Coinbase proposes new blockchain adoption metric to combat airdrop-related distortions

Crypto exchange Coinbase has announced a new metric called the h-index to address distortions in tracking on-chain adoption caused by airdrop-related activities.

Coinbase, the publicly traded US-based cryptocurrency exchange known for developing Base, a layer 2 solution for Ethereum, has launched a new metric to provide a more accurate measure of blockchain network adoption. This new metric aims to reduce disruptions caused by airdrop-related activities and Sybil attacks.

In a research report published Friday, Coinbase noted that investments in blockchain infrastructure are leading to excess block space, making on-chain transactions cheaper and fueling networks with a new wave of decentralized applications. But this change has also made it harder for analysts to track ecosystem adoption as more apps are released.

Coinbase says traditional network metrics such as total transactions or daily active addresses may be skewed by Sybil attacks and airdrop activity. To solve this problem, Coinbase is proposing a new metric called h-index that balances the depth and breadth of on-chain adoption. The h-index counts the number of addresses that receive transactions from at least the same number of unique sending addresses.

“In other words, an h-index of 100 means that 100 unique receiving addresses received transactions from at least 100 unique sending addresses within a given time period.”

coinbase

According to Coinbase’s findings, Ethereum and Base networks exhibited the most widespread user activity in the week ending June 6 when the h-index was implemented, followed by Arbitrum and Polygon.

H-index for blockchain networks | Source: Coinbase

Acknowledging the metric’s flaws, Coinbase believes the h-index “can provide new insights into benchmark chain adoption by mitigating the major impacts of Sybils and measuring growth more broadly.”

The crypto exchange noted that challenges still remain, including differences in blockchain execution environments that may affect transaction formats and data interpretation. Additionally, Coinbase admits that the influence of exchanges or other smart contract wallets could also “skew the numbers.”

Sybil attacks are a well-known type of network attack in the crypto industry where a single entity creates multiple fake identities or nodes to gain control over a network or influence its functioning. Such activities may manipulate network metrics and data by creating large numbers of fake accounts or addresses to artificially inflate transaction volumes or user activity in order to distort the perception of network usage and adoption.