from Hacker News

68% of total Ethereum transaction value controlled by one system

by bmj1 on 9/25/17, 8:29 PM with 82 comments

• by ve55 on 9/25/17, 9:33 PM

  Why is the link at the top of this article ('cyber•Fund') to https://cyber.fund/system/Paragon, a page for 'Paragon', a very shifty high-budget ICO?

  Given the other things Paragon has paid big bucks for (anything you can imagine, from paying Youtubers 5 figures per video to get their subscribers to 'invest' in them to paying for mass reddit vote manipulation to buying very expensive ads and sponsorship programs to lying about their company model, CEO, etc), it seems really out of place to me that this article links to them as the first link.

• by dahdum on 9/25/17, 9:14 PM

  Aren't these the temporary deposit addresses that exchanges give out? You deposit and then they sweep the balance to their hot/cold wallets as necessary?

  Also the ReplaySafeSplit and related contracts were due to the ETH/ETC split, you had to move your coins to be safe.

  I see no evidence of a "mixer" being the cause.

• by alexjray on 9/25/17, 10:32 PM

  “Ethereum transactions” and “quantity of ETH transacted” are two very different things. This title (and article) is deceiving.

  Please see Vitalik Buterin response to this before reading.

  https://medium.com/@VitalikButerin/i-think-this-article-real...

• by ChrisClark on 9/25/17, 9:56 PM

  Good to clarify, it's actually 68% of the value, the amount transferred. They are only about 10% of the number of transactions.

• by atomical on 9/26/17, 1:01 AM

  This is obvious if you've ever poked through a few random transactions on etherscan. The big exchanges use temporary accounts to move funds to users. It makes sense that would make up a majority of eth transactions because fiat is the only way to purchase ether.

• by shemnon42 on 9/25/17, 8:52 PM

  Is the story that 68% of the traffic is naked laundering or that 68% of the traffic is people buying into ICO that are not already enfranchised in ethereum?

• by TeeWEE on 9/26/17, 10:05 AM

  These are just temporary addresses at exchanges:

  You pay the exchange x euro, the exchange gives you y ether to adress (temp) E, then you transfer from E to your own wallet K

• by Animats on 9/25/17, 9:12 PM

  This mixing ramped up around the same time as the price did. Etherium was around $8 at the beginning of 2017, where it had been for years. By midyear it was in the $300-$400 range.

  Is this mixing somehow involved with a scheme to pump the price?

• by atomical on 9/26/17, 2:22 AM

  I would be interested in seeing the charts on etherscan modified so that these temporary accounts are removed.

  https://etherscan.io/chart/address

  It's going to screw up a lot of analysis.

• by XR0CSWV3h3kZWg on 9/25/17, 9:18 PM

  The article doesn't seem to support the claim.

• by thisisit on 9/26/17, 6:12 AM

  This whole analysis is very confusing.

  The first analysis about temporary addresses makes sense. Addresses used only for one hour. But what bearing does "transaction value" has? The real metric of a mixer controlling a currency would have been number of transactions. Mixing is about spreading the transactions far and wide and across many addresses to make it difficult to trace. When you look at the graph below, the mixer accounts for barely 11% of the transaction volume.

  If I go further and read about the core and shell, the analysis falls apart even more.

  The idea proposed is that the shell accounts are the ones responsible for generating output and inputs to external accounts like the exchanges and also talk to core which consists of 90% temporary accounts. Fair enough.

  "In the end, it turned out that the total amount transferred into and out of the core is 4 times higher than the total that entered and left the shell and the core taken together." How is this even possible?

  If assume flow of 1 ETH ignoring fees. Poloneix -> Shell -> core -> Shell -> Kraken

  From the statement "total that entered and left the shell and the core taken together" = 1 ETH into shell + 1 ETH into core + 1 ETH out of core + 1 ETH out of shell = 4ETH

  Total for core is 2 ETH - 1 in and 1 out. If shell is there to interact with the core, how is core doing 4 times the amount. Unless of course the confusion is dividing the total in and out of 4 by actual transaction of 1 ETH.

  All exchanges need to segregate customer amounts to ensure everything works smoothly. Let's assume I have 1 ETH, then sent it to Kraken. No trades done and simply withdrew the ETH. Here's what will happen:

  Me -> Kraken Temp account + network fees (mostly pool accounts ~ 0.0002) -> Me + Kraken account for withdrawal fee ie 0.005 + network fees (again pool)

  In which case, two scenarios can occur:

  a. Kraken temp account is tagged - So my account and pool accounts can be considered to be the shell. The in and out total for me is 1.9946 worth of ETH (1 ETH out + 0.9946 ETH in after Kraken and network fees). On the block fees side, in and out of the shell is 0.0004 ETH. Total is 1.995 in and out of the shell. While Kraken is doing 0.005 ETH.

  b. The worse case scenario - Kraken temp account is unmarked. In this case the temp account becomes the shell while my personal account and pool becomes the so called core. Now this happens: Core transaction volume - 1.995 ETH Shell or Kraken temp account - 0.9998 In (after fees) + 0.9946 out (after Kraken and network fees) = 1.9944 ETH Kraken - 0.005 ETH

  Actual volume is 1 ETH but counting the transaction volume blows this thing up.

• by seibelj on 9/25/17, 8:53 PM

  It's an ETH mixer, it helps you obfuscate ETH, the same exists in BTC and all other crypto currency systems without inherent privacy.

• by 45h34jh53k4j on 9/25/17, 8:38 PM

  Oh no! The emperor's has no clothes!