Skycoin – Chain Analysis

Chain Analysis of Skycoin
CHAIN ANALYSIS
19.07.2018
ANALYSIS OF SKYCOIN TRANSACTIONS
CHRISTIAN OTT
AUTHOR
Introduction
A side effect of the Skycoin blockchain being publicly visible is, that it enables users to track every transaction and to create statistics about coin movements. That is of course nothing new, other blockchains are publicly available as well and have provided automated statistics about their usage (the chart section on Etherscan for example). However, I haven’t seen many statistics about the Skycoin blockchain, even though an analysis of its blockchain offers interesting insights. Therefore, I decided to create some statistics about Skycoin’s blockchain, which I will present to you in this article. The data used for this analysis starts in block 1 (start of Q2 2015) and ends in block 43753 (end of Q2 2018).

Transactions over Time
Let us start with the easiest analysis, the growth of transactions over time. Block 1 of Skycoin’s blockchain was issued on April 02, 2015. Three years have passed since then and the transaction volume is steadily growing, though the usage started out slow. In 2015 the blockchain registered 262 transactions, which increased to 311 transactions in 2016. That changed in 2017. With increasing public awareness and Skycoin’s first exchange listings on C2CX and Cryptopia, the usage of the network increased in every quarter. In Q2 2017 it was the first time over a thousand transactions, in Q4 2017 the blockchain registered 4500 transactions. This growth continued in 2018, Q1 included 13k Skycoin transactions, Q2 about 24k transactions. A great amount of these transactions are interactions with the exchange wallets, 66.6% of the transactions in Q2 2018 were either incoming or outgoing transfers of the Binance, C2CX or Cryptopia withdrawal addresses. I outlined the amount of interactions with the withdrawal addresses with own colors in the following chart, where you can also see the growth of Skycoin transactions over time.
25k20k15k10k5k02015Q12017Q22017Q32017Q42017Q12018Q220182016Other TransactionsBinanceC2CXCryptopiaSkycoin Transactions over Time
Address Growth
The increase of transactions came alongside an increase in unique addresses, that held a balance higher than 1 Skycoin. At the end of 2015, just 98 addresses held more than 1 Skycoin. This number increased to 166 addresses at the end of 2016. However, the growth in addresses and therefore the distribution of Skycoin really took off in 2017 after the first exchange listings on C2CX and Cryptopia. In the middle of 2017 the circulating supply of Skycoin was still distributed among 400 addresses, while this number increased to 2000 addresses at the end of the year. This growth has continued in 2018, at the end of Q2 2018 7856 addresses held at least 1 Skycoin. This indicates, that the circulating supply of Skycoin is distributed among 20 times as many addresses than it was one year ago and is therefore in an ongoing decentralization process. In the graphic below you can see the growth of addresses with at least a balance of 1 Skycoin over time, it also differentiates the addresses according to the amount of Skycoin held by them.
8k6k4k2k02015201720182016> 1 Skycoin> 100 Skycoin> 10 Skycoin> 1000 SkycoinAddresses with at least 1 Skycoin
Coin Hour Lottery
Another interesting analysis can be made on Coin Hours. Even though Coin Hours are worth nothing right now (which may change in the future), some Skycoin holders are very keen on increasing their Coin Hour stack. This has led to several users splitting their Skycoin withdrawals from exchanges into numerous smaller amounts of Skycoin, to receive a greater amount of Coin Hours with multiple withdrawals, than they would get with one withdrawal of their whole amount. The amount of Coin Hours sent by the exchange certainly depends on the amount of withdrawals prior to an individual withdrawal as well as it depends on the amount of Skycoin in the address used by the exchange and the amount of Skycoin withdrawn. On average per withdrawal, Binance sent 118k Coin Hours, C2CX sent 85k Coin Hours, whereas Cryptopia sent only 21k Coin Hours. In the following graphic you can see the percentage of Skycoin withdrawals, that included a specified amount of Coin Hours for Binance, C2CX and Cryptopia withdrawals:
100%80%60%40%20%0>1M>250K>100K>25K>10k>1kCoinHoursCoin Hours sent by ExchangesBinanceC2CXCryptopia
Movement of Skycoin distributed in 2015
Alongside the first block issued in April 2015 the first distribution event of Skycoin took place,1 where the coins were sold for 0.1 USD apiece.2 At the end of 2015, 97 addresses held a sum of 540k Skycoin. With the price currently at 7 USD, the first investors are at a 70x of their initial investment and therefore might have a high incentive to sell. Because of their low-entry price, selling their coins could lead to huge sell walls, that could slow down price growth. However, if they already sold a sizable portion of their holdings over the past few years, they shouldn’t be able to suppress the price. So, it should be interesting to see what happened to these coins. I analyzed the movement of the amounts held by the early investors of 2015 and checked, whether they are still holding their coins, moved their coins to an exchange (Cryptopia, C2CX or Binance) or sent their Skycoin to another address that obviously belongs to another person.

