An exploratory analysis on ethereum transactions on state channel scaling

• Main Author: Wang, Daini
• Other Authors: Anwitaman Datta
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2021
• Subjects: Engineering::Computer science and engineering::Data
• Online Access: https://hdl.handle.net/10356/148948
• Institution: Nanyang Technological University

Ethereum is a decentralized blockchain which has smart contract functionality. In the recent years, due to its surging transaction fees and slowed transaction speed, Ethereum scaling has become a major concern for the developers. In order to expand Ethereum’s capacity in accommodating more concurrent transactions, blockchain developers came up with various on-chain and off-chain solutions. On-chain scaling aims to increase the capacity in the main blockchain layer whereas off-chain scaling, also called Layer 2 scaling, helps to handle transactions off the Ethereum main chain. However, despite the existing implementations of these solutions, the benefits brought by some projects remain constrained. For example, a few projects targeting at one of the off-chain solutions, state channel, ceased development in 2018, and for the current similar ongoing projects, there is still room for improvement in the number of user base. Hence, in order to maximize the benefits of Ethereum Layer 2 scaling, this paper focuses on state channel and evaluates its effectiveness by conducting an exploratory analysis on current Ethereum transactions. We collected data from Google BigQuery platform and Etherscan and our study runs from August 2015 to March 2021. The exploratory analysis approached Ethereum transactions in terms of transaction activity, interaction purpose, transaction input and network protocol, from which we derived several interesting findings in this paper. Firstly, there was a weak relationship between the transaction time span and transaction volume. Secondly, most of the accounts with high activity were related to decentralized exchanges, gambling and mining. Thirdly, there was a new rise of user-contract interactions and ERC-721 transactions. Lastly, the current network protocol was not able to support accounts with high activity. Thereafter, we concluded that i) priority of construction of state channel should be given to accounts belonging to categories such as decentralized exchanges, gambling and mining, ii) more diverse functionalities of state channel should be developed to accommodate the new trends and, iii) more advanced network protocol should be implemented to make funds from accounts with high activity more accessible. Further studies are also proposed to deepen the study in this area.