Saturday, February 24, 2024

Analyst: Using This Metric In Ethereum Is Flawed, What’s The Alternative?

In the world of blockchain analysis, one metric that has been heavily relied upon to gauge the efficiency and speed of transaction processing is the transaction processing speed (TPS). However, a decentralized finance researcher, known as “@bkiepuszewski,” argues that this metric is flawed and suggests an alternative measurement called User Ops per second (UOPS). This alternative metric aims to provide a clearer picture of a blockchain’s overall utilization, considering factors such as the number of user operations and the complexity of transactions. While the adoption of UOPS remains uncertain, it could potentially revolutionize how analysts evaluate blockchain networks like Ethereum, particularly in light of the rise of layer-2 solutions. These solutions, such as OP Mainnet and StarkNet, have become popular among developers looking to avoid scalability issues and deploy complex decentralized applications (dapps).

Analyst: Using This Metric In Ethereum Is Flawed, What’s The Alternative?

Measuring Network Utilization

Typically, blockchain utilization measures how much a given network, such as Bitcoin or Ethereum, is being used at a given point. This metric is crucial as it can be used to measure adoption levels since networks with higher utilization rates tend to have a broader and more active user base, which can contribute to their long-term success.

To gauge network activity, the most commonly used metric considers the number of transactions processed every second in the case of simple transfers or the total value locked (TVL) when dealing with smart contracts deployed. For example, as of November 1, the average network utilization rate in Ethereum, based on Etherscan data, is around 50%. This is a significant decrease from the approximately 100% utilization rate registered in 2021. On the other hand, the Bitcoin Transactions Per Day, as of early November, stood above 433,000, a nearly 2X increase from late October.

In the case of Bitcoin, which serves as a transactional layer, it is expected that the number of BTC-related transactions will increase when prices rise, as users try to profit from the emerging trend.

The Rise Of Ethereum Layer-2s

While measuring network utilization is important, it is also crucial to consider the impact of layer-2 solutions, such as OP Mainnet, Base, and StarkNet. These solutions bundle transactions offline before confirming them on the mainnet as a single transfer.

More developers are opting for layer-2 solutions as their base to avoid scaling issues and to deploy more complex decentralized applications (dapps), including social media platforms like According to L2Beat, two popular layer-2 solutions, Arbitrum and OP Mainnet, have total value locked (TVLs) of over $6.5 billion and $2.9 billion, respectively. This significant adoption of layer-2 solutions raises questions about the accuracy of measuring blockchain throughput solely based on the traditional transactions per second (TPS) metric.

Flaws in Transaction Processing Speed Metric

One Twitter user, @bkiepuszewski, argues that the TPS metric, which analysts often rely on to measure the speed of transaction processing in blockchain networks like Ethereum or the BNB Chain, is inherently flawed. According to this decentralized finance (DeFi) researcher, the TPS metric fails to consider the level of complexity of transactions, which can vary significantly within a blockchain network.

For example, in the Ethereum network, complexity can arise from smart contract interactions or other computationally intense operations. When the market is trending higher and there is an increased demand for complex transactions, the TPS metric may lead to congestion in the network. Therefore, @bkiepuszewski suggests an alternative metric called User Ops per Second (UOPS) that takes into account the complexity of transactions and the network’s capacity to handle user load.

Alternative Metric: User Ops per Second (UOPS)

@bkiepuszewski proposes using the UOPS metric instead of TPS to measure blockchain utilization more accurately. UOPS considers the number of user operations that the network can process per second while factoring in the level of complexity of those transactions. This metric provides insights into how well the blockchain can handle user load without congestion.

By focusing on user operations rather than simple transactions, UOPS provides a clearer picture of how well a blockchain is utilized. It also allows for measuring adoption levels based on user operations, which can be more meaningful in evaluating the success and sustainability of a blockchain network.

Benefits of Using UOPS

Using UOPS as a metric offers several benefits in measuring blockchain utilization. Firstly, UOPS takes into account the complexity of transactions, which provides a more accurate representation of the network’s capacity to handle different types of operations. This is especially important considering the increasing complexity of decentralized applications and smart contracts deployed on blockchain networks.

Secondly, UOPS reduces the risk of congestion in high-trending markets where there is a surge in demand for complex transactions. By factoring in transaction complexity, UOPS allows for a more efficient allocation of network resources and ensures smoother operation even in periods of high activity.

Challenges and Adoption of UOPS

While UOPS provides a promising alternative to the traditional TPS metric, its long-term adoption and acceptance are uncertain. The use of layer-2 solutions, as mentioned earlier, may impact the calculation of blockchain throughput based on TPS. If more developers continue to adopt layer-2 solutions, the accuracy of TPS in measuring network utilization may be compromised.

Furthermore, the choice of using UOPS or TPS depends on the specific requirements and characteristics of the network. Different blockchain networks may have varying levels of complexity and user load, which would influence the suitability and practicality of using UOPS as a metric.

Layer-2 Solutions and UOPS

Layer-2 solutions, such as OP Mainnet, Base, and StarkNet, play a crucial role in the adoption of UOPS as a metric. These solutions bundle transactions offline before confirming them on the mainnet, enabling higher throughput and scalability. However, the use of layer-2 solutions may make the TPS metric less accurate in measuring blockchain throughput, as it does not consider the off-chain processing that occurs in layer-2 solutions.

Developers are increasingly choosing layer-2 solutions as their preferred method for scaling and deploying intensive dapps. These solutions offer more flexibility and efficiency, allowing for the deployment of complex applications such as social media platforms. This shift towards layer-2 solutions further emphasizes the need for a more accurate metric like UOPS to measure blockchain utilization.

Scaling with Layer-2 Solutions

Layer-2 solutions provide developers with access to efficient scaling options for their blockchain applications. By leveraging these solutions, developers can overcome the scalability limitations of the underlying blockchain network and deploy intensive dapps without sacrificing performance.

For instance, layer-2 solutions like Arbitrum and OP Mainnet have achieved significant TVLs, indicating their popularity among developers and users. These solutions enable higher throughput, reduced transaction costs, and improved user experience, making them attractive for various use cases.

Comparison of TPS vs. UOPS

When comparing TPS and UOPS as metrics for measuring blockchain utilization, it becomes evident that UOPS provides a more accurate measure. TPS solely focuses on the number of transactions processed per second without considering their complexity or the network’s capacity to handle user load. In contrast, UOPS takes into account the complexity of transactions and provides insights into the network’s efficiency in processing user operations.

UOPS allows for a more holistic assessment of blockchain utilization, considering both the number and complexity of user operations. This metric enables a better understanding of the network’s capabilities and potential bottlenecks, reducing the risk of congestion and improving overall user experience.

Future Implications and Conclusion

The future adoption and acceptance of UOPS as a metric is still uncertain. However, it represents a potential alternative to the flawed TPS metric in measuring blockchain utilization accurately. Further research and analysis are required to fully evaluate the effectiveness and accuracy of UOPS, considering the impact of layer-2 solutions and the evolving landscape of blockchain applications.

As blockchain technology continues to evolve and mature, the need for reliable and comprehensive metrics becomes increasingly important. UOPS offers a promising solution to measure blockchain utilization in a more nuanced and accurate manner, taking into account the complexity of transactions and the network’s capabilities. By adopting more robust metrics like UOPS, the blockchain ecosystem can better understand and optimize the utilization of its networks, leading to more resilient and efficient decentralized applications.