Nebulas is a blockchain platform focused on providing high throughput (more than 2,000 transactions per second), upgradability (core protocols can be updated without forking the blockchain) and incentives for the developers of decentralized applications. Nebulas DApps can be programmed with Javascript, and developers can be rewarded for their work through a well-funded incentive program.

One of the defining characteristics of the Nebulas platform is the Nebulas Rank metric. The Nebulas project has recently released a yellow paper, which explains the Nebulas Rank concept and its underlying algorithms in detail. NR is one of the crucial components of Nebulas and its goal to serve as a quantitative metric which is as accurate as possible at determining which actors on the network are its most valuable contributors. Given that a high NR comes with certain benefits to an account, it’s vitally important that the NR metric incentivizes behavior which is healthy for the network.

In a commentary on the concepts presented in the NR yellow paper, the Nebulas team explains that they believe classic monetary theory also translates to cryptocurrency-powered blockchain systems.

»An interesting argument is that we do not deny that the value of many encrypted digital currencies in the market at this stage is affected by many factors (such as user investment expectations and other unknown factors), but in the long run, the balance of supply and demand of currency is still the important factor that determine the currency’s value, and our experimental results also support the above conclusions.«

Even though there are many factors influencing prices in the cryptocurrency market, which is highly speculative at this stage, the Nebulas team has found encouraging results in its analysis of the Nebulas rank as applied to the market capitalization of Ethereum. The team took the complete transaction data from the Ethereum network in a two month timespan (May 1 2017 to June 30 2017), and calculated the NR for each account.

The sum NR of all accounts was then compared to the movement of Ethereum’s market capitalization in the two month time period, and found a correlation coefficient of about 0.84. While it would be nice to see more data of this type, their results show promise for NR as not only a metric for the value of individual accounts, but the value of a blockchain network as well.