32 Findsing From Manually Analyzing Ethereum's Top 10K Wallets

Spoiler: It's Bullish.

The 10k Audit.

I manually audited the top 10,000 Ethereum addresses to learn about liquidity, profitability, market manipulation and what Whales are doing with their money.

This is the first of many reports to come from this data set.

Finding #1 — How Much ETH is in the Top 10k Addresses?

The top 10k addresses represent 91.7M ETH.

The top 1k addresses represent 70.7M ETH.

The top 100 addresses represent 37.8M ETH.

The top 10 addresses represent 16.6M ETH.

Roughly 17% ETH is held by 10 addresses.

Some maximalists my scream that this is too high and proves a “premine” and centralized control.

But, that couldn’t be further from the truth.

The reason ETH’s distribution seems so focused is actually smart contracts.

Unlike some other currencies, ETH actually gets used for a purpose.

A lot of time that purpose requires depositing something into a contract, often in a trustless manner in which you still control the asset.

A great example is wETH where we deposit Ether in order to get Wrapped Ether for standard ERC20 use.

This smart contract usage is what skews the distribution on ETH, and can make it seem like it isn’t fair.

So what happens if we remove the smart contracts and only look at exchanges, individuals and funds?

Finding #2 — Eth’s Distribution

When we remove the smart contracts the distribution is now:

The top 100 represent 26.4M ETH.

The top 1k represents 42.5M ETH.

The top 10k represents 57.2M ETH. (56.7%)

Maximalists love to say ETH is more centralized than BTC and that the ICO is a “70% premine”

But, what does Bitcoin’s distribution look like when we compare it to ETH directly?

Bitcoin’s Top 10k Holders: 10.54M BTC (57.44%)

Ethereum’s Top 10k Holders: 57.2M ETH (56.70%)

Based on individual holders, Ethereum is as equally distributed as Bitcoin.

How does that stack up to other networks?

In XRP 16 addresses hold 55.2% of XRP.

In BCH 1100 addresses hold 56.8% of BCH

In BSV 1250 addresses hold 55.6% of BSV

In Litecoin 300 addresses hold 54.3% of LTC

In Tron 1031 addresses hold 51.1% of TRX.

This means when it comes to equity of distribution, Ethereum and Bitcoin are in a league of their own.

No other coin comes within an order of magnitude of their distribution.

Finding #3 — How Much ETH is There?

You would think, like most people, that there is 110,696,890 ETH.

This is already where you’d start to be wrong.

Most automated on-chain calculations account only for how much ETH was ever created.

They fail to account for how much ETH is lost or inaccessible. That’s something you can only do manually.

We identified at least 6.2M ETH that is confirmed burned/lost, and another 3.8M ETH that is likely lost or burned.

That means that roughly 9% of ETH is inaccessible and there is actually only around 100M ETH in circulation.

That may not sound like a big difference, but it *REALLY* matters when we talk about ETH2.0 sharding returns.

The fantastic team at ETHHub, has a nice chart for us to review the staking rewards based on amount of ETH validating.

It gets down to GIC rates at 100M staked. Which we know won’t be the case, as that would leave ETH with a very low liquidity.

We know about 65M ETH is “active”. We can remove the 26M ETH from exchange hot wallets, and assume that an additional 20% of ETH stays active in contracts and payments.

That brings us down to 76.2M ETH.

We can also remove the 6.1M burned ETH, 3.8M likely lost ETH, and 1.7M locked ETH.

But, what about cold exchange wallets?

Exchanges maintain strong cold wallet reserves, and most exchanges do not take a fraction reserve approach. But, this could change under ETH2.0 due to the staking rewards.

Let’s assume that some major exchanges will keep full reserves, and some sketchy ones will keep next to no reserves. We’ll assume that 80% of cold exchange funds stay cold.

That means we can remove another 20M ETH.

Which leaves us with 44.6M ETH that is currently in a position where it could likely enter into staking.

But that is the absolute max amount.

So how would we estimate how much ETH likely WILL be staked?

We’d base that on a distribution — and usually in tech we use a distribution model that is a slightly adapted standard distribution.

It comes from a theory called crossing the chasm.

Basically this means we expect adoption of a new tech to come in waves.

2.5% innovators.

13.5% early adopters.

34% early majority.

These waves are ultimately based on product maturity.

