Impact Metric

Daily Active Users (DAU) counts the number of unique wallet addresses that interact with a protocol's smart contracts in a 24-hour period. It measures genuine user engagement beyond speculative trading.

• Definition: A unique address performing a meaningful transaction (e.g., swap, stake, vote).
• Importance: Tracks organic growth, product-market fit, and retention.
• Analysis: Often analyzed alongside Monthly Active Users (MAU) to calculate stickiness (DAU/MAU ratio).

Transaction Finality Time is the duration required for a transaction to be considered irreversible and permanently settled on the blockchain. It is a critical metric for security and user experience.

• Probabilistic Finality: Used by Proof-of-Work chains (e.g., Bitcoin), where confidence increases with block confirmations.
• Absolute Finality: Used by Proof-of-Stake chains with finality gadgets (e.g., Ethereum after The Merge).
• Impact: Directly affects settlement risk for exchanges, bridges, and payment systems.

Protocol Revenue is the fees captured and retained by the protocol's treasury after distributing rewards to suppliers or liquidity providers. It measures the underlying business model's sustainability.

• Gross vs. Net: Gross Revenue is total fees generated; Protocol Revenue is the net fee retained.
• Examples: Lending protocol interest, DEX trading fees, or NFT marketplace royalties.
• Significance: Used to value protocols via Price-to-Sales (P/S) ratios and assess tokenomics.

A Network Decentralization Index quantifies the distribution of network control, often measuring the concentration of hashing power, staking assets, or governance votes. It is a key security and censorship-resistance metric.

• Common Measures: Gini Coefficient, Nakamoto Coefficient (minimum entities to compromise the network).
• Data Points: Validator set distribution, governance proposal voter turnout, mining pool dominance.
• Goal: A higher coefficient indicates a more resilient and permissionless network.

Proof-of-Stake (PoS) networks inherently use energy consumption as a primary impact metric. Beyond that, frameworks are emerging to assess validator Environmental, Social, and Governance (ESG) performance. Metrics can include:

• Energy source (renewable percentage)
• Decentralization (geographic and client diversity)
• Governance participation These scores help institutional stakers and delegators make capital allocation decisions based on verifiable impact data.

Lending protocols are beginning to incorporate impact metrics into their risk and reward models. For example, a protocol could offer lower borrowing rates or higher yields for loans collateralized by verified green assets (e.g., tokenized carbon credits, renewable energy certificates). This creates a financial incentive for holding and using assets with positive, measurable environmental impact, directly linking creditworthiness to sustainability.

The Ethereum network's transition from Proof-of-Work to Proof-of-Stake (The Merge) is the largest single demonstration of impact metric application. The key metric: energy consumption reduction. By switching consensus mechanisms, Ethereum reduced its total energy use by over 99.9%. This serves as a foundational case study for how protocol-level changes, driven by measurable impact goals, can radically improve a network's environmental footprint.

Decentralized Autonomous Organizations (DAOs) managing large treasuries are using impact metrics to guide their investment and grant-making strategies. Metrics help answer:

• Which projects in our ecosystem generate the most positive externalities?
• How do we measure the social impact of a grant?
• What is the carbon footprint of our treasury's yield-generating activities? This moves DAOs beyond pure profit maximization to stewardship based on quantifiable data.

Active Addresses count the number of unique blockchain addresses that were active as a sender or receiver in a given period (daily, weekly). It is a key proxy for network adoption and user engagement.

• Types: Can be split into Daily Active Addresses (DAA) and Monthly Active Addresses (MAA).
• Interpretation: A rising trend generally indicates growing usage, but can be skewed by a single user controlling multiple addresses (sybil activity).
• Use Case: Comparing fundamental user growth between Layer 1 blockchains like Ethereum and Solana.

Transactions Per Second (TPS) measures the number of transactions a blockchain network can process and confirm each second. It is a core scalability metric for evaluating network capacity.

• Theoretical vs. Actual: Networks often advertise peak theoretical TPS, but sustained, real-world TPS under load is more informative.
• Examples: Bitcoin (~7 TPS), Ethereum L1 (~15-30 TPS), Solana (thousands of TPS).
• Context: High TPS often involves trade-offs with decentralization or security, as seen in some high-performance Layer 2 solutions.

Finality Time is the duration required for a blockchain transaction to become immutable and irreversible. It is a critical security and user experience metric.

• Probabilistic vs. Absolute: Proof-of-Work (Bitcoin) has probabilistic finality (~60 minutes for high confidence). Proof-of-Stake (Ethereum) achieves absolute finality in ~12-15 minutes via checkpoints.
• Fast Finality: Some chains, like BNB Chain or Avalanche, aim for sub-3 second finality.
• Impact: Directly affects settlement speed for exchanges, bridges, and payment applications.

Protocol Revenue is the total fees captured and retained by a blockchain or DeFi protocol's treasury, typically from transaction fees or service charges. It measures the underlying economic value accrual.

• Calculation: Total fees minus rewards distributed to validators/stakers (supply-side emissions).
• Example: Ethereum's revenue comes from base gas fees that are burned (EIP-1559). Uniswap's revenue is a fraction of trading fees.
• Significance: A key metric for evaluating a protocol's sustainability and token valuation models.