98% of XRP Ledger Transactions Have “Zero Value,” Much like EOS & XTZ : Report
“Only 2% of transactions on the XRP ledger lead to value transfers,” reads the report by Cornell University.
The report titled “We Know What They've Been Put Through: Revisiting High-scalability Blockchain Transactions,” talks about the network traffic of three major high-scalability blockchains EOS, Tezos (XTZ), and XRP.
Although scalability has been a bottleneck for major blockchains like Bitcoin and Ethereum, these highly scalable blockchains aren’t really being used for value transfer purposes either. The report found,
“Despite the advertised high throughput and the seemingly commensurate transaction volume, a large portion of on-chain traffic, including payment-related transactions, does not result in actual value transfer.”
Both transaction volume & token value highly manipulable
98% of XRP ledgers aren't making any value transfers.
Between October 1, 2019, to December 31, 2019, a total of 90 thousand accounts collectively conducted 150 million transactions, an average of 1.7 thousand transactions per account.
The distribution of the number of transactions per account is highly skewed, 18 most active accounts are responsible for half of the total traffic.
The report also found that out of the top 10 accounts by the number of conducted transactions, all except one “share suspiciously similar patterns.”
The pattern reveals, more than 98% of their transactions are OfferCreate, which is used to create a new order in the decentralized exchange provided by XRP.
These accounts are either descendants of an account from Huobi or frequently transact with descendants from Huobi. They all have also transacted using CNY and their payment transactions use the same destination tag, similar to a bank reference number.
As per the report, by allowing autonomy in currency issuance, the XRP ledger makes it easy to generate seemingly high-value, but in effect valueless and useless transactions.
As such, XRP ledger is “fraught with zero-value transactions” and “both transaction volume and token value on the XRP ledger are highly manipulable.”
It’s all about governance here
In the case of Tezos, 82% of its throughput was used for maintaining consensus.
These endorsement operations account for a vast majority of total operations which are performed by bakers and a block needs a minimum of 32 endorsements for it to be accepted.
Analyzing the top receivers’ accounts didn’t provide much but the top sending accounts divulged that most of them follow a similar pattern, “sending a small number of transactions to many different accounts.”
Also, 4 out of 5 of these accounts are regular accounts and most likely to be automated by an off-chain program.
The report further found, only a single participant has ever proposed an amendment and every proposal has always received more than 99% of approvals (or over 99% rejection in another proposal’s case).
Used by porn and betting websites
95% of transactions on EOS were the result of an airdrop of a single value token.
Overall, token transfers account alone for more than 91% of the transactions and the rest are mostly user-defined. Before the EIDOS token, about 50% of transactions belonged to betting games.
Eosio.token account is by far the most used account followed by a porn website that uses EOS as a payment system. The third account from the top is a betting website where all the bets are performed transparently using EOS.
These are followed by a decentralized exchange and a role-playing game on EOS.
The absence of transaction fees is one of the major selling points of EOS which though advantageous can also result in spammy behaviors.
In the case of EIDOS token, this resulted in the network entering congestion mode and users having to stake an amount much higher than what they would pay in transaction fees on Bitcoin.