It is a bit hard to calculate how much of that 44.6M ETH would fall into each tranche.

Because the percentage in crossing the chasm is not based on the ETH balance.

It’s based on the number of holders — which is not a standard distribution.

But, as a rough estimate.

2.5% would be 1.15M ETH

13.5% would be 6M ETH (7.15M ETH total)

34% would be 15.1M ETH (22.3M ETH total)

So we could estimate:

Early Phase 0 staking would be 17%-20% yield.

Dropping to 6% — 8% once staking services are more robust and common place.

Leveling off at 4%-6% once ETH2.0 is rolled out and transactable.

Those early returns don’t account for EIP-1559 burning, or increase in ETH price.

And as we know, ETH2.0’s roll out will cause some serious price action:

So I guess we can call that conclusions:

Finding #4 — ETH2.0 will likely initially return 12%-17%+

That’s it.

That’s the tweet.

Finding #5— ETH is surprisingly active!

64.53% of top ETH was ‘active’ meaning it had been on an exchange or spent in the past 30 days.

14.02% was in cold wallets (1+ year idle)

9.71% was idle (31–364 days no activity)

1.76% was locked in time locked contracts

That may not seem that shocking at first, but, compare it to the stats across all Ethereum addresses.

Where 54.39% of addresses are cold (1 year+) and 39.93% of addresses are idle. With only 5.68% being active.

So what does this mean?

It means our 4th finding

Finding #6 — Whales Are Active & Growing

It means that whale accounts are very active in this down market, and many of them have been accumulating.

Existing whales have increased their position by more than 4% in the past 6 months. ($550M USD)

That rivals the roughly $600M in new capital influx that Bitcoin was estimated to see last year.

But, for Ethereum, that was only on whale accounts, and only in the past 6 months.

Whales love ETH & BTC. Nothing else has this level of inflow.

But perhaps more important is

Finding #7 — An Influx of New Whales

There are a SIGNIFICANT number of new wallets in the top 10k who had their first transaction associated with fiat onramp exchanges that serve large scale customers (mostly Gemini, Kraken and Coinbase)

These new addresses often bought $100,000 — $250,000 worth of Ethereum, and they represent around 6% of the top 10,000 addresses. (Or ~$100M in new ETH purchases in the past 6 months)

Let’s repeat that in its own tweet, so you can retweet it at naysayers.

In the past 6 months, whales have bought more than $650M in new Ethereum purchases.

That means in the past 6 months, whales have bought more Ethereum, than all new Bitcoin inflow last year.

There now back to more data.

Finding #8 — Exchanges as Wallets

Right now, 33.6M ETH is deposited into exchanges.

With only 13.7M of that is in cold wallets, with the rest being in hot wallets.

This means the average exchange has only around 40% of their holdings in cold reserves.

But, among that there are some winners and losers:

Finding #9 — Coldest Exchanges

BitFlyer, Gate.io, Coinbase and Kraken have the best ratios of cold to hot holdings.

Up to 78% cold.

They don’t take chances with your crypto.

Finding #10 — Thawed Exchanges

On the other hand Yobit, Poloniex and Bithumb rely way too heavily on hot wallets.

Up to 91%.

Yikes.

Speaking of Poloniex…

Finding #11 — Poloniex is Sketchy

When Circle bought Poloniex, they responsibly moved assets to better cold wallets and had strong reserves.

Around the time that Tron took over Poloniex, it seems some cold wallets drained. Not entirely, just to fractional reserves.

Which is odd.

If Circle was taking the assets, they would have fully drained the wallets. So why did Poloniex seem to go lower liquidity?

Those wallets then drained into exchanges, but, only exchanges that listed Tron.

Around this time, BEFORE the announcement, there was an increase in buying activity on Tron.

TRX’s price rose around 50% (from $0.14 to $0.21).

Did Tron switch Poloniex to fractional reserves to pump their own token price?

It might justify the high price paid for a dying exchange?

The price action might be unrelated, and Poloniex may simply be cross-market trading on other exchanges.

But the sudden shift in cold wallet balance is concerning.

Back to the ETH data!

Finding #12 — Not for Sale!

Right now, there is only 19.5M ETH listed on exchanges for sale.

Even though 33.6M ETH is deposited in exchanges.

That’s only 58% of deposits, so whales are accumulating, not selling.

