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N.B: In the spirit of full transparency, the following Coin Report on BitShares is a Sponsored Post. It is sponsored by DEXbot; an automated market-making bot for the BitShares blockchain.
Welcome to the 20th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of BitShares. This will comprise of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!
It’s been well over a month since my last Coin Report on Own, and I return to the task with a report on most certainly the largest project featured in these reports: BitShares.
Whilst I have always had some degree of familiarity with the project, given its history within the space and the numerous innovations and developments it has put forth, until the completion of my research I had no idea about the breadth of the BitShares ecosystem.
As such, this report will be rather lengthy.
I hope the report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about BitShares prior to reading this report, here are some primary links:
Consensus Mechanism: Delegated Proof-of-Stake
Sector: Blockchain & Financial Services Ecosystem
Exchanges: Binance, Bittrex, Poloniex, Huobi, LBank, CoinEgg, BitShares Decentralised Exchange, ZB, HitBTC, Gate.io, OpenLedger, Upbit, CoinTiger, IDAX, Livecoin, Rudex, GDEX & CryptoBridge
BitShares was first launched in July 2014, utilising an open-source Graphene blockchain and operating with the Delegated Proof-of-Stake consensus mechanism, both invented by Daniel Larimer in December 2013. BTS, the blockchain’s native token, operates using a SHA-512 hashing algorithm. This first version of BitShares was then abandoned in favour of a new launch, which occurred in October 2015, was conducted by its community and reflects the BitShares project of today..
When the most recent version of BitShares came into existence, users opted for the chain to begin with distribution exactly as it was, and thus 2.4bn BTS were minted in the genesis block and distributed to all individual keys. They can still be claimed by anyone with proof of ownership.
Larimer has gone on to be actively involved in EOS and Steemit.
Given that BitShares has been around for over 5 years now, there is extensive price-history to be analysed. For now, it is sufficient to note that BTS formed an all-time high against Bitcoin of ~16,000 satoshis in the summer of 2017, and an all-time high against the Dollar of $0.92 in January 2018.
BitShares is a broad blockchain ecosystem, comprising primarily of financial services, such as market-pegged assets, decentralised exchanges and banking services. It operates as a Decentralised Autonomous Corporation (DAC), also referred to as a DAO, and utilises a governance system for its development and future direction.
As stated in its whitepaper:
“The BitShares Blockchain is an industrial-grade decentralized platform built for high-performance financial smart contracts. It represents the first decentralized autonomous community that lets its core token holder decide on its future direction and products.”
Given such competitive services and grand ambitions, let us see how BitShares fares…
Let’s begin with some Metric Analysis:
Below are listed a number of important metrics, all of which are accurate as of 13th May 2019. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.
Price: $0.057 (779 satoshis)
Exchange Volume: $9,291,564
Circulating Supply: 2,716,950,000 BTS
Total Supply: 3,600,570,502 BTS
Maximum Supply: 3,600,570,502 BTS
% of Max. Supply Minted: 75.46%
Network Value: $204,983,640 (21,165 BTC)
Network Value at Max. Supply: $204,983,640
Exchange Volume-to-Network Value: 6.01%
Average Price (30-Day): $0.056
Average Exchange Volume (30-Day): $8,538,038
Average Network Value (30-Day): $152,990,038
Average Exchange Volume (30-Day)-to-Network Value: 5.58%
Volatility* (30-Day): -0.01296
Average Daily On-Chain Transactions (7-Day): 1,161,184 (source)
Average Daily Transactional Value** (30-Day): N/A
NVT*** (30-Day): N/A
% Price Change USD (30-Day): -12%
% Price Change USD (1-Year): -76.6%
USD All-Time High: $0.92
% From USD All-Time High: -94%
Premine % of Max. Supply: N/A
Premine Location: N/A
Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 56.05 BTC (CoinPaprika)
Liquidity-to-Network Value %: 0.26%
Supply Available on Exchanges: 40,426,902 BTS
% of Circulating Supply Available on Exchanges: 1.49%
Reserve Balance: 883,618,457 BTS (source)
*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.
