Conflux (CFX), as the first platform from China to enter the global public chain first tier, has always been highly anticipated, even being referred to as China's "Ethereum." Especially in the context of Beijing considering using stablecoins to counteract the dollar's hegemony, and with Conflux preparing to launch an offshore RMB stablecoin, the market's excitement is naturally justified, with CFX rising over 190% in the past 30 days. However, behind CFX's weekend trading leading the altcoin market and the subsequent price drop, on-chain data reveals a concerning truth: Conflux's on-chain activity does not truly reflect its claimed decentralization and activity, and there is even a significant risk of centralization.

1. Conflux's "China's Ethereum" Narrative and Market Frenzy

Conflux positions itself as China's Ethereum, with a digital ledger that meets regulatory requirements and is available in mainland China without the need to issue tokens. Analysts have previously told CoinDesk that it is a "one country, two systems" protocol that can cross the global cryptocurrency market through tokens and serve as a digital ledger for mainland China, collaborating with domestic internet giants like China's version of Instagram.

Policy Benefits: Given that industry insiders indicate that Beijing is considering using stablecoins to counteract the dollar's hegemony, and Conflux is preparing to launch an offshore RMB stablecoin, the market's excitement is naturally justified. In the past 30 days, CFX has risen over 190%.

Technical Advantages: Conflux is a Layer-1 smart contract network based on a hybrid DAG consensus mechanism. The chain is compatible with the Ethereum Virtual Machine and achieves low fees through a sponsored gas model. Its 3.0 version is set to launch in August 2025, with a transaction throughput of up to 15,000 TPS, more than 75 times that of Ethereum, and transaction confirmation times reduced to under 26 seconds. The number of nodes will also increase from 5,000 to over 10,000, covering more than 40 countries, making it highly competitive in terms of performance.

Application Scenarios: In the cross-border finance sector, the DAG blockchain collaborates with financial institutions for cross-border payments and trade settlements, compressing the traditional 3-5 day process to just 26 seconds, with transaction fees reduced to 1/20 of traditional channels. It also promotes RWA, such as bulk settlement of commodities, reducing dispute rates by 92%. Additionally, the DAG blockchain has built an ecosystem covering DeFi, the metaverse, digital copyright, gaming, and more, processing a total of 170 million transactions and serving over 25 million users.

Strategic Significance: The DAG blockchain is the first platform from China to enter the global public chain first tier, supporting the country's "Belt and Road" Web3 infrastructure tasks and reducing dependence on Western blockchain systems. It aligns with China's regulatory framework, receiving support from Shanghai's "Metaverse New Track" policy, and collaborates with institutions like Fudan University to build compliant financial models, providing strong policy support for its development.

2. The "Shadows" Revealed by On-Chain Data: Centralization and Insufficient Activity

However, behind Conflux's glamorous narrative, on-chain data reveals some concerning "shadows."

Insufficient On-Chain Activity: According to data from the network's block explorer, trading activity did not grow last year, except for occasional peaks. In fact, it remains below the daily average of 2022. This starkly contrasts with the recent surge in CFX's price, suggesting that the price increase may be more driven by narrative and speculation rather than actual on-chain activity.

High Centralization: Other on-chain data shows that nearly 80% of the total gas consumed in the protocol comes from three accounts, resulting in a concerning level of centralization. In contrast, the largest gas consumers on Ethereum account for less than 10% of the network's total gas consumption. This high level of centralization contradicts the core spirit of blockchain decentralization and raises concerns about its security and censorship resistance.

3. Conflux: The Challenge of a Hybrid Utility Tool

Conflux positions itself as a hybrid utility tool, aiming to balance performance, application scenarios, and policy support.

Ecosystem Cooperation: The DAG blockchain has established cross-chain bridges with dozens of mainstream public chains globally, achieving interconnectivity within its ecosystem. It has also formed strategic partnerships with AnchorX, Dongxin Ping, and others to jointly promote overseas benchmark projects for cross-border settlement applications, and has collaborated with China Telecom to develop the BSIM card, providing hardware-level security guarantees and further expanding its ecological influence.

The Gap Between Narrative and Reality: Although Conflux has a strong appeal in its narrative, on-chain data indicates that its actual activity and level of decentralization as "China's Ethereum" still have a significant gap compared to mainstream public chains like Ethereum.

As the narrative of Conflux as China's "Ethereum" drives prices up under favorable policies and market speculation, the on-chain data revealing insufficient activity and high centralization casts a shadow over Conflux's future development. While Conflux has potential in terms of technical performance, application scenarios, and policy support, whether it can truly achieve decentralization and translate its grand narrative into actual on-chain activity will be key to its ability to stand out in future competition. Investors should remain vigilant about its potential centralization risks while closely analyzing on-chain data to avoid being misled by excessive speculation.

Related: JD.com and Ant Group may miss out on the first batch of Hong Kong stablecoin licenses, what's going on?

Original: “Conflux: The True Face of China's Ethereum? On-Chain Data Reveals Hidden Centralization Risks!”

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