Introduction

User engagement is a crucial factor contributing to the growth and expansion of the crypto market. Thus, what increases user engagement in platforms and in blockchain, in general, is one of the most important questions that should be answered.

In off-chain the degree of embeddedness increases the social engagements. People are more embedded in a community, the more likely it is that they engage in the activities of the very community. The question is whether this theory is true in on-chain as well?

This dashboard focuses on Ethereum blockchain, the largest blockchain, and presents the degree embeddedness in the Ethereum and its change over time. The dashboard also attempts to to investigates whether the degree embeddedness on the chain contributes to the engagement in the network or not.

Please note that this dashboard is more analytical than descriptive.

Research Question

Networks consist of nodes (actors) and edges (relationships). The token transfers among users on Ethereum can be considered as a network where nodes are ‘wallet addresses’ and edges ‘token transfers’.

In networks, the degree of embeddedness has relationship with the sustained activity of actors. The more a node is embedded in a network , the more likely it is it contributes to that network more frequently and for a longer time. The degree of embeddedness of a wallet address can represent the number of users that the owner of wallet has relationship with.

We can expect that Ethereum users with the higher embeddedness of degree, are more engaged in the network and for longer time.

> User’s degree of embeddedness → user engagement

In this dashboard, we specifically, examine how the degree of embeddedness of Ethereum users change over time and how it is correlated with user engagement.

Method, Data and Definitions

In this dashboard, the focus is on token transfers (including ETH). The degree of embeddedness of each address is defined as the number of wallet addresses that the wallet transferred to and from. We also distinguish between indegree (from_address) and outdegree (to_address).

User is defined any address which send or receive a token transfer on Ethereum. Users indegree is defined as the number of addresses which connected to through receiving transfers and outdegree is the number of addresses which connected to through sending transfers.

User engagement is defined as number of transaction that a user executed.

From Etehreum.core schema two tables have been used: etehreum.core.fact_token_transfers and ethereum.core.ez_eth_transfers .

Facts and figures below show the following:

• In total 46,7 million addresses have made at least one transfer on Ethereum since in 2022 so far.
• From this amount 28,9M addresses are non-institutional addresses (can be considered as ordinary users’ wallets).
• The average number of transfers per user has fluctuated around 1,5 since the beginning of 2022.
• If we exclude institutional addresses then we can see a gradual increasing trend in the average number of transfers per user from 1 to 1,3.
• On average, users have made 5,64 transfers in 2022 so far.
• If the institutional addresses is excluded the average transfer per user will be around 3,36.

The graph below shows the daily number of users and transfers over time in 2022. We can see that both the number of users and the number of transfer per day has decreased since the beginning of 2022.

When we distinguish between senders and receivers, we can see the daily number of receivers is higher than the number of senders. This is caused by the fact that some wallets are hubs and send more than receive.

Explanatory Analysis

Now, we explore how the average degree of embeddedness of users is changing on Ethereum.

Graphs below show how the average degree of indegree and outdegree of Ethereum’s users has changed over time.

We can see that the average outdegree and indegree of users has decreased recently. We can expect that the engagement of users (number of transactions) will be decreasing.

The core question of this dashboard is whether the degree of embeddedness increases the activeness of users on blockchain. This has been already tested by the author in the case of Optimism. Now let’s test this hypothesis in the most popular blockchain, Ethereum:

> The more a user is connected through sending and receiving transfers, the more likely it is to engage in the Ethereum blockchain through transactions.

Here, I only focuses on the top 500 addresses in terms of the indegree and outdegree. The correlation between the degree of embeddedness and the number of transactions (activeness) of a user is shown.

Therefore, we can conclude that, there is no evidence to reject that the degree of embeddedness can predict the activeness of users on Ethereum.

Interestingly, we can see that indegree has a strong correlation with number of transactions. It implies that:

> the more a user receive transfers the more will be active on the blockchain.

Descriptive Analysis

Top institutional addresses

Graphs and tables below show the top 50 address with the highest indegree and outdegree.

The focus in this section is on October 2022.

Coinbase and in general CEXes have the highest indegree (received tokens from many addresses) and Ethereum genesis has the highest outdegree (send token to many addresses).

Conclusion

In this dashboard we argued the higher degree of embeddedness leads to the more active and committed user. Then, we explored how the average degree of embeddedness of users on Ethereum changed over time.

We saw that the average embeddedness is not growing. This can be against the healthiness of Ethereum network and predict the less active and committed users in future.

When a user is loose the embeddedness in a network means that engages less with the very network which makes dropping out likely.