Coin Metrics' State of the Network: Issue 164
Tuesday, July 19th, 2022
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The Ethereum Crowdsale 8 Years Later
After years of testing, research, and development, excitement is building around the potential timeline for Ethereum’s planned move to proof-of-stake (PoS) through The Merge. The Merge arguably represents the single largest protocol-level change in Ethereum’s history, eliminating mining and introducing a system of validators that stake their ETH to earn rewards from creating and attesting to new blocks.
Tracking ETH supply continues to attract attention as ETH holdings directly dictate a user’s ability to participate in PoS. At the same time, the move to PoS will also introduce a new ETH issuance model and impact ETH’s monetary policy. To best understand Ethereum’s current supply, however, observers need to step back a year before the network even launched to the pivotal period of July 22, 2014 to September 2, 2014: the ETH crowdsale.
In this week’s State of the Network, we take a data-driven retrospective look at the ETH crowdsale using data from Coin Metrics’ ATLAS. We review the data behind the sale and also examine the current set of genesis accounts (those who participated in the crowdfund).
How should a cryptocurrency be initially allocated? Over the years this question has been the source of constant debate. There have now been many initial issuance models with varying amounts of rewards for early adopters and contributors – leading to stark differences in supply distributions.
For Bitcoin, Satoshi addressed this question when releasing the first version of Bitcoin’s code in 2009:
You can get coins by getting someone to send you some, or turn on Options->Generate Coins to run a node and generate blocks. I made the proof-of-work difficulty ridiculously easy to start with, so for a little while in the beginning a typical PC will be able to generate coins in just a few hours.
Anyone could download the open source software for Bitcoin and contribute compute power to secure the network in exchange for freshly minted BTC. Per Bitcoin’s supply schedule, the first 50 BTC were generated in the genesis block, the same amount as any other block until the first halving in 2012 when the block reward dropped to 25 BTC (interestingly, these 50 genesis coins are not spendable and are provably lost).
But with the proliferation of alternative cryptocurrencies to BTC, new models were tested. In 2013, Mastercoin (MSC), the precursor to the Omni layer for Bitcoin, launched a fundraising campaign using Bitcoin as the crowdfunding platform. Anyone could send BTC to a specified address and receive an amount of MSC at a predetermined rate. The project raised just over 5,000 BTC worth ~$500,000 at the time. The success of this model would pave the way for Ethereum’s high-stakes 2014 crowdsale of ETH.
ethereum.org as it looked during the ETH crowdsale in summer 2014 (source)
Like Mastercoin, the Ethereum crowdsale raised BTC in exchange for ETH. Participants in the crowdsale were promised an allocation of ETH when Ethereum launched in the following year. By using Bitcoin as a crowdfunding platform, anyone in the world could in theory participate. Author and Defiant News founder Camila Russo summarized just how profound the ETH crowdsale was in her book The Infinite Machine, an exciting account of Ethereum’s roots:
“Before, anyone who wanted to buy stock in big tech firms like Facebook or Google would need a U.S. bank account; things got even more complicated for those who wanted to invest in startups that hadn’t gone to the public markets to raise funds. Now anyone could be an investor in one of the most cutting-edge technology companies out there. All they needed was an internet connection and at least 0.01 bitcoin.” (source)
The crowdsale launched on July 22, 2014 and was scheduled to run for 42 days. By this point, Vitalik and other early contributors had revealed Ethereum’s vision to the world, most notably with the 2013 Ethereum whitepaper and a presentation at Bitcoin Miami 2014 in January of that year.
The crowdsale had an interesting set of incentives to encourage those privy and willing to participate to do so early. For the first two weeks of the sale, 1 BTC could purchase 2,000 ETH, with the price changing linearly thereafter to a final 1,337 ETH per BTC. The chart below shows the price for ETH in BTC terms to show the discounted price of ETH in the early days of the crowdsale and rising price from day 14 to 36 of the sale.
Using Bitcoin as a crowdfunding mechanism was a novel experiment at many levels. But one consequence of conducting the crowdsale on a public ledger is that we can easily access this rich dataset of contributions years on. Unsurprisingly, this data has been the subject of a lot of scrutiny to-date — most intensely with Preston Byrnes’ 2018 remarks and independent crypto researcher Hasu’s data-driven follow-up analysis.
