Web3 In Numbers: Verified Smart Contracts Surged in Q2 2023 Despite Bear Market

2023.7.27  •  7 min read
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Summary

The second quarter of 2023 witnessed a remarkable rise in verified smart contracts across various blockchains, even amidst a bear market, indicating the continuous development commitment in the space.This report provides an in-depth analysis, highlighting the monthly verified smart contract data for BNB Chain, Ethereum, Polygon, Fantom, Avalanche, Arbitrum, and Optimism.

By comparing the monthly percentages of smart contracts verified on these blockchains, the report aims to highlight the emerging trend of increased verified smart contracts during Q2 2023.

BNB Chain Dominates Q2 with an average market share of 46.5% for total Verified Smart Contracts, Ethereum Follows at 31.3%

Particularly in May, we saw a growth in the total verified Smart Contracts in the industry. Such an indicator can be a proxy for new dApps or projects being launched onto the market, at least directionally, if not exactly.

1. Introduction

The blockchain industry has witnessed significant growth in smart contracts applications over the years. Smart contracts enable decentralized and automated execution of agreements, ensuring transparency and trust among participants. Despite the bear market conditions in Q2 2023, such as the decrease in Venture Capital funding flowing into the space, the number of verified smart contracts continued to rise, underscoring the industry's resilience and the increasing demand for blockchain-based solutions.

2. Methodology

To analyze the rise in verified smart contracts during Q2 2023, we collected and analyzed monthly data for BNB Chain, Ethereum, Polygon, Fantom, Avalanche, Arbitrum, and Optimism. The provided data includes the sums of smart contracts verified on each blockchain for the period from April 2023 to June 2023. The percentages represent the distribution of smart contracts among the blockchains for each month.

3. Analysis & Findings

At a glance over Q2 2023’s data, BNB Chain emerged as the front runner in terms of verified smart contracts, and this reinforces its dominant position within the space and the trust its community placed in its ecosystem. Typically, projects leverages on BNB Chain’s high DAU (of over 1.2 million in Q2 2023) as part of their go-to-market strategy.

Ethereum maintained its position as a leading blockchain, demonstrating steady growth in the percentage of verified smart contracts. Additionally, other blockchains, including Polygon, Fantom, Avalanche, Arbitrum and Optimism, all displayed consistent engagement in their verified smart contract activities.

BNB Chain exhibited a significant rise in market share, increasing from 38% at the beginning of Q2 to 45% by the end of the quarter. This performance underscores BNB Chain's dominance and the high level of trust placed in its infrastructure by developers and users.

Ethereum maintained its position as the second-largest blockchain for verified smart contracts. It exhibited steady growth, with percentages ranging from 31% in April 2023 to 34% in June 2023, signifying its enduring relevance and adoption.

Polygon demonstrated resilience in verified smart contracts, starting at 10.8% in April, 2023 and consistently maintaining a presence in the range of 10-12% throughout Q2 2023. Its scalability solutions and low transaction costs make it an attractive option for developers.

Fantom's verified smart contracts percentages started at 3.3% in April, 2023 and gradually declined to 1.4% by June 2023. While Fantom experienced a decrease in its verified smart contract activities, it remains a significant player in the Web3 developer ecosystem.

Avalanche demonstrated a relatively stable performance in verified smart contracts, with percentages ranging from 2.2% to 2.7% throughout Q2 2023. Its high throughput and low latency have attracted developers, resulting in consistent smart contract activities.

Arbitrum showcased remarkable growth in verified smart contracts, starting at 0.9% in April 2023 and reaching 4.5% by June 2023. This significant increase positions Arbitrum as a noteworthy blockchain considering the developer activity related to smart contracts in Q2, 2023 . Its compatibility with Ethereum and promises of scalability and reduced fees have likely contributed to its growing popularity among developers.

Optimism demonstrated consistent growth in verified smart contracts, starting at 1.2% in April 2023 and reaching 1.5% by June 2023. Optimism's focus on Ethereum Layer 2 scaling solutions has attracted attention and participation from developers seeking faster and cheaper transactions.

Overall, Q2 2023 highlights the increasing importance placed on security, reliability, and scalability within the blockchain ecosystem, as evidenced by the rise in verified smart contract activities across multiple blockchains.

4. Layer 2s: The new (scaling) Trend in Web3

  • BNB Chain experienced significant adoption of its layer 2 scaling solution, zkBNB in 2023. The BNB Chain community demonstrated their commitment to innovation by launching BNB Greenfield, a decentralized data storage blockchain. Moreover, the ecosystem welcomed opBNB, an Optimism-based Layer 2 solution on BNB Chain, which garnered tremendous interest with over 11 projects actively building on the testnet.
  • Linea is among several zkEVM solutions that seeks to combine the security and performance of zkProofs with full EVM compatibility, Consensys launched its testnet on 28 March 2023.
  • Arbitrum Foundation announced the launch of DAO governance for its Arbitrum Nova and Arbitrum One networks. A governance token called $ARB was introduced to power the new decentralized structure.
  • Polygon’s Q2 metrics for its zkEVM Mainnet Beta reflect the network’s steady growth in activity.

