Comparing Blockchains: 10 Performance Metrics That Matter
“New killer blockchain” – it’s a term commonly used by crypto projects to market themselves. But how can you tell if one blockchain is better than the other, and what metrics should you be looking at?
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Performance metrics are important not only for blockchain app builders and users but also for traders and investors. A careful assessment of these metrics can reveal how secure a blockchain is, and how much demand it has, thus offering useful clues for investment decisions.
10 Blockchain Performance Metrics to Look at
When we talk about crypto fundamentals, it all comes down to technology, token design, and community engagement. Blockchain networks influence key factors like transaction speed, fee structures, privacy features, and other qualities that attract developers and users.
Whether it’s a cryptocurrency with its own blockchain ecosystem or a token on an established network, both rely on technology to operate effectively.
In this list, we’ve included 10 popular blockchain performance metrics that reveal a network’s engagement, reliability, and network capacity.
1. Transactions Per Second (TPS)
TPS is one of the most commonly used metrics to compare blockchains. It measures the average number of transactions a network can process per second.
Higher TPS means a blockchain can handle large transaction volumes, which may result in lower costs due to reduced network congestion.
Blockchains have different TPS rates due to factors like block size, consensus mechanisms, and other considerations. A network’s block size defines the maximum amount of data a single block can store. For example, the average block size of Bitcoin is 1.6 megabytes, while for Ethereum it’s around 75 kilobytes, and for Mina 22 kilobytes.
Bitcoin uses a Proof of Work consensus mechanism, where miners compete to solve complex puzzles and add a block to the chain, a process that takes about 10 minutes. According to the blockchain analytics platform Chainspect the Bitcoin Network processes 7 transactions per second. Ethereum is based on Proof of Stake consensus and handles around 12–15 transactions per second.
Some other blockchains can achieve a TPS rate in the thousands. Among those with the highest TPS are Internet Computer Protocol (ICP), Solana, Tron, NEAR, and Base.
Top blockchains by TPS. Source: chainspect.app
2. Daily Active Users (DAU)
When you want to know the number of users active on a blockchain in a day, this is the metric to check. A higher DAU indicates that more people are regularly using the network, which is a positive sign of its utility.
Tracking DAU over time helps spot trends in user activity. A sudden jump or drop could indicate changes in interest or problems that need fixing.
DAU is often analyzed alongside Monthly Active Users (MAU) to gain a clearer picture of user engagement. Analyzing these metrics can show how many people are returning to the network, reflecting higher community involvement.
Based on data from Token Terminal, Solana is currently the leading blockchain by this metric with around 6.3 million daily active users.
Top blockchains by the number of daily active users. Source: tokenterminal.com
3.
Total Value Locked (TVL)
TVL represents the total value of assets across different applications on a blockchain. These assets can include cryptocurrencies that are staked, lent, or used as collateral on DeFi platforms. Typically, TVL is measured in US dollars.
High TVL can indicate that the blockchain supports popular decentralized applications, which reflects the health of the ecosystem. This is a sign of blockchain adoption, liquidity, and confidence in the technology.
Liquidity, in the context of blockchain, shows how easily funds are available on-chain, allowing users to quickly trade, lend, or borrow assets. The blockchain with the highest TVL currently is Ethereum, holding around $50.9 billion.
Top blockchains by TVL. Source: defillama.com
4.
Cost Per Transaction
Users need to pay network fees when transferring cryptocurrency from one wallet to another. Transaction processing requires computational resources, and the blockchain compensates network participants for validating blocks and ensuring security.
Network fees vary depending on the blockchain’s design, congestion levels, consensus mechanism, and fee model. They are typically paid in the blockchain's native cryptocurrency, such as Ether on the Ethereum network.
On Ethereum and some other networks, transaction fees are known as gas fees. “Gas” measures the computational work required to process transactions and execute smart contracts.
At the time of writing, the average transaction fee on Ethereum is $2.38, while on Bitcoin, it is $0.90. Fees may rise during peak times, though new blockchains and Layer 2 networks aim to make transactions more affordable.
Transaction Fee from October to November 2024 with the highest cost of $6.55 on October 8, 2024, and the lowest of $1.87 on November 3, 2024. Source: etherscan.io
5. Daily Network Transactions
The number of daily transactions on a blockchain, sometimes called transaction volume, shows the total number of transactions completed in a day.
This metric reflects interest in the blockchain, which can indicate potential growth for the network’s native token. A high number of daily transactions also demonstrates a blockchain’s ability to handle large volumes without slowing down.
You can find this metric on platforms like Glassnode, YCharts, Artemis Terminal, and CoinGecko. Currently, Ethereum leads in daily transactions, with over 1 billion confirmed transactions.
Ethereum price and transactions per day. The black line represents the price, while the blue represents the transaction count. Source: glassnode.com
6.
Transaction Confirmation Time
Average transaction confirmation time refers to how long each transaction takes to be validated and added to the blockchain. Once added, the transaction is final and can no longer be reversed or changed.
For example, if the average confirmation time is 2 seconds, half of all transactions are confirmed within that time.
This is an important metric for users, as it indicates how long they need to wait for transactions to complete. It's especially critical for applications requiring quick processing, such as games and payments.
Transaction confirmation times vary based on the fees users pay to prioritize their transactions and each network’s design.
Some blockchains, like Near and Avalanche, offer near-instant finality, with transactions confirmed in about 2 seconds.
