Try Quests to earn cryptoOpen Analytics - 17. Cosmos Hub
Submit a deep dive dashboard that explores a specific topic in detail using data from the Cosmos Hub.
Open Analytics - 17. Cosmos Hub
✨Introduction
Tendermint validators are the backbone of the Cosmos Hub blockchain. They commit new blocks by taking part in a consensus process and broadcasting votes signed with their private keys. Token holders who receive rewards for running the Tendermint consensus system can stake ATOM tokens to vote for a validator nominee. An additional incentive for validators is the ability to set a commission percentage on the fees their delegators earn. The staked ATOM tokens of validators who double-sign or go inactive for an extended period of time will be reduced. Before delegating, delegates should vet potential validators and oversee their selected validators to ensure equitable revenue and risk distribution. Cosmos, which aspires to create a scalable "internet of blockchains," uses ATOM as its staking currency for governance voting.
🛠️ Method
In the Cosmos (ATOM) ecosystem, delegation and staking are key features. I will analyze Cosmos delegate data to better understand how the new year has started and how delegators have staked and unstaked their ATOM over the past year and in the early days of the new year. To do this, I will be using Flipside's Cosmos database.
This analysis will focus on delegation metrics for delegate and undelegate activities, as well as delegator redelegations. I will be using cosmos.core.fact message attributes and fact transactions tables as my data sources.
For the delegate analysis, I started by filtering the message type field to "delegate" to get delegate transaction IDs. Next, by filtering the message type column to "delegate" and attribute key to "amount," I obtained the unadjusted delegate amount (in ATOM). By matching transactions with fact transactions and selecting the from address field, I was able to obtain the delegator's wallet address.
To analyze undelegation, I repeated the process and replaced the message type entry with "unbond." By joining with the transactions table, I was able to obtain the undelegator volume and users.
In addition to the above analysis, I will be calculating the Nakamoto coefficient, Gini coefficient, and Lorenz curve. The Nakamoto coefficient measures the degree of centralization within the network, while the Gini coefficient and Lorenz curve help to identify the distribution of staked ATOM within the network. These calculations will provide further insights into the state of the Cosmos ecosystem and how it has evolved over time.
✍🏻 Conclusion
Based on the above findings, we can infer that the Cosmos network has been steadily growing over the past year, with an increase in the number of transactions, volume, and redelegations. The delegation metrics in the new year are higher than 2022, while the undelegate metrics are lower.
However, there is still a need for improvement in terms of decentralization, as the Nakamoto coefficient is relatively high, indicating a concentration of power among a small number of validators. It is important to note that while the Nakamoto coefficient is a useful metric for measuring the level of decentralization, other variables such as the resources and capital required for an attack would also need to be considered.
In terms of redelegation, the average redelegation volume per user in 2022 was higher than 2023 to date, while the average unique redelegators and transaction count per day in 2023 are higher than 2022. The majority of wallets and transactions are for redelegated amounts between 10 to 50 ATOM.
In terms of validators, there are clear leaders in terms of undelegation and volume, such as SG-1 and Binance staking. However, there is a diverse mix of validators in terms of popularity and use for redelegation paths.
Overall, with continued growth and focus on decentralization, the Cosmos network has the potential to become a leading player in the blockchain industry.
Hey there 👋!
Firstly, I appreciate you sticking with it until the conclusion.
I'm Hamed, a civil engineering Ph.D.
student interested in data analysis.
I've made many similar dashboards and visualizations since I started at Flipside in January.
Please take a look at my various contact details and let me know what you think.
About:
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Author: HaM☰d
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Discord: 0xHaM☰d#8391
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Twitter: @arjmandi_hamed
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Email: h_arjmandi2012@yahoo.com
🔎 Finfings:
The graphs above show that the frequency of redelegates has remained relatively constant over time. Starting in January 2022, the sum climbed to an all-time high (ATH), but it began to drop until July 2022. Since September 2022, the number of weekly redegates and redelegators has remained fairly constant, below 2000. However, in the second week of January 2023, it spiked again, reaching about 4000.
When we compare the number of redelegations to the structure of stakers redelegating their ATOM, we can see that the two are very similar. Currently, the number of redelegators is below 2000 per week.