The amount of Skycoin held by the 97 addresses decreased over time. Prior to the first exchange listings on Cryptopia and C2CX in Q2 2017, 94k Skycoin were moved to other addresses. As soon as Skycoin was listed on several exchanges, profits were taken over time. 83k Skycoin were sold on exchanges in Q2 2017, 20k Skycoin were sold in Q3 2017. In Q4 2017 and Q1 2018, just 3k Skycoin were sold per quarter. More coins were sold in Q2 2018, where 45k Skycoin were sold on Binance and 10k were sold on Cryptopia.

So, the situation on June 30 of 2018 is: Of the 540k Skycoin distributed in 2015, 269k are still held by the addresses (49.8%). 165k were sold on Binance, C2CX or Cryptopia (30.6%) and 106k Skycoin were moved to other addresses (19.6%).
600k500k400k300k200k100k02015Q22016Q32016Q42016Q12017Q22017Q32017Q42017Q12018Q22018Q12016Sent toother addressSent toExchangeHoldingTracking Skycoin distributed in 2015
Movement of Skycoin distributed in 2016
In 2016, the project put about 1.5 million Skycoin in circulation. I think the movement of the coins distributed in 2016 is also very interesting to analyze, since the entry price for these coins was also way lower than it is today. It might not have been as low as 0.1 USD as we saw in 2015, but since they have sold Skycoin at a rate of about 2500 Skycoin per 1 Bitcoin,2 the price should have been somewhere around 0.1 USD – 0.4 USD.3 This means most of these investors are still at a 20x of their investment and might want to take a profit and could therefore suppress the price. Adding to that, I think that not all of the coins were sold to private investors but were also used to reward contributors to the project.

The first bigger movement of the coins distributed in 2016 happened in Q2 2017, where 300k Skycoin were sent to exchange addresses and 100k moved to other addresses. I would guess the 300k Skycoin were sent by the team for the distribution event on C2CX in Q2 2017, paired with the team generally providing the exchanges with an initial amount of Skycoin to facilitate trading liquidity.4,5,6 Over the next nine months, only 70k more Skycoin were moved to exchanges, so only a smaller amount of profits was taken. However, that changed in Q2 2018, where about 750k Skycoin were moved to exchange addresses, 715k of them to Binance. All of these transfers to Binance were made from June 08 to June 13. This also matches exactly with the price decline during these 6 days. In my opinion, selling coins that were held for multiple years this rapidly without caring about crashing the price is an indicator for either selling stolen coins7 or complete panic selling, which probably both were the case here.

Summarizing, the situation on June 30 of 2018 is: Of the 1.46 million Skycoin distributed in 2016, 136k are still held by the addresses (9.3%). 1.115 million were sold on Binance, C2CX or Cryptopia (76.4%) and 209k Skycoin were moved to other addresses (14.3%).
1.5M1.2M.9M.6M.3M0Q12017Q22017Q32017Q42017Q12018Q220182016Tracking Skycoin distributed in 2016Sent toother addressSent toExchangeHolding
The Whale
As if a selloff of more than 700k Skycoin in one week wasn’t enough, on June 18, another address owner decided to sell all of his/her coins. This address received 1 million Skycoin in Q3 2015. I assume, that it is either owned by a whale or a consortium of investors. The coins in it were held for over two and a half years. However, on June 18, 2018, the entire balance of 1 million Skycoin was moved to Binance. Most of these coins were presumably sold on June 18 and June 19, with Skycoin’s trading volume skyrocketing on these two days.