For comparison, that number has been historically more than 75%+ any time the Eth price has risen by >25%.

This is the first time ever, that ETH has risen >50% and the number has been below 80%.

Whales are hungry.

Finding #12 — Unclaimed Fortunes

347 Genesis addresses in the top 10k failed to ever claim their ETH ICO purchase.

These idle funds are 1.7M ETH or around $340M USD.

There are likely additional long tail Genesis wallet addresses that are unclaimed as well.

But, these funds, if staked could generate more than $5M annually.

It may be worth the Ethereum community debating forking unclaimed funds in ETH2.0, staking them, and using the revenue for community based funding.

Finding #14 — Founder Patience:

Speaking of Genesis wallets, most founding ETH members who were in the top list still hold most of their funds.

On average dev grant and founders still hold 56.4% of their original genesis Ether.

Only two early grant holders who were in the top list heavily sold ETH. In both cases this was to fund large businesses in the crypto space that have struggled with revenue.

At least two founding members have also not ever touched their genesis grants.

What about Vitalik?

Finding #15 — Vitalik Believes

At peak Vitalik likely had ~630,000 ETH.

At least 54,856 was allocated in donations to external entities personally.

167,000 was sold before 2018.

He put an additional 50,000 into EthDev

35,000 for funding additional ecosystem projects

That means Vitalik only sold around 26% of his ETH holdings over the past 5 years, most of it when ETH was low in price.

On the other hand, he has donated at least 21% of his ETH to supporting the ecosystem, and he holds the remainder.

This dismantles the narrative of Ethereum being a founder based scam.

Vitalik owned, at max 0.9% of ETH.

For every ETH he has sold, he has donated the equivalent to the ecosystem.

This goes to show that Vitalik believes in the vision of Ethereum isn’t here for a get rich quick scheme and puts his money where his mouth is.

But, perhaps most importantly, that nearly all EF founders are in the same boat.

Finding #16— Genesis Patience

Of the Genesis Buyers in the top list that claimed their wallets, 97.4% of them still hold >75% of their initial ETH purchased.

They are also token purists, with 97.4% of them never having purchased any tokens.

Finding #17 — Top Tokens:

Among Genesis & Top 250 individual accounts, the only tokens we see are ANT, BAT, ENG, ENJ, GNO, GNT, HOT, KNC, LINK, MKR, MLN, OMG, POWR, QSP, RDN, REN, REP, TKN, ZRX & TokenSets.

In all cases the tokens are only owned by 1–2 addresses each.

Finding #17 — Average Holders

Out of the top 10k wallets, the average balance is 9,170 ETH ($1.8M).

That’s fairly bias by exchanges. The median amount is 1,672 ETH ($334,000)

Finding #19 — Eth IS Money

16.2M ETH is in ‘active’ circulation meaning in the last 90 days it passed through a payment processor, payment gateway or smart contract (excluding exchange and multisig.)

That means ETH is actually being *HEAVILY* used as money and gas.

Compare that to Bitcoin where 57% of Bitcoin hasn’t moved in over a year (with 21% not moving since 2015).

And only 0.36% of Bitcoin has been through a payment processor in the past two-years.

When it comes to being money, ETH is used 440x more than Bitcoin for transacting.

ETH is money.

Plain, simple, and re-tweetable.

Finding #20 — Miners Hording

In a strange twist, miners are starting to horde. In the past 6 months miners have accumulated 1.15M ETH ($230M USD) that they haven’t sold.

This is strange because miners have hard costs to cover in their mining operations so they very rarely ever horde any ETH at all.

We’ve never seen such a rapid increase in miner hording on ETH. Ever.

It seems likely that as we edge closer to Phase0 roll out, ETH miners are getting ready to convert mining operations into staking operations.

Which will lower their costs. However, some miners continue to heavily sell, possibly indicating they won’t be stakers in the future.

This hording seems to be only around 20% of miners, but, they are hording at aggressive levels.

This may mean we see around 80% of miners shift to other PoW chains. Which could be great for ETH’s little brother ETC.

It also means we have a chance to further improve decentralization if we can make it easy for users to host their own nodes on low end hardware.

Either way, profiteering miners are bullish on the future of ETH.

Finding #21 — Exchange Deposits Explode

In the past 6 months, exchange deposits grew ~5x from 11,000 a day to >55,000 a day.

