-
The recent downturn in daily active addresses on Smart Contract Platforms (SCPs) highlights the necessity for ecosystem refinement, according to crypto analyst Jamie Coutts.
-
This shakeout reveals underlying growth potential, as prior metrics were inflated by bots and Sybil attacks.
-
“Pectra upgrade enhances Ethereum’s staking and prepares it for real-world applications,” Coutts remarked.
Declining daily active addresses on Smart Contract Platforms reveal true growth potential, while Ethereum’s Pectra upgrade boosts staking confidence.
Decline in Active Users Reflects Ecosystem Cleansing
According to Jamie Coutts from Bloomberg Intelligence, we are witnessing the most significant decline in daily active addresses on Smart Contract Platforms (SCPs) in their history. The drop of 40.5% in just five months is unprecedented and signals an essential shift in the market dynamics.
Coutts remarks, “This is the largest usage collapse in SCP history,” emphasizing its severity compared to previous downturns such as the 2022-2023 bear market. The decline exposes the reality beneath inflated activity numbers associated with artificial growth.
During this period of contraction, an increase in global liquidity and a historic high in stablecoin market capitalization are providing a contrasting backdrop. While many SCPs face challenges, Coutts asserts that this decline is not an indicator of impending obsolescence, but rather a crucial cleansing phase.
Much of the inflated usage seen during the prior cycle is attributed to artificial activity driven by bots and Sybil farms. “Much of the past cycle’s growth was artificial: usage inflated by bots and Sybil farms,” Coutts explains, advocating for the elimination of these “fake” users to reveal genuine growth potential.
This trend suggests that SCPs lacking robust application ecosystems may experience valuation compression, particularly those without stablecoin integration or real-world asset applications. According to Coutts, “Platforms that fail to provide high throughput and low-cost real settlement mechanisms risk substantial valuation declines.”
Ethereum’s Pectra Upgrade and Its Implications
The recent Pectra upgrade, which came into effect on May 7, 2025, serves to bolster Ethereum’s market position among SCPs. By introducing new features that enhance Ethereum’s staking model, the upgrade is set to shape how users interact with the Ethereum network.
Data from CryptoQuant shows a marked increase in ETH staking following the Pectra announcement. Prior to the news, staking had suffered a net outflow of approximately 1.02 million ETH. However, following the upgrade’s announcement, there was a net inflow of around 627,000 ETH, signaling renewed confidence among stakeholders.
“ETH staking dropped from ≈34.88M to 33.86M ETH before the Pectra news, highlighting market uncertainty,” stated CryptoQuant analyst Kripto Mevsimi. “Afterward, it rebounded, illustrating revitalized confidence post-upgrade.”
Bohdan Opryshko, co-founder and COO at Everstake, emphasized that the Pectra upgrade represents a watershed moment for institutional involvement in Ethereum’s staking ecosystem. His comments underline that the upgrade facilitates institutional engagement through enhanced operational clarity.
“For the first time, institutions can stake at scale with operational clarity and reduced complexity. It’s a significant signal for conservative capital,” Opryshko noted.
Furthermore, the introduction of smart accounts in the Pectra upgrade enables Ethereum wallets to perform complex smart contract functions, potentially driving increased stablecoin integration and enhancing scalability for financial transactions.
Despite the promising upgrades, Coutts highlights a notable disconnect between price action and network activity in the crypto market. While prices may stabilize, the activity among many SCPs remains sluggish. He concludes that this disparity will not persist forever, as sophisticated capital is anticipated to migrate towards platforms that anchor real economic behavior.
“Markets may be stabilizing, but activity is not,” he suggests, anticipating that capital will focus on infrastructure supporting practical economic applications, particularly through stablecoin use and financial transactions.
Looking forward, Coutts predicts that a liquidity-driven rally may emerge, fueled by increased liquidity entering the market. “Value will likely collect among SCPs capable of delivering tangible real-world applications,” he asserts, reinforcing the positive outlook for Ethereum’s functionalities following its Pectra fork.
Conclusion
The current state of Smart Contract Platforms marks a pivotal transition—what is perceived as a decline may ultimately pave the way for authentic growth and stronger foundations. Ethereum’s Pectra upgrade could serve as a catalyst for recovery, particularly as it bolsters staking confidence and real-world application capabilities. Traders and investors should remain vigilant, as the market’s fluid dynamics suggest that only platforms offering sustainable value will thrive.
