Mean Coin Age
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- From Our Network #6 (30-1-2020):
"Mean coin age is a relatively new method of measurement to observe a network’s behavior in aggregate. For each coin, we calculate how long it has stayed in its current address and we compute the average of all those ages. Major drops in mean coin age indicate that previously dormant coins are starting to change addresses, and often correlate with increased market volatility. An undisrupted incline on the chart signals a growing average age of all coins on the network.
With the explosive growth of ‘ETH locking’ mechanisms and DeFi solutions, this [coins having old mean age] is likely to become the norm in years to come. It will be interesting to see how this trend affects various valuation models that draw from network activity and health indicators. NVT, for example, posits that the more value transferred on the network (using on-chain trx volume as a proxy), the more valuable the network is itself. Given that several of Ethereum’s emerging use cases warrant relative coin inactivity, it could likely prompt the creation of new and/or modified approaches to ‘traditional’ blockchain network valuation."