This is normally the leading early indicator of a bear market or mass sell-off.

Instead, those sell walls got chewed up by whales. Despite the 5x increase in volume, ETH rose in price.

This tells you the remarkable confidence that large investors have in ETH right now.

The last 3 times we saw exchange deposits grow by 4–5x in under a one-month span, lead to market drops >40% of the price.

This is the only time I’ve been able to identify the inverse. There is a major positive sentiment being shown in the market right now.

Finding #21 — You are Being Played:

There are a group of at least 12 whales, that in coordination with BitFinex (and maybe BitMex?) seem to manipulate the market.

Their attack works as follows:

First, we see an increase in people shorting ETH. It usually starts on BitFinex, and then expands to BitMex and finally other exchanges.

These whales start sending equal batch transactions over a few days to BitFinex, Coinbase, Kraken, Bitstamp, Bitflyer

They make repeated small transactions so that systems like WhaleAlerts don’t pick up on the transaction.

Then all at once, the market dumps. They profit on their huge shorts and buy back at a lower price.

Once its done, they batch transactions back to their addresses.

It sometimes takes them more than two weeks to migrate their ETH back, but, its always with a profit. Usually these wallets continue to buy new ETH for 4–6 weeks after their dump.

What gets really interesting is that BitFinex cold wallets often seem to get in on this dumping action about 40% of the time, which is surprising given how rarely cold wallets move.

Speaking of Bitfinex,

Finding #23 — BitFinex Used User Funds to Vote on ProgPoW

BitFinex withdraw 1.17M ETH from their hot wallets to cold wallets to take place in the CarbonVote on ProgPow.

https://web.archive.org/web/20190402164923/http://www.progpowcarbonvote.com/

Only around 3M Ethereum was involved in the voting process, meaning that BitFinex represented >40% of the vote.

And, this isn’t the only vote manipulation that happened around ProgPow.

With swirling acusations around NVIDIA and AMD, and a GPU data center helping to fund ProgPoW (https://www.trustnodes.com/2019/01/10/rumors-circulate-after-eth-devs-suddenly-decide-a-proof-of-work-change) it’s no surprise that we identified 36 other cold addresses that sprug to life to vote in favor of ProgPow and went idle again.

This validates what most people suspected.

The community doesn’t want ProgPoW.

Big self-interested parties want ProgPow.

On the topic of exchanges:

Finding #24 — Coinbase is Stealthy

The exchange that best obscures transactions is actually Coinbase.

They spin up new wallets and mix funds on all outbound transactions making it really hard to identify.

We were able to identify the source and destination of 80% of transactions from all other exchanges with ease.

Only Coinbase (and Tornado.cash) made it more difficult.

Finding #24 — Big Players are Buying:

We were also able to identify wallets associated with major players such as JPMorgan Chase, Reddit, IBM, Microsoft, Amazon and Walmart.

100% of these wallets are accumulating ETH.

It is unclear to what end, and where it sits in their corporate structure/if it is an official corporate initiative or not.

What is clear, is they are growing at this price point and betting on ETH in someway.

Finding #26 — Wealth = Patience:

The individuals on the top whale list who grew their net worth the most over the past 3 years were those who were patient.

They always sold very little of their stack.

They also never bought tokens at ICO, they always waited till a few months after coins were listed places and dropped down in price.

Finding #27 — Eth’s Biggest Hater?

There is a lot of anti-ETH rhetoric out there.

A lot of it coming from BTC maxis. But, where does that disinformation start?

Some whale addresses helped me clue in.

First, I mapped address moves vs tweet volume and tweet sentiment related to ETH.

The first thing I noticed is that negative ETH sentiments do occasionally shift the price downward.

This is “shaking out weak hands” — mostly ETH novices who don’t know enough to shrug off the disinformation.

Then I noticed that buying action from whales surges after this sell off.

That makes sense. Whales move money in to exchanges to buy more ETH when the market drops.

But, this is where it gets really interesting.

There are multiple addresses that shift USDC, USDT, DAI and Paxos into exchanges BEFORE large spikes in anti-ETH tweets (both spikes in volume and negative sentiment)

Most Whale addresses move money in AFTER the social spike, and only respond to about 8% of spikes.

