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State of Cardano Q4 2023

Published 16.2.2024

Analytical company Messari has published the State of Cardano Q4 2023 report. In the report, you will find relevant statistics about the project, such as the number of daily transactions, the number of active addresses, TVL, etc. It is possible to compare the data from Q1 with the data from Q4. Messari publishes similar reports on many projects. We took reports from several other projects and compared some data with Cardano. This context is important because looking at data in isolation doesn't make sense when we can have a bigger picture.

About Messari Reports

It is beneficial for the crypto industry that a third party analyzes the on-chain data of various projects and issues publicly available reports. Everyone can see how the project has been doing in the last year. We like that the reports are concise yet contain a lot of useful data.

We looked at the Q4 2023 reports of the following projects: Cardano, Ethereum, Cosmos, Polkadot, Avalanche, Algorand, Solana, Ripple, and Bitcoin.

The projects differ from each other in many areas, so not always there is available the data we wanted to compare. Bitcoin uses PoW consensus, so it has no staking. Not all projects have treasuries.

It is somewhat surprising that Messari is not consistent regarding tracked data across projects. Data, that are not present in the reports, are available on the Messari platform. Maybe this is because the reports come from different authors. Different analysts seem to have different eyes on the projects.

For some projects, we were unable to find out the number of daily active addresses, TVL, Nakamoto coefficient, daily transaction volume, etc. from the reports. Unfortunately, the comparison will not be complete.

It is possible that we failed to find the data in the report in some cases. It is also possible that some data is entered incorrectly in the table. That is certainly not our intention.

It is a pity that the authors do not cooperate in the analysis of the projects and the data is not more consistent. For example, with Bitcoin, you will find information about the settled value, but not with other projects. From our point of view, this is basic data that should be in all reports about all projects.

We also lack, for example, DEX volume for DeFi ecosystems, which are almost all ecosystems except Bitcoin. The authors of the reports sometimes use different terminology, which complicates the comparison of projects.

Look at the table which compares some statistics for selected projects. All data is taken from the Messari reports.

Cardano

Let's take a quick look at Cardano first.

In Q1 2023, there were 67K daily transactions, which is the same as in Q4. In Q3, the number of transactions dropped to 60K per day, so in Q4 we see quarterly growth.

Cardano is the only case where the reports distinguish between regular transactions and dApp transactions (which is determined by the project's architecture and the availability of this information). The number of dApp transactions is increasing. In Q1, Cardano processed 38K. In Q4 it was 49K transactions. That's an increase of 11K dApp transactions per day.

In total, Cardano processed 116K transactions.

The number of daily active addresses was 60K in Q1, which was roughly 20K more than in Q4. So there was a decline.

TVL grew significantly. In Q1 2023 it was 138M. In Q4 it was 400M. Importantly, TVL is increasing not because of the increasing market value of ADA, but because of the new ADA coins that are locked in DeFi. In Q1 it was 366 ADA. In Q4 it was 669 ADA. In this case, we are observing a gradual constant growth.

The treasury balance is also growing. This is logical. Every epoch, the protocol inserts ADA coins into the treasury as defined by the defined rules. Currently, only the Catalyst project takes ADA from the treasury. There was 1.43B ADA ($860M) in treasury in Q4.

In Q1, 1,128 pools minted at least one block. In Q4 it was only 1.087. This is a slight but steady decline.

Engaged stake fell from 69% in Q1 to 65% in Q4.

The Nakamoto coefficient decreases. It was at 38 in Q2. In Q4 it was at 31.

You can find much more information in the report. We encourage you to check it out.

Cardano is growing in important metrics. From our point of view, these are primarily the number of transactions (regular and dapp transactions) and TVL. The community should think about why the number of daily active addresses is not growing. Next, we should deal with why the Nakamoto coefficient decreases.

We will deal more with other data in the context of other projects.

Comparison With Other Projects

In the number of daily transactions, Solana leads with 40M transactions (we do not know if failed transactions are included).

In second place is Avalanche with 1.5M transactions (or 2,5M transactions if Subnets are included).

Third place went to Ripple with 1,3M transactions. Fourth place belongs to Ethereum with 1M transactions. This is a very similar number of transactions processed by Algorand.

Bitcoin processes roughly 480K transactions per day.

