Solana continued to dramatically underperform its peers due largely to a decline in usership, network activity, TVL, and selling pressure related to the FTX bankruptcy. Despite the chain’s position as FIFA’s “official blockchain partner,” Algo holders saw the World Cup as a ‘sell the news’ event. Despite the excitement around Algorand’s yearly conference held at the end of November, Decipher, Algorand’s daily average transactions fell 25% in December compared to November, while average TVL dropped 29%. Unique Daily Ethereum ERC-20 UsersĪmong the worst performers in Layer 1 protocols were Algorand (ALGO) -31% and Solana (SOL) -29.9%.
Likewise, L2 settlement activity on Ethereum increased by 13.7% between October and November and a further 7.7% between November and December.
For example, unique daily Ethereum ERC-20 users, or wallets that sent an ERC-20 token, have increased by 4.5% on a 30-day moving average basis compared to November. Thus, ICP was dropped from the MVIS Smart Contract Leaders Index for falling under the $25M/day level required for inclusion.Įthereum remains the dominant L1 as network usage has remained robust and even grew by some measures in December. Still, the positive price performance was not accompanied by rising volumes. Another positive catalyst has been the long-awaited launch of an asset bridge that connects the Ethereum network to the Internet Computer network. The ICP has seen positive price action as the pace of smart contract deployment, called canisters, has accelerated to 16.6% month-to-month in December.
The top performers for the month, among leading smart contract platforms, included Internet Computer (ICP) +5.3% and Ethereum (ETH) -7.5% Still, despite negative news related to both macroeconomics and digital assets, some key Layer-1s remained remarkably resilient. Specifically, the continued fallout from the FTX fraud, multiple Bitcoin miner bankruptcies, and the solvency issues at DCG’s lending entity Genesis presented both fundamental and liquidity-based headwinds. Most Layer-1 smart contract platforms underperformed Bitcoin & Ethereum in December as investors sold what they could to fund redemptions amidst the overall industry deleveraging. Sources: Bloomberg, Messari, CryptoCompare, MVIS, VanEck research as of. MVIS ® CryptoCompare Media & Entertainment Leaders MVIS ® CryptoCompare Smart Contract Leaders MVIS ® CryptoCompare Decentralized Finance Leaders MVIS ® CryptoCompare Infrastructure Application Leaders Rollup technology is rapidly scaling to solve scalability, and transactions already get included much more quickly on-chain than they did three years ago.” Vitalik wrote: “These are all problems that can be solved, and there is a strong drive to solve them.
We think this correlation is something to watch this year. Historically, sturdier relative economic performance in China has coincided with a strong RMB, less onerous capital controls, and resilient BTC. On the positive side, we also note the recent strength of the Chinese RMB amidst a CCP U-turn on COVID-19 and other redistributive policies. Possible downside catalysts include a disorderly DCG bankruptcy, CFIUS blocking BinanceUS’s acquisition of $1B of Voyager crypto assets, hot inflation prints, or a Ripple loss. Possible upside catalysts include a pre-packaged DCG/Genesis bankruptcy or restructuring with new equity financing, an announcement from Saudi Arabia formalizing Bitcoin mining, regulation & licenses, or a Ripple court victory or settlement. Notably, Bitcoin's 30-day volatility is now lower than S&P 500 volatility, which is generally considered unsustainable. December was another tough month for both growth stocks and digital assets as Bitcoin fell 3%, Ethereum -7%, the Nasdaq Composite -9%, and the MVIS Smart Contract Leaders Index -17%.
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