- 1 Ethereum Classic has an average of 5.5 Transactions per block which is very less compared to its peers.
- 2 Ethereum Classic saw 35k transactions in the last 24 hours while the active addresses are near 15701.
- 3 At press time, ETC was trading at $23 with a 2% drop over the last 24 hours.
Ethereum Classic is the original Ethereum blockchain which was launched in July 2015. The protocol can support DApps and smart contracts similar to Ethereum. The main motto of the protocol is to preserve the integrity of the existing Ethereum blockchain.
As per their website, they have proven their ability to resist censorship against all odds and deliver the original Ethereum vision of unstoppable applications. Some of the latest applications using the Ethereum Classic blockchain are Nyke Finance, Safe Classic, Mono NFT and more.
Source: Ethereumclassic.org
One of their mottos is ‘Code is the Law’ meaning “applications run exactly as programmed without downtime, censorship, or third-party interference’ But if you look around, every other blockchain’s vision is more or less the same.
Thus the question arises – Why Ethereum Classic? And the answer is not so simple. Let’s have a look at some of the details of how Ethereum Classic functions to help answer this question.
What is the Block Reward Policy of Ethereum Classic?
Before understanding what the block reward policy of the Ethereum Classic is, let’s understand what Block means in a proof of work (PoW) chain.
In the context of the PoW chain, a block contains a collection of transactions and is linked in chronological order. So the major component of a block is the transaction.
But can you form a block in a PoW chain without the transactions? The answer is yes, if it is Ethereum Classic. Before moving further, let’s have a look at the mining rewards for the Ethereum Classic blockchain.
Source: ETC Supply By Ethereum Classic.org
As per one of their blogs, Ethereum Classic has a new formula for calculating the mining rewards for a block. The reward consists of three parts: base rewards, uncle rewards, and gas rewards.
The base rewards decrease by 20% every 5 million blocks, while the uncle rewards and gas rewards vary based on the number of uncle blocks and the gas requirements of the transaction.
Gas rewards and uncle rewards can increase the existing supply while gas rewards transfer the existing tokens. You can also estimate the supply of ETC as per the formula between 198.3 million and 210.6 million ETC. Let’s understand the benefits of empty blocks.
Are there any Incentives for ETC Miners with Zero Transactions in a Block?
The answer to this question is a resounding yes, here’s why. You have probably heard of the block-size wars at some point. It was a debate in which the Bitcoin community was divided into two camps to keep the same block size or increase it.
The key point here is that Bitcoin protocol blocks have a constant frequency at which they are made. If you multiply this frequency by the number of transactions in a block, you get how many transactions a blockchain can process.
The problem is that if each transaction takes up some space in a block and blocks have limited space in them meaning there’s a cap on transactions, increasing block size would up that limit.
Source: Ethereum Classic Blocks By Blocscout
Now for Ethereum, the frequency of blocks is fixed but the size of blocks is variable (higher usage means bigger blocks). If you understand all that, then it should be clear that always having empty blocks appended to the network would prevent transactions from happening and make the chain come to a halt.
So, it could be considered an attack on the network sometimes but all this is happening in Ethereum Classic in real-time.
Source: Ethereum Classic Memepool
There is another thing that would tell you why some actors are incentivised to make blocks with no transactions in them.
That is, in some networks, miners are asked to make temporary blocks from the mempool which would be added to the chain if the node making the block wins the right to do so. All temp blocks by the nodes that did not win are discarded.
Now these nodes would be incentivised to put less computational resources into processing transactions and more into winning the round. You can lead with three conclusions
– No transactions in the mempool i.e. no accounts trading value.
– An attack on the network is occurring.
– Someone gamed the system.
So, Ethereum Classic is not under attack but the transaction in the mempool is at an all-time low while nodes are gaining the power to add zero transaction blocks
Old But Not Dead Yet
Ethereum Classic has a network utilization rate of less than 1% every day. Meanwhile, the overall transactions per block is less than 5 which is significantly low when compared with LTC and BCH.
Ethereum Classic has a hash rate of 172.51 Th/S while the difficulty of the network is 2.2P. The protocol had recorded 35k transactions in the past 24 hours and the active address count was 15017. It is 45% lower than the active address of Litecoin and 35% lower than Bitcoin cash.
Source: Ethereum Classic Smart contracts By Blocscout
The overall smart contract of the Ethereum Classic has been increasing steadily. Over 7+ smart contracts are being added to the blockchain daily. The number of verified smart contracts on the Ethereum Classic blockchain is less than 2.
Source; Defillama
At the time of writing, Ethereum Classic had a TVL of $438k, of which the majority is contributed by the Hebaswap. Meanwhile, there are just two to three core developers of the protocol which are contributing to the project.
How Long Will Ethereum Classic Survive?
Ethereum Classic had a market cap of $3.4 Billion and was ranked 26th in the crypto verse at press time. Despite having zero transactions in a block or 30 transactions had survived in every bull or bear run.
Despite having a very low TVL and smart contracts on its platform, Ethereum Classic is still around. It will be interesting to see innovation in this protocol in the future. Despite everything, Ethereum Classic will continue to survive in the coming days.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or any other advice. Investing in or trading crypto or stock comes with a risk of financial loss.
