Detailed Breakdown of Jamie Coutts’ Q3 2023 Report on Smart Contract Platforms

On 4 October 2023, Jamie Coutts, a crypto market analyst at Bloomberg Intelligence, launched half one in every of his Q3 2023 report card. In response to Coutts, the market capitalization of good contract platforms has elevated by 6% year-over-year. He additionally famous that lively addresses have grown by 25%, including 1 million new addresses. Coutts reported that quarterly revenues have shot up by 82.9%, and the sector has notably lowered its losses from $2.28 billion to $420 million. Nevertheless, he identified that each capital and exercise volumes have seen a decline.

Coutts noticed that when evaluating Q3 to Q2 of 2023, the market capitalization of good contract platforms has decreased by 12%. He additionally acknowledged that core adoption metrics have suffered, largely as a result of Q2 meme coin surge. Regardless of this, Coutts highlighted that lively addresses have proven resilience by being much less price-sensitive, reducing solely by a modest 2.9%.

In response to Coutts, the general market drawdown stays at round 70%. He identified that Ethereum’s Layer 1 (ETH L1) and Layer 2 (ETH L2) platforms have seen 12-month value will increase of 25% and 20%, respectively. In distinction, he famous that different Layer 1 platforms (Alt-L1s) have declined by 29%. Coutts acknowledged that this has contributed to Ethereum’s market cap dominance, which has risen to 72%.

Coutts noticed that lively addresses have barely decreased by 3% however have proven resilience, indicating a degree of consumer engagement regardless of a decline in transaction charges and volumes in comparison with Q2.

Coutts emphasised that the rise in Ethereum’s Layer 2 options has been a major think about serving to the community regain market share from Alt-L1 platforms. He reported that over the previous yr, lively tackle development on Layer 2 has outpaced that of Alt-L1s by twice as a lot, albeit from a decrease base.

In response to Coutts, Alt-L1 platforms account for 80% of lively addresses, however their development price is decelerating. He acknowledged that the majority transactions nonetheless happen on Alt-L1 platforms, however the legitimacy of those transactions is unclear. Coutts additionally famous that regardless of excessive transaction throughput and quantity, few Alt-L1s are worthwhile, attributing this to capability oversupply and sub-optimal market match.

Coutts reported that Ethereum’s Layer 1 has been extremely efficient in changing transactions and lively addresses into price income, boasting a ratio of 26x for charges to lively addresses and eight.4x for charges to transactions. In stark distinction, he famous that Alt-L1s lag behind with a 2.3x and 0.3x ratio, respectively.

Coutts acknowledged that regardless of a slowdown in adoption and challenges akin to liquidity and U.S. regulatory headwinds, the community results from the incremental enhance in lively addresses are considered as optimistic. He additionally talked about that technical scalability enhancements and falling prices are contributing to community development.

Coutts concluded that whereas the speed of adoption has slowed down, the optimistic community results stemming from a modest enhance in lively addresses through the 2022/2023 bear market are noteworthy. These results persist regardless of challenges like liquidity points and U.S. regulatory constraints. Coutts additionally famous that technological developments in scalability and reducing operational prices are steadily aiding the expansion of good contract platforms. As for Ethereum, regardless of uncertainties within the treasury market that might problem present theses, Coutts stays largely optimistic. On the flip aspect, he maintains a much less promising future for a lot of Alt-L1 platforms attributable to lackluster demand and ineffective tokenomics.

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