concept of a richlist has been around for quite a long time in cryptocurrency circles. Richlists are interesting and informative. Many people want to know how much of a cryptocurrency is concentrated into the hands of a few whales versus how much is distributed among a broad user (or speculator) base.
The breadth of ownership of a cryptocurrency can be highly informative as to the adoption and relevancy of a currency. In an extreme scenario, if one address owns 95% of a cryptocurrency’s tokens, the ownership profile itself suggests that the cryptocurrency is not widely adopted at best and could even be some sort of a scam at worst.
Complicating the matter is that the smaller a cryptocurrency is in “market cap”, the less likely it is to have a publicly published richlist (particularly, ignoring ERC-20 tokens). Therefore, the usefulness of richlists increases in conjunction with the likelihood that there is no public richlist to view! This is quite the conundrum.
BlockchainAnalytics.io has an approach even more useful than a typical richlist! We create series of richlists across groups of blocks and analyze changes in the richlist across each set of blocks. Calculating, for example, a full richlist every 10,000 blocks and then trending changes to the richlists can be highly informative.
GameCredits Trended Richlist
In this post, we make public one such analysis. The subject of this post is GameCredits – a cryptocurrency that could one day provide a universal market and pay token for the world’s 2+ billion gamers. This analysis makes public several interesting facets of “history” embedded in the GameCredits blockchain.
For the GameCredits blockchain, BlockchainAnalytics.io calculated a richlist every 10,000 blocks. Therefore, we have richlist metrics at block 10,000, block 20,000, block 30,000, block 40,000, etc through the end of the blockchain. Since the GameCredits blockchain (at time of writing, April 2018) is a little over 2,000,000 blocks long, this approach produces around 200 richlists to trend.
First, we begin by looking at the percentage of total tokens owned by the ten richest addresses for each richlist.
Chart 1 above shows that 46% of all GameCredits tokens were owned by just ten addresses at block 10,000. Highly concentrated ownership near the beginning of a blockchain’s history makes intuitive sense. Concentrated ownership makes particular sense if a coin is pre-mined or has only a few individuals mining it for the first several thousand blocks (note: we are NOT asserting that GameCredits was pre-mined – merely stating a couple possibilities for why ownership may initially be highly concentrated for blockchain-based tokens in general).
As a coin advances deeper into its lifecycle, broader ownership of the coin – either by current users, potential users, miners, or financial speculators – would intuitively suggest that concentration of ownership decreases. In the case of GameCredits, concentration of ownership did the opposite. Concentration of ownership initially accelerated. By the block 140,000 richlist, the top ten addresses owned 65% of total outstanding tokens (up from 46% at the block 10,000 richlist).
The entire time of block creation to go from block 10,000 to block 140,000 was about two months and ten days. One would not necessarily expect significant ownership diversification of a cryptocurrency over just a couple months, especially when it is new. Nevertheless, it is interesting that the concentration of ownership increases significantly, not decreases, from block 10,000 to block 140,000.
Continuing deeper into GameCredits’ history, chart 1 shows that GameCredits’ concentration of ownership is fairly stable from the block 140,000 richlist to about the block 280,000 richlist (as a percentage of outstanding tokens). Finally, around 280,000 (which corresponds to about 6/20/2014 — about 4 months after the first block), ownership by the top 10 addresses begins to trend down on a largely linear basis until the block 1.16 million richlist.
The fairly steady decrease in ownership from richlist 280,000 to richlist 1.16 million is informative at some level. This view suggests that other individuals could be accumulating GameCredits tokens (be it by mining or trading on exchanges).
In Chart 1 above, the huge jump in concentration of ownership for the richlist at the block 1,160,000 richlist punctuates the importance and usefulness of looking at richlists every n-blocks. This trended richlist view grants the observer a 50,000 foot view of the ownership topography of the cryptocurrency. Without a trended view across multiple periodic richlists, discovery of such significant changes in ownership could be nearly invisible.
What happened to drive this incredible increase of concentration in ownership!?
