Recently, there has been a significant decrease in the number of daily active users on Smart Contract Platforms (SCPs), causing worry among investors and developers. Crypto analyst Jamie Coutts views this decline as a necessary cleansing process within the SCP ecosystem, with Ethereum's Pectra Upgrade potentially being a key turning point.
Coutts, known for his work on Bloomberg Intelligence's crypto research product, highlights that this decline is unprecedented, surpassing the bear market of 2022-2023. He points out that daily active addresses have dropped by 40.5% in just five months, marking the largest usage collapse in SCP history. The decrease is attributed to the inflated activity driven by bots and Sybil attacks, which created artificial growth during the previous cycle.
Despite the decline in active addresses, Coutts believes that this does not signify the end of smart contract platforms, but rather a necessary correction to eliminate fake activity. He emphasizes the need for SCPs to offer high-throughput, low-cost, and real settlement capabilities to avoid valuation compression. Platforms integrating stablecoins and real-world assets are expected to attract more value, as the market rewards those enabling genuine economic activity.
The Pectra Upgrade on Ethereum, implemented on May 7, 2025, introduces enhancements to the staking model and validator operations. This upgrade aims to position Ethereum as a leader in the SCP space and has already spurred an increase in ETH staking activities, indicating renewed market confidence. The upgrade also introduces smart accounts, facilitating smart contract logic execution and potentially driving stablecoin integration and scalability.
Coutts forecasts that the crypto market will experience a liquidity-driven rally in the future, with value consolidating around SCPs that can deliver tangible value through real-world applications and stablecoin integration. This aligns with the improvements introduced by Ethereum's Pectra fork and signals a shift towards platforms supporting genuine economic behavior.