The Evolutionary Journey of Ethereum Token
Editor's Note: This article comes fromEthereum enthusiasts (ID: ethfans)Editor's Note: This article comes from
Ethereum enthusiasts (ID: ethfans)
Ethereum enthusiasts (ID: ethfans)
, Author: Coin Metrics, translation & proofreading: Min Min & A Jian, reprinted by Odaily with authorization.
In 2015, Ethereum ushered in a new era in the blockchain world: the era of tokens.
Broadly speaking, a "token" represents a utility or asset, usually issued on a blockchain. In contrast, "coin" refers to a cryptographic asset native to a chain, primarily used as money ("coin" and "token" are used interchangeably in some contexts, but in the context of this article are different). For example, BTC and ETH belong to the category of coins, while MKR and BAT belong to the category of tokens.
However, Ethereum has adopted a completely new way of creating tokens, which is more user-friendly. Anyone can easily issue their own tokens on Ethereum through a simple smart contract.
Soon, thousands of tokens were released on Ethereum. With the skyrocketing number of token types, it is urgent to solve the problem of token standardization to ensure that different types of tokens are interchangeable. ERC-20 implements a standard interface that makes transactions between different ERC-20 tokens easier, and makes it easier for wallets and dApps to integrate ERC-20 tokens. At the beginning of 2018, ERC-721 was also absorbed into the official community standard, which is specially used to represent non-homogeneous tokens with digital scarcity (for example, a crypto cat or a unique cryptographic artwork).
Since then, the evolution of Ethereum tokens has continued to accelerate. In this article, we will explore the evolution of Ethereum tokens and their future development trends.
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Ratio of whole network value/token value
One way to measure the value of a token is to compare the market cap of Ethereum's native currency (ETH) to the total market cap of all tokens issued on the platform. We call this the "network value/token value (NVTV)" ratio, as Chris Burniske proposed.
We divide the market value of ETH by the total market value of several major ERC-20 tokens to get this ratio. Although there are tens of thousands of tokens issued on Ethereum, we only select several mainstream ERC-20 tokens to calculate the total market value. The specific list can be found in the footnotes of the chart below.
Ethereum's NVTV ratio is steadily decreasing. On April 1, 2019, Ethereum's NVTV ratio fell to 1.57, an all-time low. As of Nov. 10, the ratio was 1.90.
ERC-20 assets: ant, bat, bnb, cennz, ctxc, cvc, dai, fun, gnt, gusd, ht, icn, knc, leo_eth, link, loom, gno, lrc, mana, mkr, omg, pax, pay , poly, powr, ppt, qash, rep, salt, srn, tusd, usdc, usdt_eth, wtc, zrx
This is also reflected in the realized market value. Realized Market Cap is a measure proposed by Coin Metrics, calculated from the last price at which each unit of supply changed hands. On the contrary, the traditional market value is uniformly valued according to the current market price. Realized market capitalization can be used to measure the average cost base (cost base refers to the initial investment volume).
From the perspective of realized market value, Ethereum's NVTV ratio has been steadily declining, and has now fallen to 2.57, a record low. As can be seen from the decreasing NVTV ratio, ERC-20 tokens are steadily approaching ETH in terms of valuation.
Since mid-2018, most of this growth has come from a certain type of ERC-20 token: stablecoins.
The chart below reflects the market capitalization shares of utility tokens, exchange tokens, and stablecoins. We have used a simple approach to classify these tokens abstractly; however, other approaches to classification are possible.
A "utility token" is a category "that can ensure that buyers of coins can use certain products in this network, thereby providing funds for the entire network (this definition is taken from BitcoinWiki)". Utility tokens are usually issued during the ICO boom to raise funds, as a payment method in the ecosystem, to access a certain service or function, or to participate in activities such as voting.
"Exchange tokens" are a class of utility tokens created by digital currency exchanges such as Binance's BNB token. Exchange tokens are usually used to raise funds and to offset part of the transaction fees.
A "stablecoin" is a type of token that pegs its value to another asset, usually a fiat currency like the U.S. dollar. Tether is currently the largest stablecoin by most measures, and other stablecoins built on Ethereum include DAI, USDC, PAX, and TUSD.
While exchange tokens gained momentum in early 2019, BNB transitioned from an ERC-20 version to a mainnet version (Binance’s own mainnet) in April, causing the market cap of exchange tokens on Ethereum to plummet.