In terms of the volume redelegated, two major weeks stand out, with the redelegated volume hitting around 20 million on each occasion and exceeding 27 million on the second week of November 2022, during FTX's demise.
🔎 Finfings:
The chart above shows the weekly transaction count for delegate and undelegate actions over time. As can be seen, the number of delegation transactions is much higher than undelegations. The chart on the right represents the volume over time. According to this chart, it can be observed that in some weeks, the undelegated volume was much higher than delegation. By looking at the crypto calendar, we can find that during these weeks, the crypto market was affected by LUNA's crash in May and FTX's demise in November, which resulted in higher undelegate volumes. However, in the other weeks, the net delegated volume was positive, indicating that Cosmos users are loyal to this asset.
Overall, as seen in the cumulative charts below, more than 128M ATOM has been delegated compared to 104M undelegated volume (24M net delegated volume) through 3.1M and 235K transactions, respectively.
🔎 Finfings:
The data presented suggests that there is room for improvement in terms of decentralization on the Cosmos hub. The Nakamoto coefficient, which measures the number of validators that would need to collude to compromise the network, is relatively high, indicating a concentration of power among a small number of validators. This is further supported by the Lorenz curve and Gini coefficient, which show a relatively unequal distribution of staked volume among validators.
It's important to note that while these metrics can provide insight into the decentralization of a network, they do not necessarily reflect the actual difficulty of conducting an attack on the network. Other variables such as the resources and capital required for an attack would also need to be considered.
In conclusion, the data presented suggests that there is a need for improvement in terms of decentralization on the Cosmos hub. Based on the data provided, it appears that 14 validators or 33% of the entire staked amount, would be required to compromise the network. However, it's important to keep in mind that the actual difficulty of conducting an attack on the network would depend on various other factors as well.
According to the data presented, the Nakamoto coefficient of the virtual currency "Cosmos" has been steadily rising over the past year, with values ranging from 2 to 14, and Gini Coefficient is 0.51.
The chart below show the distribution of Staked volume in top Validators.
🔎 Finfings:
As it is clearly observable, the number of delegate transactions and the volume of these transactions have shown an aggressive increase at the start of the new year. On the other hand, while the number of undelegate transactions has increased since 2023, the volume of undelegated tokens did not show a similar increase. The spikes in the charts above belong to the crash of Luna in May and the demise of FTX in November.
The pie graphs below represent the daily averages of these metrics and the net volume per delegator. As can be seen, the average net volume per delegator in 2023 is 57 ATOM, while it was 36.7 in 2022. Overall, the delegation metrics in the new year are higher than those of 2022, while the undelegate metrics are lower. I have calculated the average transactions count and volume per day, while the net delegated volume has been calculated per delegator on average.
🔎 Finfings:
SG-1 is the origin validator with the most undelegated transactions, while Imperator.co was the most popular destination validator in terms of transaction count.
Binance's staking validator sent out the most volume, and SG-1 received the most volume.
The most popular path to redelegation was from Citadel.one SuperApp to Prism protocol, mainly because of a potential airdrop.
The following pie charts show the distribution of wallets and transaction count in terms of redelegation volume. As can be seen, the majority of wallets and transactions belong to those who redelegated between 10 and 50 ATOM.
Regarding the methodology for calculating the Nakamoto coefficient, it is calculated by taking the percentage of total tokens owned by the top holders. For example, if the top 10 token holders own 50% of the tokens, the Nakamoto coefficient would be 50%.
For the Gini coefficient, it is calculated by plotting the cumulative percentage of token holders on the x-axis and the cumulative percentage of tokens held on the y-axis. The line that represents perfect equality is then drawn. The Gini coefficient is calculated as the ratio of the area between the perfect equality line and the plotted line to the total area below the perfect equality line.
The Lorenz curve is also used to measure the distribution of tokens. It is calculated by plotting the cumulative percentage of token holders on the x-axis and the cumulative percentage of tokens held on the y-axis. The diagonal line represents perfect equality, and the plotted line represents the actual distribution of tokens. The more the plotted line is away from the diagonal line, the more unequal the distribution of tokens.