Supply Emission & Inflation:
Block Reward Schedule: 1 BTS per block from Reserve Pool. Reserve Pool collects funds from fees, loans and numerous other functions. Maximum and Total Supply are constant – only Circulating Supply changes based on the dynamics of the various mechanisms of the blockchain.
Average Block Time: 3 seconds (1.5 seconds to account for latency)
Current Block Height: 37,404,651
Annual Supply Emission: N/A
Annual Inflation Rate: 0%
Circulating Supply in 365 Days: N/A
Holder Count: 167,355
Supply Held By Top 10 Holders: 45.61%
Supply Held By Top 20 Holders: 52.95%
Supply Held By Top 100 Holders: 65.93%
Inactive Holder Count in Top 20 (30 Days of No Activity): 0
As tends to be the case, there is rather a lot to work through here, with the mountain of metrics lessened only by the lack of masternode functionality on the BitShares blockchain.
To begin, let’s take a look at the most startling and perhaps most impressive piece of data – Average Daily On-Chain Transactions.
BitShares is widely recognised as an active blockchain, but I did not quite realise the extent of its use. The average number of daily on-chain transactions for the past week has amounted to over 1.1 million. Bitcoin did 367,000 transactions yesterday. That really is rather impressive. The maximum recorded daily transactions was over 6 million, as per Blocktivity.
So, we know the BTS blockchain is very much an in-demand product, but what of the value of these transactions. Naturally, a single $1m transaction on the Bitcoin network is of greater value that 1 million transactions of $0.10. However, I was unable to find any data on the average transactional value on the BitShares blockchain, and, given the sheer volume of transactions, it is impossible for me to attempt to manually calculate this figure as I often do with smaller projects.
That said, I would like to note that whilst there is a likelihood that Bitcoin processes a greater value of transactions on a day-to-day basis, BitShares isn’t really a store-of-value cryptocurrency, as we shall come to later. Rather, it is a utility token, and given the brief summary of its core use-cases in the introduction – namely, its decentralised exchange and market-pegged assets – perhaps volume of daily transactions is a better measure for its validity and accomplishments.
Anyway, let us move on to look at the remaining General metrics, before taking a look at Supply Emission and finally Distribution:
Firstly, I’d like to highlight BitShares’ Volatility of 0.01296, which is the 3rd-lowest 30-day volatility of any coin previously reported on and indicates a potential accumulation range in play against the Dollar.
Now, let’s take a look at the buy-and-sell-side Liquidity metrics:
BitShares had buy support of around 56.05 BTC across its listed exchanges, equating to 0.26% of its Network Value. This places it in the middle of the pack relative to other Coin Reports, but it is surprisingly low given its listings on the largest exchanges worldwide, like Binance, Poloniex, Huobi and Bittrex.
With regards to sell-side liquidity, I calculated there to be ~40.4mn BTS available to buy on exchanges, equating to 1.49% of the circulating supply. This places BitShares 7th amongst coins from prior reports, which is impressive given that many of the coins with less available supply offer large incentives to hold, like masternode rewards.
Finally, before we move on from evaluating the General metrics, let’s discuss those related to volume:
BitShares has traded $9.29mn of volume over the past 24 hours, equating to an impressive 6.01% of its Network Value. For those that have been reading the blog for some time, you’ll know that I like to see a figure of 1% or greater Exchange Volume-to-Network Value (ideally Average Exchange Volume-to-Network Value) as an indication of interest).
Further, BitShares has traded $8.5mn on average daily for the past month, equating to 5.58% of its Average Network Value for the same period. This is by the 4th-highest Average EVNV of any coin previously reported on.
Now, let’s move on to the Supply Emission metrics, as this is of great concern to potential investors and speculators:
Unlike the vast majority of coins, including legacy coins from 2013/2014, BitShares is already at its maximum supply of 3.6bn BTS. The only change occurs is the amount of this in circulation, which currently sits at 2.7bn, with the remainder comprising of the reserve fund of 880mn BTS.