However, a handful of addresses (seemingly out of Asia and Europe) move the assets, almost without fail, BEFORE the shift in sentiment.

How often do these magical addresses seem to predict new increases in negative tweets?

Roughly 86.7% of the time…..

You don’t need to be a data scientist to realize that level of correlation is highly suspect.

Now, not all of these negative sentiment spikes are effective in moving the price.

In fact, it works less than 7% of the time. But, when it works, it works well.

And these whales are somehow always magically ready to capture it.

Which likely suggests that these addresses are actually funding ETH FUD or spreading it via bots so they can accumulate.

That sounds like a bad thing — but, if the funding for most of the hate about your project, comes from people who are simply trying to get in on the project at a better price — that says something about your quality and your future.

For what its worth, I (so far) do not believe that any of the BTC maxi’s who are anti-ETH are complicit in this manipulation.

It’s more likely they are getting anonymous tips/funding funneled to them, and bots retweeting their sentiment.

But it is something I plan to investigate further, as there would be some sweet sweet irony-filled justice if some of the top BTC maxis were funded by ETH money :)

Finding #28 — Genesis Hopscotch

You are on average, only roughly 12 wallet transactions away from a genesis block.

It’s the Ethereum equivelent of your ‘(Kevin) Bacon Number’ — Buterin Number is perhaps the best term here?

Finding #29 — Patient Miners

There are only 8 addresses in the top 10,000 that are not from genesis and have no transfers.

They are 8 solo miners who accumulated their wealth through early mining.

All are active wallets and seem to have no interest in selling.

Finding #30 — Delicious DeFi

In the top 250 wallets only TokenSets, Tornado.Cash and Maker have been used by individually owned wallets.

In the top 10k we also find Uniswap, Aave, Bancor, Compound, Kyber, Loopring, Nexus Mutual, Melon and Augur.

So far, these are used by less than 6% of the top 10k wallets, which means that DeFi still has incredible room for growth.

With $800M locked in DeFi — most of it comes from individual micro wallets.

Wait till whales catch on!

Finding #31 — Doubling DeFi

While not many whales are involved yet, the amount of ETH whales have put into DeFi has more than doubled over the past 6 months, with them expanding their positions in all of the above projects except for Loopring, Melon and Augur.

Finding #32 — Bullish.

In the end this is all extremely bullish for Ethereum.

Let’s recap:

Whales are increasing their stake.

New whales are funneling in.

Eth is more transacted than BTC.

There was more capital inflow into ETH than to BTC.

There is less ETH than you thought.

Not that much ETH can stake first round.

Staking returns could be as high as 17% early on.

Whales are accumulating.

Haters are accumulating.

Miners are accumulating.

Eth is as decentralized as Bitcoin.

ETH founders still hold most of their ETH.

Vitalik donates 1 ETH to the ecosystem for each ETH he sells.

Even market manipulators who fund FUD against ETH or short-sell, only do so to buy more ETH.

Very few whales are using DeFi right now. Plenty of room to grow.

Those whales who are using DeFi are rapidly increasing their holdings.

All things point up for ETH.

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Coffee&Coin - Issue #6 - Dying Unicorns, Rating Councils, and $5 in Free MANA Tokens

September 30th

Giveaway:

Coffee&Coin has partnered with the team at Decentraland to give each user 200 MANA ($5) to help them claim their own free avatar name (which costs 100 MANA) in Decentraland’s virtual world on a blockchain.

Learn how to claim your tokens on our Reddit post >>>

Kik Shoots a Unicorn to Save a Token:

Common readers will know I have no love-loss for Kik/Kin. In the beginning, I was a huge advocate for the Kin token, as it represents a solution that is sorely needed in the industry, and Kik, a $1B+ startup with hundreds of millions of registered users was willing to stake their app on the line for it. [Read the Full Article >>>>]

Coinbase Rating Council:

In a company blog post this week, Coinbase announced they are partnering with Anchorage, Bittrex, Circle, DRW Cumberland, Genesis, Grayscale Investments and Kraken to create a "Crypto Ratings Council" which takes aim at providing a standardized framework for scoring crypto assets, on a scale of 1-5, with how similar they are to a US Security under the Howey Test.

The Crypto Ratings Council (CRC) notes that all analysis is done by independent legal experts and technical experts on their staff, and that none of the scores are endorsed by any US authority like the SEC.

