Ethereum Sentiment Research Spotlight Study

State of Blockchain Q3 2016 | 1

ETHEREUM SENTIMENTResearch Spotlight Study


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Spotlight Study: Ethereum Sentiment

Since our last report, interest and de-velopment of ethereum has exploded…but not without controversy.

• We are now dedicating a section of our SOB coverage to ethereum and its market, blockchain and community metrics.

• We conducted a “spotlight study” survey with 240+ startup execs and enterprise blockchain leads to assess the impact of the DAO hack and subsequent hard fork on ethereum sentiment.

Data Source: CoinDesk Ethereum Survey

Our goals:

• Determine if market events caused direct change in sentiment or use of ethereum’s technology.

• Identify effects of ethereum’s chal-lenges on the extended block-chain marketplace.


Ethereum Sentiment Spotlight Study: Findings

Data Source: CoinDesk’s 240+ person executive survey; full results start on slide 56

Opposed the ethere-um hard fork (23% weren’t sure if it was the correct decision).

Reported no change in their use of ethereum due to the hack or hard fork.

Responded the hack did not neg-atively impact their sentiment towards ethereum; those whose sentiment was negatively impacted were al-ready unlikely to use ethereum.

Thought ethereum has better govern-ance than bitcoin (while 34% feel both communities face governance chal-lenges).

63% 48% 37% 33%


Ethereum Sentiment Study: Demographics

Data Source: CoinDesk

Our 243-person survey included technical leaders from startups and enterprises who attended our annual Consensus summit.

Of these respondents:

• 86% believe blockchain technology (broadly speaking) would have an impact on financial services, while 14% said it was “too early to tell”.

• 70%+ believe blockchain tech would also have an impact on governments and businesses outside of financial services.

• 52% of bulls believe it would be 5-10+ years before block-chain tech was widely adopted.


Ethereum Sentiment Study: Demographics


When it came to ethereum in particular:

• 63% reported they were “very familiar” with the ethereum protocol; 70% said they were “very familiar” with the DAO hack and hard fork.

• 58% reported using the ethereum protocol – 37% used the public blockchain, 19% used a permissioned version of ethereum, and 6% used a public fork of ethereum such as ethereum classic, krypton, or shift.

• 67% planned to consider using the ethereum protocol in the future – 49% planned to use the public blockchain, with 26% planning to use a permissioned version and 12% planning to use a public fork.


One in Three Were Negatively Impacted By the Ethereum Fork or DAO Hack


Were you or your organ-ization directly impacted in any way by the June 2016 DAO hack (i.e. lost tokens, proof-of-concept delayed or reconsidered due to the hack)?

• 75% of those affected lost money in the DAO.

• 11% said it made them lose confidence in ethereum.

• 20% said it set back a pro-ject or proof-of-concept.

“The hard fork hardened my opinion re: ethereum’s governance problems.”

“We delayed anchoring into ethereum because of the fork.”



One in Three Disagree with the Decision to Hard Fork


How do you feel about the decision to hard fork the ethereum (ETH) block-chain?

• Majority of those who disa-greed with the decision were already skeptical of ethereum and “not considering” using the technology in the future.

• The decision to hard fork may get more popular over time; for those who changed their minds at some point, “agrees” out-numbered “disagrees” 7:1.

“I was worried the hard fork might undermine the authority of the core dev team (or rather, make it seem like they have too much power), but those concerns seem to be overblown, and all seems to be going well for now.”


In Terms of Perception, the Drama Has Taken Its Toll: Bad for Ethereum, Good for Bitcoin


How has the DAO hack and the ethere-um hard fork affected your sentiment towards using:

• Sentiment skewed negative for both ETH and ETC.• 49% negative vs. 26% positive for ETH.• 50% negative vs. 15% positive for ETC.• “bad precedent”, “broke immutability”, “lack of

quality control & testing”, but “pragmatic”.• Many believed this cast bitcoin in a more positive

relative light. • 39% positive vs. 17% negative.• “only production ready blockchain”, “stability and

predictability are key”.• Muted impact on sentiment towards other public

blockchains.


For the Majority Whose Sentiment Was Negatively Impacted, Governance Was the Primary Concern


If the the DAO hack and/or Ethereum hard fork negative-ly impacted your sentiment on using Ethereum, what are your specific concerns?

• 47% concerned with how the ethereum blockchain and pub-lic protocol was governed.

• 38% concerned with the block-chain’s compromised immuta-bility.

• 33% fear regulatory risks due to the coordinated response.


Despite Setback, Ethereum Perceived to Have Better Governance Than Bitcoin (Though Both Have Flaws)


Please select the choice you believe best re-flects your opinion of current Ethereum and Bitcoin governance:

“ETH vs BTC vs ETC rivalries need to stop; these technolo-gies are too new to take sides. Instead of coming together, there are obvious lines being drawn.”

“I’d be more optimistic if univer-sities embraced and increased resources not only for bitcoin but ethereum, and other DLTs.”


Public/Enterprise Ethereum Users See Different Strengths in the Technology


Respondents Use Public (ETH) Version of Ethereum for These Reasons.

Respondents Using Private/ Permissioned Version of Ethereum for These Reasons

• Both groups emphasized the quality of the ethereum community.• Ethereum users placed more emphasis on Turing Completeness.• Enterprise users emphasized developers, flexibility and maturity.


Ethereum’s Developers Continue Upgrades


“Casper” – Two prominent ethereum developers (Vitalik Buterin, Vlad Zamfir) continue work on new blockchain consensus algorithm.• Would see ethereum migrate from bitcoin-like proof-of-work to

more decentralized proof-of-stake alternative.• Zamfir, Buterin remain split on best paths forward.

Formal verification – soundness of smart contracts continues to be both practical and enterprise concern.• Startups are working to provide specialized software to mathe-

matically check for issues.

EMV upgrade – ethereum language compiler continues to face performance issues, problems with IoT compatibility.• Compiler works in 256-bit ’chunks’, too slow for appliances with

smaller bit registers.• Plan is to migrate to new EVM (EWASM) unveiled at Devcon2 con-

ference in Shanghai.


Our Respondents Predict Ethereum’s ‘Proof-of-Stake’ Switch Will Occur in 2017


How likely do you think it is that the following will be deployed by the Ethereum commu-nity by the end of 2017?

• 82% believe that ethereum’s most challenging hard fork – a switch to a new consensus algorithm called “Casper” – has a 50% or greater chance of being implemented in 2017.

• Our respondents believe the Mist browser is the most likely 2017 release, with 62% saying they be-lieve this is somewhat or very likely vs. 11% that believe it is unlikely.

• Respondents were split on the release timing of the Swarm storage platform, and two scaling solu-tions: state channels and sharding.


Hard Fork? That’s the Easy Part


We asked whether there was anything more technically challenging on the development roadmap than ethereum’s switch to proof-of-stake:

“While some acknowledged the Casper switch was the biggest milestone in the near-term roadmap, respondents over-whelmingly noted that “sharding” was the most technically complex project being tackled.”

“by far the hardest”, “represents a sea change in how these systems work entirely”, “there is not enough capacity on the network before worrying about sharding and parallelism”.

What is Sharding?

(From CoinDesk’s research report ‘Un-derstanding Ethereum’)

Sharding is a scaling solu-tion where portions of the full ethereum blockchain are held on separate servers in order to distribute the network’s com-putational load and improve its performance. This solution could allow businesses, indi-viduals or entities to run a pub-lic or private blockchain (with distinct transaction validators) on a platform that uses the security and functionality of a public platform.


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Ethereum Sentiment Research Spotlight Study