1 BTS per block is rewarded to Witnesses from the reserve fund, but the fund collects fees from transactions, loans and other functions. The reserve fund also pays out to Workers who submit proposals for development on the project that is completed to the satisfaction of BTS holders. These are the only means by which circulating supply can inflate.
As such, the annual inflation rate is effectively 0% and all BTS that can come into existence already exist. Wonderful news for speculators, as a lack of supply emission equates to zero headwinds for price growth during a bull cycle.
As no new supply can be minted, declines in price must be a result of either price manipulation by larger holders or selling by smaller holders, rather than the dumping of newly minted supply.
Now, let’s conclude this section with some Distribution analysis:
I was impressed to find that there are 167k holders of BTS; by far the most of any coin previously reported on, and 120k more holders than the second-largest – MonetaryUnit.
Naturally, given the nature of the project and its size, distribution analysis led me to find that 45.61% of the supply is held by the top 10 holders, 52.95% by the top 20 and 65.93% by the top 100. Despite the seemingly centralised concentration of supply, almost all of the top 20 addresses belong to various exchanges. As such, despite there only being ~40m BTS in the orderbooks of most of the listed exchanges, there is over 1bn BTS held with exchanges.
The utility token functionality of BitShares explains this high concentration on exchanges, particularly when the use-case of market-pegged assets is taken into consideration.
And that concludes this section.
Now, let’s take a look at the BitShares Community:
There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.
Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.
BitShares is present on 3 of the 4 platforms; all besides Telegram (though it does have a Telegram channel specifically for its Decentralised Exchange). Having spoken with the BitShares community, I found that all of these platforms are community-run, with no central authority. Whilst admirable, a lack of a cohesive social media marketing campaign often leads to weaker than desirable results. We shall see…
To begin, let’s look at the various social metrics that I calculated from the BitShares Twitter and Facebook accounts:
Twitter Followers: 92,857
Average Twitter Engagement: 0.11%
Facebook Likes: 2079
Facebook Posts (30-Day): 0
Average Facebook Engagement: N/A
As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.
Whilst the BitShares Twitter account has a massive audience (twice that of Ubiq, the second-largest of previously reports), its engagement rate is poor relative to other coins. That said, in RivalIQ’s report, we find that the average Twitter engagement rate across all industries is 0.046%, which means that BitShares’ engagement rate is currently 2.39x greater. Further, the average engagement rate for the Media industry (the most relevant in the report) is 0.013%, thus Bitshares’ is 8.46x greater. Disappointingly, BitShares’ engagement rate is the second-lowest of coins from prior reports, placing higher only than MonetaryUnit, and only fractionally higher than Ubiq. There is, of course, a clear trend of declining engagement as a percentage when audience size is far larger than other projects, but 0.11% isn’t particularly great for a project that has been around since the very beginning.
Facebook houses a far smaller audience for BitShares than any of its other social platforms, with only ~2,000 Likes. The reason for this is perhaps explained by the lack of activity here, with 0 posts in the past 30 days, and thus zero engagement. Social presence is not particularly noteworthy, thus far, particularly when the project’s aims of being a worldwide decentralised exchange are taken into consideration. Users want to trust the exchanges they trade on and trust is formed via relationships. For businesses, these relationships are most easily formed on social media. Being vocal and useful on these platforms not only strengthens a community, but grows it, often exponentially.
The BitShares Discord has 5633 members, with 25 new members in the past week, equating to 0.44% weekly growth. There are only a few dozen messages per day in General, which is very surprising given scope of the project and the moderate size of the group, though it is quite small relative to their Twitter audience. What was disappointing was that I found that some days have no discussion at all… the reason that I find this disappointing is that there doesn’t seem to be another chat-based hub for
the BTS community, disregarding the Telegram for the DEX itself. How can progress and fruitful conversation be fostered for a community-run project with a strong governance system like BitShares if there are so few platforms with an active community presence? It can get rather insular in such cases.
