Smart Contract Platforms See 40.5% Drop in Active Addresses as Ecosystem Cleanses

There has been a significant decline in daily active addresses across Smart Contract Platforms (SCPs) in recent months, raising concerns among investors and developers. This decline is the most severe ever recorded, surpassing even the 2022-2023 bear market, with daily active addresses dropping by 40.5% in just five months. This collapse is seen as a necessary cleansing of the ecosystem, as much of the past cycle's growth was artificial, inflated by bots and Sybil farms, and incentive programs that created temporary traction without stickiness.

The rise of bots and Sybil attacks, where bad actors create multiple fake identities to manipulate a platform’s usage metrics, has artificially inflated the activity numbers across various smart contract platforms. As these fake users are being weeded out, the real growth potential of SCPs is becoming clearer. This trend suggests that SCPs with weak application ecosystems or limited use cases will face significant valuation compression, especially without stablecoin integration or real-world asset (RWA) applications.

Crypto analyst Jamie Coutts notes that many SCP tokens risk valuation compression if their platforms do not offer high throughput, low-cost, and real settlement capabilities. The market will likely reward mature platforms capable of supporting real economic activity, including stablecoin transactions, payments, and AI-native applications. Coutts predicts that value will concentrate in platforms that enable high-throughput, low-cost, real settlement, and agentic automation.

Ethereum’s Pectra Upgrade, which went live on May 7, 2025, introduces key features that could help Ethereum stay ahead in the playing field. Specifically, the upgrade improves Ethereum’s staking model and validator operations. Before the Pectra upgrade news, there was a net outflow of around 1.02 million ETH, reflecting uncertainty. However, after the news, staking rebounded with a 627,000 ETH inflow, signaling renewed market confidence in the Ethereum staking ecosystem.

Bohdan Opryshko, co-founder and COO at Everstake, described the Pectra upgrade as Ethereum’s most institution-friendly update. He believes the upgrade is the clearest signal that Ethereum is ready for conservative capital. For the first time, institutions can stake at scale with operational clarity and reduced complexity, making it a green light for conservative capital to get involved in native Ethereum staking.

Further, Pectra’s introduction of smart accounts allows Ethereum wallets to execute smart contract logic. This could drive stablecoin integration and enhance scalability, making Ethereum better suited to handle real economic activities such as payments and financial transactions. Coutts highlighted a divergence between price action and network activity, a common phenomenon in the crypto space. While markets stabilize, activity on many SCPs remains stagnant. Coutts notes that this divergence will not last, as more sophisticated capital will increasingly flow toward platforms that anchor real economic behavior, especially via stablecoin flows and payments.

Finally, Coutts predicts that a liquidity-driven rally will return, fueled by the significant liquidity expected to enter the system in the coming months. However, he cautions that the value will likely accrue to a subset of SCPs that can deliver tangible value through real-world applications and stablecoin integration. This sentiment aligns with the structural upgrades brought by Ethereum’s Pectra fork.