Bitcoin “Exodus” Address Stats
The chart below shows the total amount of BTC sent to the Bitcoin address (
36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2) controlled by the Ethereum team (known as the “Exodus Wallet”). The address is noteworthy for being one of the most valuable multisig addresses at the time.
The chart below shows the total BTC and USD equivalent raised during the crowdsale and total ETH sold. Over 31K BTC was raised worth ~$18.3M for a total of 60M ETH sold (this placed Ethereum as the 2nd largest crowdfunding campaign ever at the time).
Of the 60M ETH sold, around 50M were sold within the first two weeks when the price was greatly discounted – with significant volume spikes at the beginning of the sale and the last day of the 2,000 ETH per BTC rate.
A total of 8,437 purchases were made between the minimum purchase amount of 0.01 BTC and maximum amount of 500 BTC (though there was in theory no way to cap contributors from splitting up larger amounts into multiple addresses). The three largest purchases were 500, 466 and 330 BTC. The average purchase was 3.65 BTC or about 7,000 ETH.
Ultimately, it’s hard to say much more about the participants given the pseudo-anonymity of Bitcoin addresses, yet these results nevertheless offer valuable insights into one of the most important events in the history of crypto thus far.
The Crowdfund in Context to Current Supply
Along with the 60M ETH sold in the crowdfund, ETH early contributors received an additional amount equivalent to roughly 10% of the total ETH sold while another ~10% was set aside for the Ethereum Foundation.
This meant that the total supply of Ethereum at network launch was just around 72M ETH, split across 8,893 addresses. But with additional ETH being distributed via mining, over time the crowdfund participants and early contributors have controlled a smaller and smaller percentage of total supply. With total ETH supply today near 120M, nearly 50M new ETH has been issued since genesis.
Note that the chart above is merely presented for comparison to proof-of-work issuance over time, and doesn’t reflect genesis accounts distributing their coins through time. In other words, the set of accounts controlling the 72M ETH from genesis continues to change and grow in size.
Over 92% of genesis accounts have touched their ETH by now, with only 693 accounts having never moved their ETH to-date (the largest being
0x2b6ed29a95753c3ad948348e3e7b1a251080ffb9, which controls 250K ETH). Looking across the entire set of genesis accounts, the largest by amount of ETH held today is
0x1b3cb81e51011b549d78bf720b0d924ac763a7c2 which controls 347K ETH today (~$530M at today’s ETH price) and received 560K ETH at genesis (and only recently moved 213K ETH this year).
But all told, Ethereum accounts created at genesis control just 2.66M ETH today, representing around 2% of total ETH supply, declining from 7M ETH in 2018 (of course some holders may have simply moved their ETH to custodians/exchanges or to new accounts).
While often debated for its lasting effects on supply distribution, the ETH crowdsale was undeniably an ambitious project with its success reflecting the excitement around a new era of programmable blockchains to support smart contracts and decentralized applications. With yet another ambitious project on the horizon with The Merge, many eyes are focused on Ethereum as it enters a critical stage in its still less than a decade long history.
To keep up to date on Ethereum data and other on-chain data across the entire crypto ecosystem, explore the rest of our metrics on our free charting tool, formula builder, correlation tool, and Python API client.
Also check out these other resources covering ETH supply and its pre-sale.
Galaxy Digital Research: A Breakdown of Ethereum Supply Distribution Since Genesis
Takens Theorem: Visualizing Ethereum’s History
Network Data Insights
The supply of wrapped bitcoin (WBTC) – the Ethereum token backed by BTC often used within DeFi – has fallen to 241K from a peak of 285K in May. With the unwinding and pullback in crypto lending markets, WBTC activity has weakened. But at 241K, about 1.2% of all BTC are still wrapped on Ethereum today. Meanwhile, the number of BTC held in public Lightning Network channels has continued to rise this year, standing at 4.3K BTC today.
Many stablecoins have experienced drawdowns in supply this year following the collapse of TerraUSD and broader crypto market contagion. The decline in the circulating supply of Huobi USD (HUSD) however – the crypto exchange Huobi’s US-dollar stablecoin – shows how stablecoins that are popular for trading on centralized exchanges closely track observed spot volume. As daily spot trading volume on the exchange has fallen since 2021 from over $20B/day to under $1B/day, HUSD supply has contracted from over $1B on Ethereum to just $100M today.
Coin Metrics Updates
This week’s updates from the Coin Metrics team:
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