Regarding content of General, there was some discussion on running a node and opening a Gateway but no guide available. That said, the user’s questions were answered promptly and in great deal of detail. I found out that there is a developer channel on Telegram, where I imagine more fruitful discussion takes place. Only 3 or 4 individuals were found to be talking, representing a fraction of the size of the group.
The Help channel was untouched for over a week. There are individual channels for different Graphene chains like EOS and Steem, as well as for projects like OpenLedger, though these are inactive for the most part.
Development contains Git updates and is very active. Marketing is inactive since December. The group almost feels like a ghost town, which is bizarre for such a large project with so many active users.
The BitShares BitcoinTalk thread was created on June 5th, 2017, and has since generated 1616 posts spanning 81 pages in 707 days. This equates to 2.29 posts per day, on average. However, in the past 90 days, the thread has had 14 posts via 8 individual posters, giving an average of 0.16 posts per day; a steep decline in engagement.
The ANN itself is not particularly visually appealing but highly detailed and informative for new users. It presents and highlights its numerous features and advantages, such as its super-fast block times, proven transaction capabilities of over 3,400 transactions per second, plus its status as one of the most liquid and active decentralised exchanges currently available. Key information on block rewards and the coin specification is provided, as are all relevant links to documentation and the governance system. Further, there are definitions provided for BitShares-related terminology, and a series of links to all possible wallet downloads and 3rd-party BTS Gateways like OpenLedger and CryptoBridge. Lastly, there is a detailed and extensive FAQ provided.
Overall, it could do with an update and a redesign but it is highly informative for new users seeking to learn about the project.
More recent posts (from the 8 individual posters in the past 90 days) have revolved around the ecosystem of Decentralised Exchanges being built around the BitShares blockchain.
And that concludes this section. Onto Development:
For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:
There is little information on the website relating to the team, though it does mention over 30 active contributors. There are over 100 contibutors across various repositories on Github.
As most know, Dan Larimer was the founder, though he now works actively on EOS.
Given BitShares’ governance system and commitment to being community-led, the vast majority of the development of the project is completed by Workers who submit proposals and are paid from the Reserve Fund. More info on current workers and proposals can be found here. Such is the nature of a Decentralised Autonomous Corporation.
The website is well-designed and reasonably well-branded. It is sleek, running smoothly with clean UI/UX.
The homepage promotes the recent upgrade to v3 of the BitShares protocol. Below this, there is an explanation of the function of the Decentralised Autonomous Corporation, presented in concise copy with clear use-cases and features outlined. The advantages of the Graphene blockchain are highlighted, such as the processing speed and proven transaction capabilities. Further, on-chain activity is also viewable, with a table that shows BTS to experience 1.1mn on-chain transactions per day.
I was surprised to find that there is no native blog with regular, detailed updates on the site. The social links are hidden away at the bottom right of the homepage, which is strange… these should be more prominent to facilitate seamless community growth; if a user is drawn to the features and use-cases promoted, the first thing they’d want to do is learn and potentially get involved with the community. This should be made seamless.
The navigation menu is sparse and the link to the BitShares DEX is
obscured within multiple sub-menus, which is one of my few problems with the UI/UX of the site. There is a link to a documentation page, which is very detailed and contains articles on all manner of BTS-related material, including a history of the project.
Overall, the website is clean and informative but not particularly impressive for a project with almost $50mn in its reserve fund. This is often the first point-of-reference for new users – capitalise on it.
No roadmap available.
It mentions that BitShares in its current form was launched October 13th, 2015, and describes the numerous components of the BitShares blockchain, comprised of: transactions; blockchain; networking; consensus; protocol; extensibility; performance and scalability, and how all of these work together.
