Welcome to this weeks Just The Metrics

Hello Fellow Crypto Enthusiasts,

first some exciting updates: Just The Metrics was on Air 😀📺

@ArmyOfSpies included a sequence about us in one of the YT issues last week.

Check it out and subscribe to the Channel, seems to have valuable content 😉.

Ok, but now let's start with what you are used to get here:

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

• Project Catalyst Fund 9 Voting is open

2. Diving into Just the Metrics

• The L1-Assessment-Framework applied to Polkadot

Ok, let's dig in!

Project Catalyst Fund 9 Voting is open!

You've probably already heard: Project Catalyst Fund9 Voting has started!

If you have managed to register with a valid QR code prior to August 4th, it's time to voice your say via Fund9 voting now.

I hope all reading this have already registered some days ago to have a been taken snapshot of your wallet to determine the weight of your voting power.

If you register now - you will only be able to participate in Fund10 at the earliest.

Goal

The goal is to distribute the pot of $16,000,000 by the Cardano Community to the respective project proposals.

Visualization of the voting process

Here's a nice and comprehensive overview how the voting process works:

Voting Timeline:

• Start: Sep 5 - 10am UTC

• End: Sep 19 - 3pm UTC

• Expected Results: around Sep 27

• First Rewarding: mid of October

So let's get ready for voting! 💪

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L1 Assessment Framework applied to Polkadot

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 Polkadot that determine its degree of

• Security

• Scalability &

• Decentralization

General Decentralization Metrics:

Initial Token Distribution:

• Polkadot had an initial Token distribution with 47 % going towards insiders and the foundation.

• 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

• Compared to L1 like Solana & Avalanche, Polkadot allocated 53% to the public whereas Solana just distributed 1% and Avalanche allocated 16%

• So overall, the fairness and decentralization of Polkadot's initial token distribution range somewhere between Cardano & Avalanche.

The number of individual staked wallets & staking ratio

• Polkadot has over 33,646 staked wallets (called Nominators) with a staking ratio of 52,4%, which reflects a relatively low level of decentralization.

Permissioned vs Permissionless Node (Yes/No):

• Polkadot is a permissionless public blockchain

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

• Polkadot has a total of 998 validators.

• Although anyone can run a Polkadot validator node, the maximum number of validators who can participate in the validation is restricted to 297 in an Era/Epoch (24 hours)

• You currently need a minimum of 5000 DOT (USD 38500) to be a validator on the Polkadot relay chain.

• Compared with Cardano, which has more than 3100 validator nodes, Polkadot has a relatively low number of validators. This reflects a relatively low degree of decentralization.

Sources for Validators & Delegators:

1. https://datastudio.google.com/reporting/3136c55b-635e-4f46-8e4b-b8ab54f2d460/page/k5r9B

2. https://stats.avax.network/dashboard/network-status/

3. https://polkadot.subscan.io/validator

Factors Enabling Decentralization:

Size of a full node: 

Polkadot has 3 history modes of a node:

• Full Node: A full node is a pruned node that retains the last 256 blocks. A node that is pruned this way requires much less space than an archive node.

• Light node. A light node has only the runtime and the current state, but does not store past blocks and so cannot read historical data without requesting it from a node that has it. Light nodes are useful for resource-restricted devices.

• Archive Node: An archive node retains all block history for the chain. It makes it convenient to query the past state of the chain at any point in time.

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

• CPU:

  • x86-64 compatible

  • Intel Ice Lake, or newer (Xeon or Core series)

  • AMD Zen3, or newer (EPYC or Ryzen);

  • 4 physical cores @ 3.4GH

• Storage:

  • An NVMe SSD of 1 TB

• Memory:

  • 16GB DDR4 ECC

• System:

  • Linux Kernel 5.16 or newer.

• Network:

  • The minimum symmetric networking speed is set to 500 Mbit/s (= 62.5 MB/s). This is required to support a large number of parachains and allow for proper congestion control in busy network situations.

Polkadot relies on validator nodes with modest requirements.

Caveat: Locking 5000 DOT is also a minimum requirement for running a mainnet validator node (Current market price of 5000 DOT= USD 38500).

General Security Metrics:

Cost of 51% attacks:

• For an attacker to control 51% of the Polkadot network, it will cost over $4.5 billion, not factoring in the price appreciation that will occur with a buyer trying to purchase that much DOT

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

• Polkadot has a low vulnerability to such attacks

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

• Polkadot has a Peer-to-Peer propagation network.

Factors Enabling Security:

Full Node/Partial Node Ratio

• The three different history modes of a Polkadot node allow for a high Full node/partial node ratio

Client Diversity:

• Polkadot has three different client implementations in Rust, C++, and Go languages

General Scalability Metrics:

Transaction throughput:

• Regardless of how much throughput Polkadot generates as a whole, fees will be limited by the throughput capacity of a single parachain which is about 1000-1500 TPS

• This high throughput capacity is achieved due to the parallel processing of transactions across multiple chains

• For comparison, the pre-upgraded Ethereum can produce about 13.4 TPS. And Cardano is performing 7-8 TPS, which is both very low for an L1.

Transaction latency & finality time:

• Complete finality of a transaction might take up to 60 seconds for a parachain transaction, and a few seconds less for a Relay chain transaction.

Active Layer 2s (rollups/state channels):

• Polkadot’s goal is to scale horizontally using Parachains

• There is the main Relay chain and subsequent Parachains.

• The Polkadot network facilitates cross-chain communication and enables interoperability by connecting multiple blockchains into one unified network.

• Currently, Polkadot has 25 active Parachains

Factors Enabling Scalability:

Status of data availability that enables rollups:

• Polkadot's scaling model is not a rollup-centric one. Instead, it focuses on creating a scalable multi-chain ecosystem with Parachains.

So what does now the overall verdict look like:

Decentralization: Low-moderate

Security: High

Scalability: Moderate

Polkadot is a secure L0/L1.

It shows a relatively low-moderate degree of decentralization in its token distribution as well as in the number of validators when compared to public blockchains like Cardano.

The horizontal scaling model of Polkadot seems to be restricted by the number of Parachains that shares security with the relay chain. In a longer time horizon, where rollups could dominate the scaling solution landscape, this might become a critical limitation.

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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.