Jamie Coutts’ Q3 2023 Report Card on Smart Contract Platforms
In his Q3 2023 report card, Jamie Coutts, a crypto market analyst at Bloomberg Intelligence, highlights the performance of smart contract platforms. According to Coutts, the market capitalization of these platforms has increased by 6% year-over-year. Additionally, active addresses have grown by 25%, with 1 million new addresses added. Quarterly revenues have surged by 82.9%, and losses have reduced significantly from $2.28 billion to $420 million. However, both capital and activity volumes have seen a decline.
Decrease in Market Capitalization and Core Adoption Metrics
Coutts compares Q3 to Q2 of 2023 and notes that the market capitalization of smart contract platforms has decreased by 12%. The core adoption metrics have suffered due to the surge of meme coins in Q2. Despite this, active addresses have shown resilience, decreasing only by a modest 2.9%.
Ethereum’s Dominance and Alt-L1 Decline
Ethereum’s Layer 1 (ETH L1) and Layer 2 (ETH L2) platforms have witnessed price increases of 25% and 20% respectively over the past year. In contrast, alternative Layer 1 platforms (Alt-L1s) have declined by 29%, contributing to Ethereum’s increased market cap dominance at 72%. Active addresses have slightly decreased by 3% but remain engaged despite lower transaction fees and volumes compared to Q2.
Alt-L1 Platforms’ Challenges and Ethereum’s Success
Alt-L1 platforms account for 80% of active addresses but are experiencing a decelerating growth rate. Most transactions still occur on Alt-L1 platforms, but their legitimacy is unclear. Coutts highlights that Ethereum’s Layer 1 has been effective in converting transactions and active addresses into fee revenue, while Alt-L1s lag behind. Despite challenges such as liquidity and regulatory headwinds, the increase in active addresses has positive network effects. Technical scalability improvements and falling costs are also contributing to network growth.
Positive Outlook for Ethereum, Concerns for Alt-L1 Platforms
Coutts concludes that the rate of adoption has slowed down, but the network effects from the increase in active addresses during the bear market are noteworthy. Despite uncertainties in the treasury market, Coutts remains optimistic about Ethereum. However, many Alt-L1 platforms face a less promising future due to lackluster demand and ineffective tokenomics.
Hot Take: Q3 Crypto Ecosystem Report Card Highlights
Jamie Coutts’ Q3 2023 report card on smart contract platforms reveals both positive and concerning trends. While there has been growth in market capitalization, active addresses, and quarterly revenues, there have been declines in capital and activity volumes. Ethereum’s dominance has increased, but alternative Layer 1 platforms have suffered. Despite challenges, the increase in active addresses has positive network effects. Coutts remains optimistic about Ethereum’s future but expresses concerns for many Alt-L1 platforms.
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