In the particular case at the block 1,160,000 richlist, an absolutely massive portion – 47.99% of all outstanding GameCredits tokens – were owned by the top address on the richlist! In the block 1,150,000 richlist the richest address owned 8.18% of all GameCredits tokens. This huge change from one richlist to the next is highlighted more acutely in the chart of the single richest address every 10,000 blocks (Chart 2, below).
Chart 2 is incredibly telling. Firstly, at block number 10,000 the richest address on the richlist owned 36% of the entire outstanding supply of GameCredits. Again – not necessarily an issue since the cryptocurrency was so young. However, this shows that a single individual or corporate entity stands to benefit from the adoption of this currency from the very beginning (that is not wrong, but it is useful to know!). Chart 2 then further punctuates the concentration of ownership, as discussed above, at the block 1,160,000 richlist. This jolt upward in ownership was so shocking, it triggered a slight technology audit to verify Blockchain Analytics’ richlist calculation methodology. Sure enough, a huge portion of coins were concentrated into a single address.
This particular type of 50,000 foot view is clearly very telling to the observer!
But still … what happened to drive this incredible concentration in ownership!? We know it is driven by one address from Chart 2. Deeper research allows us to derive more detail.
The answer to the question (what happened?) lies somewhere between block 1,150,000 and 1,159,999. Upon further investigation, the blockchain reveals one particular block (with five transactions) within that block range where 19,000,000 GameCredits tokens were sent to a single address. Further, our derivations show there were about 49,750,000 GameCredits tokens outstanding as of block 1,150,000. Using 49.75MM tokens as total supply, this single transaction accounted for nearly 38.2% (19,000,000 / 49,750,000) of all outstanding GameCredits tokens that existed at that time!
We could dig deeper into this transaction – looking to see if this transaction was moving tokens from mining rewards or something else – but for this post, we will stop digging deeper right here. This transaction is simply astonishing. A single entity (either individual or corporation) had the ownership of enough tokens to move more than 1/3 of the existing supply in a single transaction!
Without the computational and analytical resources to trend richlists across time, movements of this magnitude can be nearly opaque to all but the individual that effected them.
Finally, after the shocking consolidation of ownership into a single address at the block 1,160,000 richlist, both Chart 1 and Chart 2 show the concentration of ownership of total outstanding tokens decreasing over time. Chart 2 suggests that the owner of the richest address explicitly sold off/transferred to other addresses around the block 1,340,000 richlist, the block 1,610,000 richlist, and the block 1,760,000 richlist.
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What else can trended richlists communicate?
Can the number of addresses with a balance signify anything?
The number of addresses with a balance can be a very telling sign of adoption of a cryptocurrency. We don’t know how many people are sharding their total ownership across multiple addresses; nor do we know with certainty if balances are for purposes of speculation, HODLing, or end-user use of the token. Nevertheless, general trends of increases or decreases in the number of addresses in a richlist provide signals to BlockAnalytics.io as we analyze the cryptocurrency space.
Chart 3, below, shows one such view of this particular indicator for GameCredits.
At block 10,000 there are 5,247 addresses on the richlist. The 10,000 unique addresses line is crossed – only for about 50,000 blocks – at the block 770,000 richlist. The 10,000 unique addresses mark is not crossed for good until the block 1,270,000 richlist (which corresponds to about 1/17/2016 — nearly two years after launch). From January 2016 to present, the number of addresses with balances grows rapidly and is (at the the last richlist calculated) over 35,000 addresses.
Finally, a single brief view of the distribution of ownership show that the the vast majority of addresses own fewer than 100 GameCredits tokens. Even addresses owning more than 100 tokens are but a blip at less than 10% of addresses with a balance, at the time of writing.
The ability to create richlists and view them across time/block groups is one tool for highly informative blockchain analysis. Richlist analysis trended across time provides a 50,000 foot view of what is happening with a cryptocurrency from the perspective of concentration or distribution of ownership.
This analysis is merely a summary of insights that can be derived from such analytics efforts. The possibility to perform richlist analyses – and the insights that can be derived from them – is nearly endless! Nevertheless, this post serves as a helpful primer on one of the ways that BlockchainAnalytics.io is thinking higher than hype™.
Questions or comments? Leave a comment below.
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