How BNB Chain, Ethereum helped smart contracts defy Q2 bear market
- BNB Chain increased its market share from 38% to 45% in Q2.
- Layer-2 solutions like Arbitrum and Optimism exhibited a promising rise.
Once restricted to facilitating the trading of cryptocurrencies, the benefits of blockchain technology harness a diverse range of industries today. The promise of decentralization, enhanced security and transparency has led traditional players to reorient their strategies in favor of Web3.
Much of the revolution has been made possible by the introduction of smart contracts. As is well known, smart contracts are self-executing programs on the blockchain which activate when pre-programmed criteria are fulfilled.
The trend, which originated on the Ethereum [ETH] chain, has now spilled over to nearly all major networks, leading to an avalanche of decentralized gaming and finance applications over the last few years.
Smart contracts’ juggernaut rolls on
Despite stagnating prices of top digital assets and dwindling investments by institutional players, the industry saw a “remarkable rise” in the number of verified smart contracts. The first few weeks of May especially recorded a significant uptick.
Interestingly, this was also the time when the global market cap fell by more than 7%, according to CoinMarketCap. The contrast reflected the industry’s resilience and unwavering confidence in decentralized applications (dApps).
These networks boosted growth
As per the report, BNB Chain retained its dominance throughout the quarter, increasing its market share by seven percentage points to 45%.
The network’s large user base, with daily active user count numbering close to 1.3 million, as per Token Terminal, has been a major factor behind projects preferring it over rival chains. The sharp growth in smart contracts was corroborated by other on-chain indicators.
The total transaction count in May was 19% more than March’s count and was the most prolific month for transactions in 2023 so far. Additionally, the monthly average of daily active users also spiked 8% in May from the previous month.
Ethereum, which popularized the concept of smart contracts, maintained its position as the second-largest home for these self-executing programs. Its continued relevance could be gauged by steady growth in market share, from 31% in April to 34% by the end of June.
A glance at on-chain indicators revealed that the Ethereum’s monthly transaction count, like in the case of BNB Chain, spiked in May. A total of 33.5 million transactions were executed in May per Token Terminal, representing a slight growth from March’s figures.
Furthermore, the monthly active user count jumped to about 5.5 million in June. This made July the most productive month for user activity in 2023 at press time.
The era of L2s
Layer-1 solutions led the smart contracts deployment trend. However, the emergence of layer-2 solutions was another success story which deserved a mention.
The largest L2 network Arbitrum [ARB] clocked impressive growth numbers, increasing its slice of the market to 0.9% in April to 4.5% by the end of Q2.
Similarly, Optimism [OP] showcased steady growth, expanding its share to 1.5% in June from 1.2% in April. Worth highlighting was Optimism’s ambitious Bedrock upgrade in June, which led to a sharp drop in overall transaction fees. This might well have attracted developers and played a big role in boosting smart contracts growth.
Ethereum scaling solutions have been on the radar of numerous blockchain-based projects. Increased transaction throughput and lower transaction fees, without sacrificing security, have contributed to the growing popularity of these L2 networks among sophisticated verticals like Web3 gaming and DeFi.
Assessing recent growth
As per DappRadar, more than 388k smart contracts with over 14k dApps were active across blockchains at the time of writing.
Over the last month, Solana [SOL] took the lead in terms of on-chain dApp transactions, with a 70% increase since the favorable verdict in the Ripple vs SEC case. Investors thus aggressively considered Solana, hoping for reduced regulatory pressures in the future.
On the other hand, market leader BNB Chain experienced a marked decline. Notably, dApps recorded only about 683.8k transactions in the network, compared to 2.48 million on Solana.