Welcome to this weeks Just The Metrics

Hello fellow Crypto Enthusiasts,

it's Sunday again and your favorite weekend treat is back in your inbox:

Just The Metrics - your newsletter with the latest updates from the Cryptoverse, Crypto Metrics, L1 Comparisons, and all about Cardano.

Here's what we got this week:

1. Updates from Cardano

• Updates from Cardano's Vasil Hard Fork Combinator

2. Diving into Just the Metrics

• The L1-Assessment-Framework applied to Avalanche

Ok, let's dig in!

Updates from Cardanos Vasil Hard Fork (HFC)

Recap: What the Vasil HFC will deliver

The Alonzo upgrade brought a host of new possibilities through the implementation of smart contract capability on Cardano, allowing for the development of decentralized applications (DApps), and decentralized finance (Defi) solutions.

The upcoming Vasil upgrade will significantly improve and enhance the network’s performance by increasing throughput and script efficiency and reducing latency in block transmission.

Hence, the Vasil is the most ambitious update program for Cardano to date. And the entire technical community is working hard to deliver it.

To keep track and provide transparency to the Cardano Community about the status of the upgrade, IOG provides a regularly updated website:

What does the Status Quo as of today look like?

With a node release candidate (1.35.3) now delivered and downstream components updated, Stake Pool Operators (SPOs), developers, and exchanges are now doing final integration testing and upgrading before the hard fork combinator event.

Here is the set of objective criteria for ecosystem readiness of the Hard Fork:

• SPOs: need at least 75%updated to the final version of the node

• Exchanges: targeting 80% completed integration by liquidity

• DApps: Backwards compatibility of Version 1 and Version 2

SPO Readiness:

SPOs making good progress over the weekend with upgrades - block producing node metric at 58% for the epoch and the hourly on 75%.

The 6-hour chart is up to 74% from 71%, a 3% gain in Vasil blocks since yesterday!

Once a few more stake pools upgrade nodes to 1.35.3, it should hold steady above 75%

Exchange Readiness:

To trigger the hard fork event, IOG & the Cardano Foundation has set a metric of approximately 25 exchanges upgraded (representing 80% of ada liquidity).

Exchanges & DApp developers also working hard behind the scenes.

Downstream Component Integration Status:

As well as ensuring to have a good number of updated 1.35.3 nodes running the networks, downstream components (used by DApp developers, SPOs and exchanges) also have to be compatible

Conclusion

Overall, it looks like a very pleasing trajectory.

Vasil may eventually happen at some point in September.

So let's stay patient and tuned.

L1 Assessment Framework applied to Avalanche

Crypto is an emerging asset class of the 21st century. And when making investment decisions in this particular asset class, it is important not to base them on hype or ever-changing narratives.

Especially in the light of recent events, it becomes more & more evident that fundamental and metrics-based decision-making is key for a profound project assessment.

So here is the Blockchain Trilemma as Assessment Framework

Let's take a look at certain metrics of Avalanche that determine its degree of

• Security

• Scalability &

• Decentralization

General Decentralization Metrics:

Initial Token Distribution:

Avalanche has a centralized initial token distribution. Compared to other Layer 1 chains like Ethereum and Cardano, the token allocation for insiders is high.

For example, Ethereum and Cardano distributed around 80% of their tokens through a public sale. In contrast, Avalanche insiders hold almost 40% of the total supply.

The number of individual staked wallets & staking ratio

• 22890 individual staked wallets. For perspective, Cardano has more than a million staked wallets.

• Avalanche has a staking ratio of 64.9%, which is relatively high (Cardano 70.43%).

• Avalanche has a relatively low number of staked wallets but a high staking ratio. This could be explained by the centralization of the token distribution.

Permissioned vs Permissionless Node (Yes/No):

• Avalanche is a permissionless public blockchain

The total number of active validator nodes/relay nodes/stake pools:

• 1266 Active validator nodes

Factors Enabling Decentralization:

Size of a full node:

>200 GB (archival node), 10 GB (pruned node)

Minimum hardware & connectivity requirements for running a validator node/relay nodes/stake pool:

• CPU: Equivalent of 8 AWS vCPU

• RAM: 16 GB

• Storage: 1 TiB (A tebibyte equals nearly 1.1 TB.)

• OS: Ubuntu 18.04/20.04 or MacOS>= Catalina

• Avalanche validator node requirements are moderate, which makes it relatively easy for people to run a validator node.

• Caveat: Locking 2000 AVAX is also a minimum requirement for running an avalanche mainnet validator node (Current market price of 2000 AVAX= 39940 USD)

General Security Metrics:

Cost of 51% attacks:

• For an attacker to control 51% of the Avalanche network, it will cost over $3.3 billion, not factoring in the price appreciation that will occur with a buyer trying to purchase that much AVAX.

Vulnerability to denial-of-service (DoS) and distributed denial-of-service (DDoS) attacks:

• Avalanche currently has very low vulnerability to such attacks.

Propagation network types (a peer-to-peer propagation network or a relay propagation)

• Avalanche has a peer-to-peer propagation network. This increases the resilience of the Avalanche network.

Factors Enabling Security:

Full Node/Partial Node Ratio:

• Avalanche had a relatively low Full Node/Partial node ratio, when compared to networks like Bitcoin and Cardano

Client Diversity:

• Currently Avalanche has no client diversity

General Scalability Metrics:

Transaction throughput:

• Avalanche boasts a theoretical throughput of 4500 tps. But this is a hypothetical scenario of the network having 100% efficiency.

• Due to the high network usage, Avalanche has seen many transaction fee spikes. Especially in Q4 2021 and Q1 2022. 

• This shows that the Avalanche network cannot support a tps of 4500 in the current state without compromising its security. Here's a Reddit post about the maximum observed TPS on Avalanche.

• The highest network activity on Avalanche was recorded on 27.01.2022, with more than 1.1 million transactions executed that day.

Transaction latency & finality time:

• 1.75 seconds based on the performance test done by users.

Active Layer 2s (rollups/state channels):

• Avalanche has no rollups or state channels

• Avalanche plans to scale through subnets. Subnets are scaling solutions that could accommodate multiple blockchains under them. Each of those blockchains works like a sidechain, which shares security with the avalanche mainnet (P-chain)

• Currently 8 active subnets with varying number of validators participating in the validation.

Factors Enabling Scalability:

Status of data availability that enables rollups:

• Avalanche C-chain's data availability is similar to the Ethereum mainchain (way better than Cardano). So theoretically, rollups working on Ethereum are implementable on Avalanche.

So what does now the overall verdict look like:

Decentralization: Low

Security: High

Scalability: Moderate-high

The Avalanche network shows a relatively moderate-high degree of security & scalability. Looking at how Avalanche is trying to extract value from Ethereum and scale with subnets, a success of L2 Ethereum rollups may result in a lack of user demand for the EVM-based Avalanche subnets.

In its current state, Avalanche lags in the decentralization metrics. Mainly due to the centralized nature of its initial token distribution and a high monetary threshold for running a validator node.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.