The Public Blockchain Ecosystem: An Empirical Analysis

Abstract

This paper offers an organizing empirical framework to understand the largely unexplored public blockchain ecosystem. Our framework casts blockchains in terms of their key economic attributes rather than as a set of disparate objects. The framework takes inspiration from the blockchain trilemma, constructing empirical analogs for each of its three attributes: (i) scale, (ii) security, and (iii) decentralization. Our analysis uncovers an association between these attributes and blockchain consensus protocols. We establish that Proof-of-Work (PoW) blockchains dominate on decentralization; Delegated Proof-of-Stake (DPoS) blockchains dominate on scale, and blockchains using non-standard protocols dominate on security.
We find that a small group of blockchains form the ecosystem's frontier, but no particular blockchain, not even Bitcoin, leads on all three attributes.

Keywords: Blockchain, Proof-of-Work, Proof-of-Stake, Delegated Proof-of-Stake, Decentralization, Scale, Security, Cryptoasset, Cryptocurrency, Bitcoin, Ethereum, EOS

JEL Classification: C0, G0, O3