Last week, CoinDesk Research released its newest report, "Understanding Ethereum", a 48-page deep dive into the emerging blockchain platform, its major players, its startup community and technological building blocks.

Our longest report to date, "Understanding Ethereum" also includes analysis on the ethereum ecosystem that seeks to illuminate how users are leveraging the platform today, and whether this matches with the intent of the platform’s creators.

Released at a time when many in the broader community are heatedly debating the merits of ethereum and its long-term viability, the report is a must-read for those who want a condensed yet comprehensive overview of why the platform has captured interest in the blockchain industry and beyond.

In the following sections, we highlight some of the major findings:

One aspect of the ethereum ecosystem we sought to study was how much of the market was being driven by real users, given the platform was meant to be used for building applications rather than currency or investment vehicle.

In practice, however, trades facilitated by ethereum exchanges are still the dominant form of transactions on the network.

Data analysis reveals exchanges account for just under 15% of the total number of transactions, but over 50% of the volume that passes through the network daily.

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As for whether this activity could be qualified as "speculative", remains a matter of interpretation. For example, it remains unknown whether exchange users are making ether purchases to invest in the network’s future or otherwise prepare for running decentralized applications (dapps).

However, it’s worth noting that, today, the amount of ether sent to dapps, defined as collections of one or more smart contracts, remains comparably lower.

Funds sent to smart contracts, including dapps, account for 6.39% of the daily transaction total and roughly 12% of total volume.

Of note for traders is that the market for ether in China is still relatively small, which means its $1bn market could be in for a boost should it successfully appeal to Asia-based traders.

Overall, just under 2% of ether is exchanged for CNY, while 85% of all bitcoin trades on the BTC/CNY trading pair.

This differential is due, in part, to the fact that ether has not yet been added by major China-based exchanges Huobi or OKCoin, both of which account for over 90% of bitcoin volumes due to their fee-free trading models.

Representatives from the exchanges told the report that they have no plans to offer ether trading yet, but that they continue to observe developments in the technology’s community.

Prior to the collapse of the $160m ethereum fund known as The DAO, the project was shaping up to be a key area of study for the report. As fate would have it, however, The DAO’s sudden collapse curtailed such efforts.

Still, there were a number of metrics collected on the project prior to its failure that illustrate just how popular the ethereum-based fund was during its short lifespan.

At peak, trades meant to exchange ether for DAO tokens represented about 3% of ethereum exchange volume, yet, the number of DAO tokenholders was relatively small.

As of mid-June, 1.17bn DAO tokens were held by 23,574 users. Ownership of these tokens was also relatively consolidated.

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Such figures provide evidence to critics who allege that actions to fork the ethereum blockchain in an effort to recover the funds may be motivated by conflicts of interest.

Due to the large overlap between ethereum owners and DAO investors, speculation remains high that those involved with the technology’s leading non-profit, the Ethereum Foundation, were perhaps among those most affected when The DAO lost control of 3.6m ETH earlier this month.

Elsewhere, CoinDesk Research found that roughly 230 decentralized applications (dapps) are in various stages of development, a figure that includes projects in concept, stealth mode, demo or working prototype stage or live.

Notably, CoinDesk Research observed development is mostly concentrated in four key areas:

The groupings provide insight into how the open-source technology’s early adopters are using smart contracts and how they believe they could best be applied to market challenges.

As illustrated by the sudden and ongoing collapse of The DAO, ethereum, while billed as “production ready”, is very much an early stage technology that is not recommended for enterprise use.

Our report outlines major challenges for ethereum, including its migration to a new proof-of-stake blockchain; its development of payments channel technology; its plans to introduce sharding; and the challenges posed by the continued development of its scripting language Solidity.

While coverage on ethereum of late has largely focused on the institutional interest and rising price of ether, such technical challenges are likely to be brought to the fore in the coming months and years as development on the platform advances.

Today, ethereum remains the most high-profile platform for smart contract development, however, this could change should technical challenges persist.

For more details and our full analysis, download the report here.

Data provided by Adam Hayes

Financial newspaper image via Shutterstock