Coinbase, a prominent U.S.-based cryptocurrency exchange that is publicly traded and is recognized for its development of Base, a layer-2 solution for Ethereum, has introduced a innovative metric known as the h-index to combat distortions in monitoring onchain adoption caused by airdrop-related activities.
In a recent research report, Coinbase highlighted the excessive blockspace created by investments in blockchain infrastructure, resulting in more affordable onchain transactions and the emergence of a new wave of decentralized applications. However, this development has made it increasingly difficult for analysts to accurately track ecosystem adoption as the number of applications continues to grow.
According to Coinbase, traditional network metrics like total transactions or daily active addresses can be influenced by Sybil attacks and airdrop activities. To address this issue, Coinbase has put forward the h-index, a metric that aims to balance the depth and breadth of onchain adoption by counting the number of addresses receiving transactions from an equal number of unique sending addresses.
In their findings, Coinbase revealed that Ethereum and Base networks displayed the most widespread user activity for the week ending Jun 6, closely followed by Arbitrum and Polygon.
While acknowledging that the h-index is not without flaws, Coinbase believes that it can provide new insights into comparative chain adoption by lessening the impact of Sybils and offering a broader measure of growth. However, challenges persist, including variations in blockchain execution environments that can affect transaction formats and data interpretation. Additionally, the influence of exchanges or other smart contract wallets could also distort the numbers, according to Coinbase.
Sybil attacks are a well-known form of network attack in the crypto industry where a single entity creates multiple fake identities or nodes to manipulate a network or influence its operations. These attacks can skew network metrics and data by generating numerous false accounts or addresses to artificially inflate transaction volumes or user activity, distorting the perception of network usage and adoption.