On Bitcoin, each confirmation typically takes around 10 minutes, but finality often requires multiple confirmations and can take longer. According to recent YCharts data, the current average confirmation time on Bitcoin is around 71 minutes.
Average transaction confirmation time for Bitcoin from January to November 2024. The chart shows a value of 71.68. Source: ycharts.com
7.
Nakamoto Coefficient
The Nakamoto Coefficient measures a blockchain’s level of decentralization by revealing the minimum number of entities needed to control or manipulate the network.
A higher Nakamoto Coefficient means higher decentralization, as it requires more network participants to make an impact. The metric considers several factors, including developer, client, node, and ownership decentralization.
While the Nakamoto Coefficient doesn’t directly measure speed, performance, or fees, it reflects the network’s long-term reliability, offering resilience against attacks and censorship.
When a network is reliable, the decentralized applications (dApps) and tokens built on it also benefit from consistent performance. The Nakamoto Coefficient can change over time as new participants join or the network undergoes updates.
When a network is reliable, the decentralized applications (dApps) and tokens built on it also benefit from consistent performance. The Nakamoto Coefficient can change over time as new participants join or the network undergoes updates.
8.
Total Transaction Count Since Network Launch
The launch of a new blockchain is always experimental, as it must prove its resilience over time. Total transactions since the network launch indicate the blockchain’s demand and how actively it’s been used.
This metric helps gauge a blockchain’s maturity and historical adoption. Newer networks usually have fewer transactions compared to established ones like Ethereum and Bitcoin. In such cases, other metrics like transaction fees and confirmation times can provide additional insights into the network’s performance.
As for Bitcoin and Ethereum, both have processed billions of transactions. In May 2024, Bitcoin surpassed 1 billion transactions approximately 15 years and 4 months after its launch. Ethereum has processed over 2.6 billion transactions to date.
Total transactions on Bitcoin since its launch exceed 1.1 billion. Source: YCharts
9. Addresses with a Non-Zero Balance
A wallet with a non-zero balance means that it holds even a tiny amount of cryptocurrency. This is an important metric for understanding the level of investment in a cryptocurrency.
Sometimes users create a wallet or register on a platform without actually buying any crypto. Likewise, holders may sell their assets and close positions.
Therefore, a growing number of non-zero balance addresses suggests rising interest in crypto, with more people actively participating in the blockchain.
At the time of writing, the number of Bitcoin addresses with a non-zero balance is over 54.3 million.
The number of Bitcoin addresses with a non-zero balance from 2012 to November 2024. Source: Bitcoin Magazine Pro
10. Blockchain Size
Blockchains are designed to grow in size over time as new blocks are added.Each block in the blockchain is linked to the preceding one through a unique identifier called a hash.
A larger blockchain size is beneficial from a security standpoint, as modifying any data would require hackers to alter the first block and change all subsequent data.
For blockchains like Bitcoin, this wouldn't even make sense. Even in the case of a successful 51% attack, where the attacker gains control over the network, the hacker would need to invest a significant amount of resources to modify data.
Despite these security benefits, a large blockchain comes with challenges. It requires more storage space and can lead to scalability issues. Solutions like sharding, sidechains, and Layer 2s have been developed to address these concerns.
Blockchain size is especially important for full nodes, which must download the entire transaction history of the blockchain in order to synchronize and validate new transactions.
As of November 2024, the Bitcoin blockchain size is around 598 gigabytes, while Ethereum's blockchain size is approximately 1,182 gigabytes.
Bitcoin blockchain size from January 2009 to November 6, 2024. Source: statista.com
Difficulties of Measuring Blockchain Performance
It's quite a challenge to analyze and compare blockchains by performance. Besides the variety of metrics to take into account, there's a question of how accurately the numbers reflect a network's capacity.
For example, looking at total transactions per second, we need to note that not all transactions are equal. There are ones that take more space in the block and therefore require more computational resources. Besides this, TPS shows how many transactions a blockchain processes per second, but not its maximum capacity. Some community engagements and events can lead to growing activities with increased TPS, which adjusts afterwards.
If we look at other metrics, they are not perfect either. Daily active addresses can distort the picture of unique users as one person can have multiple accounts, TVL doesn't reflect how efficiently the capital is used, and so on.
Despite their flaws, metrics are still important, as analyzing them can help you understand how the blockchain operates. They also allow you to focus on indicators that matter most to you, whether that’s transaction speed, cost, or another factor.
FAQ
- What Is Blockchain Performance?
Blockchain performance reflects a network's capacity to process transactions. It’s about how fast, scalable, secure, and reliable the system is at confirming and validating transactions. Key factors include transaction speed, latency (how long it takes), and decentralization, which show how well the network is running overall.
- What Are Popular Blockchain Performance Metrics?
Common metrics include transaction speed (TPS), daily active users, Total Value Locked, transaction confirmation time, and other metrics. These help evaluate the network's efficiency, scalability, and overall health.
- What Are Blockchain Analytics Platforms For Tracking Performance Metrics?
Among popular data analytics platforms are Glassnode, YCharts, Token Terminal, DefiLLama, and others.
- Is Blockchain Performance Important for Crypto Investors?
Yes, performance metrics are important for builders, users, traders, and investors alike. Analyzing these metrics can reveal insights into a blockchain's security, demand, and overall health, which can provide valuable clues for making informed investment decisions.
Related: What is a crypto on-chain analysis and how to use it?
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