The Public Blockchain Ecosystem: An Empirical Analysis

Abstract

This paper provides an empirical overview of the largely unexplored public blockchain ecosystem. Our overview highlights that only a few blockchains dominate the ecosystem although no single blockchain, not even Bitcoin, dominates uniformly. We explain our empirical findings with a simple theoretical framework that establishes three key economic attributes - adoption, scale, and security - as the determinants of blockchain user utility. We examine each blockchain along those dimensions empirically. Comparing across these attributes, we establish whether a blockchain could be optimal relative to all other blockchains for some user type. Applying that comparison yields that only a few blockchains could be optimal for some user type. Our results thus explain why only a few blockchains dominate the broader blockchain ecosystem and further provide an empirical framework from which to evaluate progress within the blockchain ecosystem.

Keywords: Blockchain, Cryptoasset, Cryptocurrency, Scale, Security, Adoption, DeFi

JEL Classification: C0, G0, O3