Usage of a zero mixin (ring size =1)

Question

Zero mixin (ring size=1) transactions are no longer allowed (except for sweeping dust). When they were allowed before the March 2016 hard fork they were quite common.

Is there evidence to support the theory that most zero mixin usage (when allowed) came from exchanges? If so do we know if their reason was:

1. Attempt to save on transaction fees
2. Indifference to untraceability of transactions
3. Attempt to make it easier to track withdrawal transactions for customer identification or support purposes

Are there any known exchanges that voluntarily used non zero mixins for withdrawals (thereby enhancing user privacy) prior to being required by the protocol to do so?

Answer 1

It is known that Poloniex switched to non zero mixin for a short time for withdrawals. However, they reverted to zero not long after, and I believe this to be due to the increased fees. Unfortunately, exchanges have to deal with people sending very small amounts of every coin, as they mine directly to the exchange address, or if they don't, they send everything as soon as they've got any, for selling as soon as possible. This means that Poloniex ends up with a lot of small outputs. When people withdraw larger amounts (or maybe even not so large ones), Poloniex has to find a lot of outputs to build that withdrawed amount, making them all the more vulnerable to high transaction fees when using non zero mixin.

Answer 2

I can't speak on the specifics of any exchange, but we can guess some information from looking at the historical ringsize data.

Between September 2015 and March 2016, the Monero wallet used a default ringsize of 3. You can see that only a small proportion of the network used a higher ringsize during this period. That is because Monero's network was most used by pools and exchanges, who generally selected ringsize 1.