Significantly, it highlights the proved transactional capabilities of over 3000 transactions per second, which is far more than Ethereum and Bitcoin combined. In fact, the paper states, “at peak times, Bitcoin and Ethereum jointly process 0.7% of the peak capacity of the Bitshares blockchain.”
It is somewhat tech-heavy in its use of jargon but many of the descriptions are clear enough for those with some degree of understanding.
The document references the importance of identity and the use of usernames for wallet addresses on the BTS blockchain, ensuring accessibility and a smooth user experience. BTS is later called the utility token of the BitShares ecosystem.
We then get an explanation of the governance system, wherein Witnesses are elected by votes with 1 BTS = 1 vote. Voters can do so directly or through proxies. Witnesses validate blocks and are rewarded for their services. There is also a Committee, which is an elected board controlling block size, Witness rewards and over 30 other parameters. All elected bodies can be swiftly unelected by voters, who also control project funding.
Lastly, the document reference the initial allocation: the project was created in October 2015 when v0.9 was abandoned and 2.412bn BTS was minted in the Genesis block. All was distributed to individual keys based on the old chain, and these can still be claimed by proving ownership of that key. It also clarifies that there is currently no reward for simply holding BTS, with transaction fees deposited into the reserve fund for project funding; there is no dividend like in the original BitShares whitepaper.
There are Windows, Mac and Linux local wallets, plus Android wallets developed by the community, as well as a web wallet. No hardware wallet storage available.
Here, I’d like to simply point out a few things that draw me to BitShares, as a project.
One thing that struck me during this research project is that around 20 decentralised exchanges are operating within the BitShares ecosystem, including OpenLedger, CryptoBridge and EscoDex. As decentralised exchanges inevitably become more in-demand over time, as regulation mounts on centralised exchanges, being the project at the centre of a web of trusted DEXes is a promising notion.
Secondly, since March 2016, BitShares has been integrated within the Microsoft Azure Blockchain-as-a-Service package, showing that they have strong connections with businesses that will only serve to grow the BitShares userbase over time.
Thirdly, the reserve fund is currently 883mn BitShares, equating to $50mn at the time of writing. That is a vast development budget, ensuring the longevity and consistency of the project moving forward. Where many projects have been swallowed up and spat back out by the bear market due to insufficient and ill-considered funding, BitShares is miles ahead of the pack and will be around indefinitely.
BitShares has had two major cycles against BTC in its 5 years of price-history, and multiple mini-cycles within this. It formed an all-time high of 16,142 satoshis in May 2017, as can be seen on the first Weekly chart provided.
Preceding this all-time high, price made an all-time low of ~250 satoshis in Q1 2017; a low which has held to this day. Following the May 2017 euphoria, BTS lost the bulk of its value, as did the rest of the altcoin market, falling to new support at 730 satoshis. Subsequently, the market rallied, and a new cyclical high was formed in January 2018 at 6800 satoshis, after which BTS has experienced a prolonged bear market of successive lower-highs and lower-lows, culminating in today’s price of ~750 satoshis; right by the support that preceded the January 2018 bull cycle.
Now, looking at the first Daily chart provided, we can see the numerous levels of support turned resistance formed throughout this bear market; levels to watch when a new bull cycle begins. More importantly, we can see that price is currently sitting at cyclical lows, having lost range support at 1000 satoshis. RSI is heavily oversold, but there is no indication yet that the bear cycle has ended.
Looking now at the second Daily chart, I have depicted short-term trendline resistance that I would like to see price close above on the Daily timeframe to potentially mark a cyclical low, with the green box highlighting a potentially rewarding entry at just under 800 satoshis.
Finally, from the BTS/USD Weekly chart provided, we can see that volume has been picking up but remains low, but also that old resistance has become support at $.036, with 14-month trendline resistance now broken and price looking as though it wants to retest the 200-week moving average and subsequently support turned resistance at $0.126.
This report is now approaching 5,000 words, and it is time to draw it to a close.
My final grading for BitShares is 8 out of 10.
Here, you can find my grading framework, for reference.
Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.
I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.
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