On July 1, 2018, the total market capitalization of utility tokens on Ethereum reached $7.52 billion, while the total market capitalization of exchange tokens was $2.98 billion, and that of stablecoins was $109 million. As of November 10, 2019, the market cap of utility tokens was $5.19 billion, that of exchange tokens was $2.55 billion, and that of stablecoins reached $3 billion, an increase of $2.8 billion from a year and a half ago.
The chart below shows the market capitalization share of each of the above three types of tokens. For each category, the list of assets we selected is shown in the footnotes of the figure below.
Utility tokens: ant, bat, cennz, ctxc, cvc, fun, link, loom, gno, gnt, icn, lrc, mana, mkr, omg, pay, poly, powr, ppt, qash, rep, salt, sr, wtc, zrx
Exchange token: bnb, ht, knc, leo_eth
Additionally, most of the growth has come from one stablecoin — Tether (USDT).
As we covered in our last article on the state of the network, Tether is spread over several different protocols, the two biggest of which are the Omni protocol (built on top of the Bitcoin blockchain) and the Ethereum protocol. Over the past few months, Tether usage has shifted from the Omni protocol-based version to the Ethereum protocol-based version.
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For a long time, the total number of various token transactions on Ethereum has been lower than the number of non-token transactions (that is, the total number of transactions minus the number of transactions of ERC-20 tokens and ERC-721 tokens, the remaining transactions are mainly Both are simple ETH transfers). However, since May 2019, token transactions have been trending to outpace non-token transactions. As of November 10, the number of daily transactions of ERC-20 tokens was around 303,000, while the number of daily transactions of ETH was around 290,000.
The figure below shows the number of transactions for ERC-20 tokens (shown by the red line), the number of transactions for ERC-721 tokens (shown by the green line), and the number of transactions for non-tokens (total number of transactions minus ERC-20 token and ERC-721 token transactions, shown by the blue line), both use a 7-day rolling average.
Many of the increments in the number of ERC-20 token transactions are brought about by usdt. The chart below shows the market share of the top 10 ERC-20 tokens with the highest number of daily transactions in 2019 (based on a 30-day average). Usdt emerged suddenly in May, occupying 80% of the market share of the top 10 ERC-20 tokens.
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Rise of ERC-721
While ERC-20 tokens have always been the dominant token type, ERC-721 tokens are on the rise.
As of the end of October, the number of transfers of ERC-721 tokens has exceeded the number of transfers of ERC-20 tokens and ETH. During the CryptoKitties craze in late 2017, the number of ERC-721 transfers peaked. In November, the number of ERC-721 transfers soared, surpassing the peak set by CryptoKitties that year.
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Compared with the number of transactions generated by the actual transaction activities of each ERC-721 asset, the total number of transfers reflects a slightly more comprehensive situation. Since each ERC-721 token is unique, many ERC-721 tokens are usually bundled together and sent in the same transaction. The figure below shows the number of transfers of ERC-20 token (shown by the red line), the number of transfers of ERC-721 token (shown by the green line) and the number of ETH transfers (shown by the blue line), all using the 7-day rolling average.
The reason why the number of transfers of ERC-721 tokens has risen sharply is mainly because of the card game "Gods Unchained" on Ethereum.
Gods Unchained is a trading card game similar to Hearthstone. Unlike Hearthstone, Gods Unchained is built on the Ethereum blockchain, and each card is an ERC-721 token. In other words, each user can truly own his own card, and can freely trade it in the open market like other cryptocurrencies.
Although still in its infancy, Gods Unchained is one of the real use cases for cryptocurrencies in the gaming industry. Players of games on the chain can control their own assets in the game. That is, their assets are impossible to dispossess or censor. There are many on-chain games that use non-fungible tokens (NFT), and Gods Unchained is just one of them. Applications like Ethereum Naming Services and on-chain games like Decentraland are also using NFTs, and a variety of other types of games will follow.
Although the number of ERC-721 contracts is still only 4,600, far less than the number of ERC-20 contracts of 184,000 (the number of non-token contracts also exceeds 12 million), the number of ERC-721 contracts in 2019 years has developed rapidly. Since January 1, the number of deployed ERC-721 contracts has increased by nearly 350%, while the number of ERC-20 contracts and non-token contracts has increased by 39% and 36%, respectively.
