Understanding the Blockchain Interoperability Graph Based on Cryptocurrency Price Correlation

Cryptocurrencies have gained high popularity in recent years, with over 9000 of them, including major ones such as Bitcoin and Ether. Each cryptocurrency is implemented on one blockchain or over several such networks. Recently, various technologies known as blockchain interoperability have been developed to connect these different blockchains and create an interconnected blockchain ecosystem. This paper aims to provide insights on the blockchain ecosystem and the connection between blockchains that we refer to as the interoperability graph. Our approach is based on the analysis of the correlation between cryptocurrencies implemented over the different blockchains. We examine over 4800 cryptocurrencies implemented on 76 blockchains and their daily prices over a year. This experimental study has potential implications for decentralized finance (DeFi), including portfolio investment strategies and risk management.