5. How Do We Make Sense of This?

The rise in verified smart contracts during Q2 2023, despite the bear market conditions, carries several learnings for the market.

Resilience of Blockchain Technology despite the downtrend: The continued growth in verified smart contract deployment highlights the resilience of blockchain technology. It indicates that developers and users remain confident in the potential of blockchain and decentralized applications, even during market downturns.

Diverse Blockchain Ecosystem: The comparison of different blockchains reveals a diverse ecosystem with multiple platforms attracting developers and users. This diversity of options provides developers with choices that suit their specific requirements, promoting healthy competition and innovation in the blockchain space.

Potential Shift in Developer Preference based on specific features: The growth in verified smart contract percentages for blockchains like Arbitrum and Optimism suggests that developers may be exploring these blockchains for factors surrounding scalability, lower fees, and enhanced user experience.

Maturing Layer 2 Solutions: Layer 2 solutions, opBNB and zkBNB on BNB Chain such as Arbitrum and Optimism, are gaining prominence for addressing scalability and cost issues associated with Ethereum. The growth also indicates the market's increasing reliance on these solutions to overcome the limitations of the base layer.

Given what we have observed in Q2 2023, we believe the following will continue to unfold or pick up in momentum for Q3 2023:

Emphasis on Security and Trust: We predict a focus on enhancing smart contract security, with platforms investing in advanced cryptography and audits.

Stable momentum in Layer 2 Solutions Adoption: Layer 2 solutions like opBNB, and zkBNB are poised for more growth due to their scalability and cost-effectiveness.

Increased interoperability: Expect increased cross-chain interoperability, due to the growth in smart contracts across multiple blockchains.

Usability Innovation: Given the shift in developer preference towards user-friendly blockchains with lower transaction fees, we expect further innovation in the usability and performance of blockchains. This could include improvements in transaction speed, reduction in gas fees, and more intuitive user interfaces.

Regulatory Landscape: Regulatory scrutiny will likely increase. Compliance will be key for organizations and developers. Organizations and developers should stay abreast of regulatory developments and ensure their operations and applications are compliant.

Education and Advocacy Boost: The growth in smart contracts and blockchain tech highlights a need for enhanced education about their benefits and risks. General public should be educated about the benefits and risks associated with blockchain technology and decentralized applications.

Adaptation Strategy: In the short term, businesses should adapt to these trends. In the long term, stakeholders must consider how they will influence blockchain technology's broader adoption.

6. What Industry Leaders Think About Web3 Growth and Development

BNB Chain gathered insights from industry leaders on the growth and development of the Web3 ecosystem and what this signifies for the industry's future in Q3 and beyond.

Eljaboom, Founder of Ajoobz said, “As per the latest data, verified contracts have seen a considerable rise despite the crypto winter. This is a perfect example of industry's dedication and determination to make crypto a safe, secure and scalable place for everyone.”

Wilson Wei, CEO and Co-Founder of CyberConnect & Link3 added, “The momentum in Web3 is on the rise and we're getting closer by the day to bring this powerful new technology to the world. With the recent developments in the account abstraction space and an increase in the number of consumer-facing dApps, it is only a matter of time until we start onboarding Web2 users who we haven't been able to access Web3 due to the complexity of blockchains and crypto wallets.”

Yogev Shelly, CEO of TinyTap and Council member of Open Campus said, “We are seeing multiple industries shifting from Web2 to Web3, such as education moving on-chain. We expect to see continued growth as more options become available. For example, the use of smart contracts for Publisher NFTs whereby co-publishing rights — which would normally require extensive written contracts and personal connections — can now be traded worldwide instantly as tokenized digital assets.”

Sarun Vichayabhai, Founder and CEO of Playbux shared, “Undoubtedly, Web3 is experiencing rapid growth towards mainstream adoption. We have witnessed this firsthand at Playbux with the introduction of our “watch to earn" feature, with users consuming over 100 million minutes of content within just a few months.

This highlights the importance of providing compelling content to users, which will in turn make them want to invest their time and gas fees on-chain. As this trend continues, projects that can offer simple and engaging use cases for users to interact with, will witness a continuous upward trajectory in adoption and success.”

7. Conclusion

The rise in verified smart contracts during Q2 2023, despite the bear market conditions, signifies the resilience and growing interest in blockchain technology. BNB Chain's dominant performance in verified smart contracts, along with the consistent growth across other blockchains, highlights the industry's emphasis on security, trust, and scalability.

As the market evolves, collaboration, competition, and innovation will continue to shape the blockchain ecosystem, paving the way for the widespread adoption of decentralized applications.

8. References

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