So far the CRC has given high "similar to security" scores to MKR (4.50), POLY (4.50), XRP (4.0), suggesting that these assets are very similar to securities.

The problem with this, is that many of these assets that are very similar to securities such as XRP or MKR are offered by members of the CRC (such as Coinbase and Kraken) to the general public in the US. This means, that these exchanges have either received guidance or have strong enough in-house council belief, that these assets are not a security that they can feel safe in offering them.

If Coinbase, et al, believed in these ratings then they simply wouldn’t be offering some of these assets to the general public. The only thing this stands to do is creating a chilling effect around the industry where small startups and independent developers choose not to work with certain assets due to the risk that it "is similar to a security" and they don’t have Coinbase level lawyers to protect them in those dealings.

Coinbase’s Chief-Legal-Office had touted this idea a few years back at a conference in DC and the idea was met with resistance from the community in fear of creating a centralized cabal of businesses who could abuse ratings to keep out new market entrants.

Its hard to see what value is provided from the CRC, but, its clear to see how it lets these businesses create a new walled garden.


News Roundup:

Kik: The Death of a Unicorn

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Common readers will know I have no love-loss for Kik/Kin.

In the beginning, I was a huge advocate for the Kin token, as it represents a solution that is sorely needed in the industry, and Kik, a $1B+ startup with hundreds of millions of registered users was willing to stake their app on the line for it.

This is part of what lead me to write the 5-part series on “What Critics Fail to Understand About Kin” as well as my series on “What Critics Have Right About Kin.”

Kin as a token, stood a fighting chance, as Kik, who was desperate for monetization, was willing to integrate the token into their own app to be a prime example of the power of the ecosystem and create a base layer of demand/use-cases for the token.

This past week, Kik announced it would be shutting down Kik Messenger, laying off nearly all of its staff in all international offices, and keeping a core team of 19 users to continue to work on their Kin project. Some of their employees/offices are being acquired by another project, and it is unclear what is happening to other intellectual property, but, the messenger app has shut down.

As Kin evolved, those of us close with the community spent two-years watching bold promises turn into poor execution - and each time it was to the same rehtoric. "We got copied and crushed" or "these people are trying to prevent us - you don’t know how hard it is!"

But, that’s the thing when you run any startup - usually you have some people trying to stop you. But with Kin it was different.

No one was stopping them from integrating Kin into Kik - except their own legacy code which they approved the re-write of too late.

No one was stopping their four person dedicated team "rewards engine" team from developing a balanced rewards algo. Instead, after months, they gave us an 'algo' that was simply counting the number of spenders, while four hours of work from the community yielded more insightful proposals.

Kik/Kin was a bloated organization, filled with self-validation and excuses. Community feedback, even feedback that was asked for, was constantly met with arrogant responses "No, we’ve got it right. We’re experts in this." meanwhile, Kin proceeded to launch a forked version of Stellar, with features removed, that some how became slower and constantly unstable.

When it comes to Kik/Kin, I really got to see behind the curtain in a number of ways. While I wasn’t privileged to non-public information, I had good relationships with a number of executives, the Kik staff from living in Waterloo, and had insights from the Waterloo startup community that had watched them grow.

I could sit here and discuss why Kin is worthless without Kik (or why at the very least it is not worth Kin keeping 30% of the token as commission), or timeline the chaos that ensued as the Kin Foundation announced features and partnerships that would never come to fruition, but, instead I wanted to look back at the history of Kik and understand the common denominator of this claim that "Kik’s history is about being copied and crushed"

Kik Timeline of Failed Product Positions:

2013 - Launched click this to share videos https://www.kik.com/blog/announcing-clik/

2013 - Launched first bot Kik bot https://www.kik.com/blog/tip-tuesday-the-kik-bot/

2014 - Launched Kik Browser and claimed that "chat is the new browser" https://www.kik.com/blog/the-kik-browser/ claims developers will be able to tap into Kik API via websites from the Kik browser (similar to web3js concept)

2014 - Bought Relay Gif Messaging, first chat app with deep gif integration. Worked on integrated the product. By 2016 they had scrapped Relay Gif messengers integration and began using Tenor Gif keyboard. The co-founders left Kik.

