Messari Report: State of the Level One in Q1 2023 Still Buoyant Despite Directionless Market

The recently released report by a recognized market aggregator and thinktank brings together and compares financial, network and ecosystem analysis of 14 Level 1 (L1) smart contract platforms – Avalanche, BNB Chain, Cardano, Ethereum, Harmony, Hedera, NEAR, Polkadot, Polygon, Solana, Stacks, Tezos, TRON, WAX. Main takeaways of this report are as follows:

Due to the relatively high usage and gas fees, Ethereum (ETHUSD), revenue for Q1 of FY23 was $457 million, nearly 2.8 times the combined revenue of all other L1s represented. Hedera saw the largest increase in revenue, up 489% QoQ. This was largely due to an increase in the use of its consensus service, which verifies timestamps and event ordering for Web2 and Web3 applications. These applications include supply chain provenance tracking, DAO vote counting and IoT device monitoring.

The P/S ratio shows the relative price of a network token compared to its revenue. TRON led all L1s represented with a P/S ratio of 16x in 1Q23, followed by Ethereum. WAX was the only network not in the top 20 by market capitalization to hit the top half of P/S ratios. While most networks derive their revenue from transaction fees, WAX's revenue is determined by a 2% tax on NFT trading floors. TRON, Ethereum, Polygon and Hedera were the only networks that had P/S ratios down this quarter, implying continuation of organic growth. The networks with the largest increases in P/S ratio in the quarter were NEAR (100%), Solana (112%) and Harmony (156%).

BNB and Ethereum were the only deflationary tokens during 1Q23 at -5.4% and -0.2%, respectively. The average quarterly change in daily transactions on selected networks was -2%.

Avalanche's numbers included only C-Chain activity. C-Chain transactions were down 82.7% YoY due to numerous subnetwork launches. In accounting for these sub-networks, average daily transaction volume increased 130% YoY. However, none of the current subnets use AVAX for gas.

NEAR token/protocol posted the largest YoY increase in average daily active addresses by 157% due to the launch of https://sweateconomy.com/. Only Avalanche C-Chain and WAX increased their address growth rate in 1Q23. The number of new Avalanche addresses increased 56% over the previous quarter. The number of new WAX addresses increased 38% over the previous quarter.

Solana's average commission per transaction in Q1 2023 was significantly lower than other popular L1s at $0.0003 – primarily due to the introduction of local commission markets (along with so-called priority fees). All networks saw an increase in the total number of dollar-denominated tokens stacked QoQ. Stacks (403%) and Solana (125%) led in quarterly growth. Ethereum retains the lowest bid weight limit.