Overall Situation
This selloff of about 20% of Skycoin’s circulating supply in a short time-frame has led to the price declining from 25 USD to 5 USD. However, as bad as this selloff was for the price in the short-term, in my opinion it is good for the price of Skycoin in the long-term. From the total of 3 million Skycoin distributed in 2015 and 2016, only 404k are still held by the early investors (13.5%). The remaining coins have been sold and are therefore redistributed to smaller investors, who might not have a high incentive to sell, until Skycoin’s price reaches a new all-time high. In case there is a huge interest in the market to buy Skycoin in the future, the overall selling pressure should be way lower than it was prior to the massive selloff.

As a summarizing overview the following chart shows the amount of coins held, sent to other addresses or sent to exchanges. It also shows how many Skycoin were sold per exchange, including Binance, C2CX and Cryptopia.
3.0M2.5M2.0M1.5M1.0M0.5M02015Q22016Q32016Q42016Q12017Q22017Q32017Q42017Q12018Q22018Q12016BinanceC2CXCryptopiaSent toother addressHoldingSkycoin distributed in 2015 and 2016
Wrap-up
We looked at several aspects of Skycoin’s blockchain in this article. First of all, we saw that the amount of transactions in the network is constantly growing. Speaking about Coin Hours transferred from exchanges, we found out that there has been a higher chance in the past to gain a large number of Coin Hours with a withdrawal from Binance and C2CX rather than from Cryptopia. The steady growth of addresses over the past few years that hold at least 1 Skycoin was documented as well. In addition to these general statistics, we tracked the movement of Skycoin distributed in 2015 and 2016 and found out, that only 13.5% are still held by the early investors, while 86.5% have been moved or sold. This led to the conclusion, that the distribution of Skycoin is currently in an ongoing decentralization process with coins moving from few large investors to many smaller investors. This should be a good thing for the future, since it makes the circulating supply less centralized and relieves Skycoin’s overall selling pressure.

Sources
1
“This IPO is for developers, people who have been following for a while and experienced people who know what they are doing. This is more of a private offering and not really an IPO. The purpose is to get Skycoin trading and work on bugs.”
skycoin; Bitcointalk; [SKY] Skycoin Launch Announcement; 07.02.2015
2
“2500 Skycoin per Bitcoin. Which is about $0.10 / Skycoin. Bitcoin to USD is too volatile so just set it to that. … I think we started getting bitmessage requests for IPO in about two months ago and are just sending out coins now. … There are about fifty people in the IPO so far. The average amount is $2000. About half the coins in the allotment are already accounted for. Very good so far.”
skycoin; Bitcointalk; [SKY] Skycoin Launch Announcement; 18.04.2015
3
“Yes we reserved 2% of the coins for people on the Bitcoin talk thread, at the ICO price. Bitmessage did not work for a lot of people. We tried to do sale over Tox bot and that failed and people had problems. Also, no wallet builds and difficult to buy. We have developers we are reserving coins for, because they have not been able to get compilation working on their platform.”
skycoin; Bitcointalk; [SKY] Skycoin Launch Announcement; 10.10.2016
4
“We have an invite only ICO on third party platform, that you need QR code to access. 25 people have code right now, and it is open to anyone who posted on the Bitcoin talks thread in the past 4 years. More information later.”
skycoin; Bitcointalk; [SKY] Skycoin Launch Announcement; 23.11.2016
5
“Now we are testing ICO on third party website.”
skycoin; Bitcointalk; [SKY] Skycoin Launch Announcement; 25.12.2016
6
“Last distribution was 500,000 coins. That took 4 months to sell. But then in last month someone wrote one article and skycoin was put on one website and whole ICO sold out in two weeks”
Synth; Telegram; Skycoin main channel; 22.04.2017
7
“I think they were stealing coins from other investors and “holding the coins” for them. Maybe they received 1 million yuan from 3 different investors and then only had 1 million yuan of coins and told them all that the “coins” in the wallet were theirs. … I think they even stole Skycoin from coins that Jane/Shellpay had and sold to Chinese users early on. There was an airdrop of 1 million coins for about 1 yuan and they may have stolen 400,000 to 600,000 coins from the air drop. … Some of the stolen coins are from the 2nd tranche of distributed skycoin, with only 3 transactions from genesis. Which is ridiculous.”
Synth; Telegram; Skycoin main channel; 20.06.2018