2014 - Kik raises $38M - Ted boasts in TechCrunch that Kik is "close to profitable" with Kik points, and didn’t need to raise more money than that as they aren’t sure how they’d ever spend it.

2014 - Ted first starts talking about being "The WeChat of the West" and wanting to include payments. He also first mentions Evan "If you talk to me, or to Evan Spiegel at Snapchat, we’ll say the same thing: We want to be the WeChat of the West." https://www.kik.com/blog/the-race-to-become-the-wechat-of-the-west/ - Dropping Evan Spiegel’s name as validation for Kin later became Ted’s favorite pastime.

2014 - Kik introduces promoted posts, the first forrunner to bots.

2014 - Launches Kik points.

2014 - Kik teases the idea of using Kik as a login in apps via their API.

2015 - Kills off Kik points.

2015 - Launches KikKupid bot

April 2015 - keeps promoting Kik browser and integrated sites. Saying chat is the new web. Still not support for devs.

June 2015 - Launches create your own smileys blog post. No actual way to create your own smilies, still have to reach out to Kik and submit art.

August 2015 - Launches "Jam" the music community chat app. https://www.kik.com/blog/introducing-jam-a-music-community-on-kik/

December 2016 - Buys "BlinkStyle" - to integrate the first monetized chat bot. Founders left after one-year, Blynkstyle was not maintained. As of 2019 the integration exists but gives inaccurate results, provides random pictures from google image search, has no price info, has no eCommerce info, it cannot link to a store to purchase the apps and there are no affiliate offers.

Feb 2016 - Launches branded promoted gifs for brands. This is right before deciding to kill off their own gif platform.

Feb 2016 - Launches "Locker" at my.kik.com in the Kik browser to store customized stickers, gifs and content. As of 2019 the locker and sticker shop still exist but you cannot create custom stickers or emojies: https://www.kik.com/blog/introducing-locker-a-way-to-store-and-share-your-smileys-on-kik/

April 2016 - Launches Bot shop with parters from Funny or Die, Riffsy, Sephora, Vine, The Weather Channel, Microsoft Zo, and Yahoo. Begins promoting bots as the main feature. https://www.kik.com/blog/introducing-the-bot-shop/

August 2016 - Kik announces more than 100 featured bots, and 20,000 bots created: https://www.kik.com/blog/kiks-bot-shop-surpasses-100-bots/ discusses how bots will be used for payments and change the way we digitally interact https://techcrunch.com/2016/05/11/kik-already-has-over-6000-bots-reaching-300-million-registered-users/ partners with restaurants and the university of waterloo to manage payments via bots https://business.financialpost.com/technology/battle-of-the-chat-bots-waterloo-based-kik-interactive-has-facebook-in-its-crosshairs

December 2016 - Once again claims chat is the new browser, but, no mention of their browser or developer integration instead it is focusing on chatbots. Claims payments in chat bots are coming soon, and that 2017 will be the "App Store moment" for chatbots https://www.kik.com/blog/chat-is-the-new-browser/

December 2016 - Removes old sticker shop relaunches providing free stickers. No remaining Kik point integrations, just sponsored stickers and Kiks inhouse stickers. As of 2019 no new updates have been added here. All current promoted stickers have been listed for a few years https://www.kik.com/blog/kiks-new-stickers-experience/

March 2017 - Adds Storyz for daily video storyz but only via the Storyz bot. As of 2019 the bot no longer exists. https://www.kik.com/blog/introducing-storyz/

Kik was a messenger app that truly had a first mover advantage in a lot of areas, but, it was also one that frequently cut promised products, failed to have polished integrations, and despite seeming to realize that it was dependent on third-party developer integrations, failed to have any real or useful platform for them.

Each time Kik came forward with a new product, it was large sweeping visions statements of how this would change the web if done correctly - and they were right. The problem was the poor execution.

No one stopped Kik.

They stopped themselves.

To their credit, Ted and his team were some of the most forward thinking people in the space - the problem was always in the execution and thinking they knew best.

The decision to shut down Kik was a shocking one, and one that I think we’ll look back at as yet another botched choice.

Kik Messenger had a loyal fanbase that would have loved to use Kin, and a large enough user pool that it could justify other small developers integrating Kin’s reward system into their own apps.

At this point though, the Kin Foundation will bring nothing to the table except for an unbalanced reward engine, a broken fork of Stellar and an SDK that can’t handle consumer-grade through-put. Which really begs the question of why the team was willing to put Kik, their last real point of value on the chopping block.

Either way, as the blame-game continues to spiral, we see fingers pointed at Facebook’s Libra and the SEC, but, this ship was sinking long before any of this was a concern. Plenty of other cryptos who were feeling the pressure of the SEC managed to deliver products and find non-US exchanges to list them for non-US customers.

What we saw here was not a matter of copy and crush, it was the slow bleed of a unicorn suffering death by a thousand poor-operation decision cuts.


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Coffee & Coin - Issue #5: Struggles for Binance and EOS

Sept. 23rd 2019

The following is a web version of the Coffee & Coin weekly newsletter. It’s sent out every Monday at 12 EST by email, and available on the web Tuesdays at 9AM EST.

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The Summaries:

Binance & US Trading:

This past month Binance started to ban the accounts of US (and accidentally Canadian) customers in order to comply with strict US regulation around the trading of securities. Initially, Binance had planned to have their US subsidiary "Binance US" live prior to the shut down, but, for reasons unannounced the rollout has been significantly slower than expected with user registration opening up this past week and deposits being slowly turned on for different coins each day.

But, time delay wasn’t the only woe Binance faced, it also announced that it will be unable to offer services in 12 different US states (Alabama, Connecticut, Florida, Hawaii, Idaho, Louisiana, New York, North Carolina, Texas, Georgia, Vermont and Washington) leaving these users without access to any Binance service.

Users who wish to trade a variety of tokens have had to look elsewhere due to the limited selection offered by Binance US, and other US competitors like Coinbase.

Currently, KuCoin, Beaxy and COSS have been working aggressively to secure US users with additional promotions, token listings and discounts - including offer zero-fee listings for approved projects, right after it came out that Binance is still charging a listing fee of $300,000 USD + 3% of total supply for listing a token.

According to out reach, KuCoin, Beaxy and COSS, which all allow US users on their global platform, have their own native token and offer a wide variety of assets, have all seen a major uptick in the amount of US registration this month, likely due to the similar service offering they have to Binance.

Other US services, that only offered more conservative listings, lacked native tokens, or other services have not seen the same uplift.

EOS Collapsing?

In a scathing report CoinDesk reporter Brady Dale, outlined some of the major challenges facing EOS’ $3B marketcap ecosystem.

After Block.One, the company behind EOS raised more than $4B in their year long ICO, they promised their 'Ethereum Killer' would be the new standard for smart contract based blockchains.

This past year, with declining development, increased infighting and further centralization there have become a number of users concerned about EOS' future potential.

Unlike other chains, EOS is basically an oligarchy run by elected 'Block Producers' (BPs) who earn for validating blocks. This helps to limit costs and accelerate transactions times at the trade-off of centralization. But, it is also the root of a lot of challenges EOS currently faces.

A quick overview of the on-going challenges:

  • Major BP 'EOS Tribe' announced they were leaving EOS to focus on other chains. They feel it is no longer profitable to maintain an EOS node, without involving yourself in 'vote trading' and other dirty politics among EOS whales.

  • Two major groups, one in the West and one in China, fought to launch the official EOS mainnet last year, but, the lack of communication between them left fractured communities who still oppose one another, leaving Western BPs and their voters feeling under represented.

  • At the current time, it is believed that of the 30 eligible BPs, all but 2-3 are located in China. This conclusion came after revelations that major BPs who had listed themselves as being in the US, Korea and Europe, were actually just holding companies for Chinese based firms with servers in China.

  • EOS reward mechanism allows consortiums of BPs to work together to game the top ranks, and therefore get the bulk of the earnings. By gaining this new EOS issuance, they are diluting the marketcap and making it harder for other BPs to compete with them in the future.

  • Top BPs have managed to miss entire rounds of validation (12 blocks) but not get voted out by other BPs due to backroom deals. Creating a slow, laggy and costly network.

  • On Twitter, EOS creator and Block.One CEO, Daniel Larmier is already hinting at his next blockchain project.

EOS stands as the largest blockchain offering of all time, and still leaves a lot of promises undelivered - but, to solve these problems, they’ll need to find ways to align the interests of global BPs, voters, and Block.One to continue to try and correct the path on this sinking ship.


News Round-Up:

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