It is worth noting that when it comes to transactions, Bitcoin is not a dominant network. People prefer networks with lower fees and fast transactions (and finality).

It can be said that the older SC platforms are, the more they are used. This is an advantage mainly for Ethereum as the first player, but also for Algorand, Cosmos, and Avalanche. Younger ecosystems such as Cardano, Polkadot, and also Ripple (XRP Ledger) are slightly behind in the number of users and transactions.

Cardano processes roughly 100K transactions per day, which is the same as the Cosmos ecosystem. It is worth noting that Polkadot processes 4x more transactions than Cardano.

The result affects the design of Cardano, which can perform multiple user requests in one transaction. Without deeper analysis, it is difficult to determine by what coefficient to multiply 'TPS'. It can be a number between 2-10.

We guess that Cardano daily processes a similar number of transactions to Polkadot, Cosmos, and Bitcoin, but probably not more than Algorand and Avalanche.

In the case of Cosmos, it is important to look at the number of IBC transfers (transfers in: 381K, transfers out: 864K).

Interestingly, the number of daily active addresses does not correlate with the number of transactions. Ethereum is the winner with 0.4M active addresses. In second place is Bitcoin with 937K addresses and Solana in third place with 190K addresses.

On Solana, each active user appears to make an average of 210 transactions per day. Is it realistic? Rather, it is not. It indicates that Messari also includes those transactions that failed. If each user made only one transaction, the number of transactions on Solana would not be 40M, but only about 200K, roughly the same as on other new platforms. However, this is only our guess.

Relatively few users use Ripple, only 30K per day. This is a surprising result in the context of a high number of transactions. However, for this project, the users may be institutions that send many transactions daily. That's an average of 43 transactions a day. That's realistic.

A similar disparity between the number of transactions and the number of daily active addresses can also be observed with Avalanche.

We would expect more daily users with Polkadot and Cosmos. It is possible that the Messari team would not be able to correctly count the number of active addresses across application chains. On the other hand, it is not significantly less than Cardano, which was used by roughly 42K people daily in Q4.

In terms of active daily addresses, Cardano lags behind Ethereum, Bitcoin, Avalanche (if we count subnets), and Solana.

Unfortunately, the Messari team was unable to measure TVL on Cosmos, Polkadot, and Ripple. This may be due to the complexity of this task.

The winner is Ethereum with a TVL of around 31B USD. Solana is second with a TVL of around 1.4B USD. Third place goes to Avalanche with 1B USD.

Cardano is doing slightly better than Algorand with 400M.

TVL is a very treacherous metric as it is heavily influenced by the coin's market cap. While Cardano's TVL is smaller than Solana and Ethereum in USD value, over the past year TVL has grown in native coins. For Ethereum and Solana, TVL has been falling in native coins. However, in Q1 2024, TVL is rising for all projects in USD and coin value due to the bull market.

In engaged stake, which is the percentage of coins in the circulating supply that are staked, Solana leads. 70% of SOL coins are staked. Cosmos is in second place with 67% and Cardano is in third place with 65%. Algorand and Ethereum have a very low stake, less than 25%.

When it comes to transaction fees, it's no surprise that on average people pay the most for Ethereum (12 USD) and Bitcoin (10 USD). The lowest fees are on Solana (0.0002 USD) and Ripple (0.002 USD). For Cardano, it was 0.15 USD.

Information on daily transaction volume and DEX volume is missing from Messari reports. For Bitcoin, it is 10.5B in USD value. A comparison would be interesting, but unfortunately, we don't have enough data.

From other sources, it is possible to find up-to-date information about the data that is missing from the table. But that would be somewhat misleading, as the crypto market is dramatically reviving. It doesn't make sense to compare current data with Q4 2023 data.

In this article, we wanted to look only at the data that is available from the Messari reports.

Additional Notes

In the article, we only looked at Ethereum, not L2s in this ecosystem. Many L2s are doing very well, but Messari does not publish separate reports about them.

The rich L2 ecosystem harms Ethereum in some statistics. For example, the TVL of L2s grew from 1.7B USD in Q1 to 3.2B USD in Q4. In the case of Ethereum, we see a drop in TVL from 23B USD to 22B USD. The L2 ecosystem is draining liquidity and users from the Ethereum network. A similar decrease can be observed in the number of daily transactions (from 1.06M to 1.02M) or in active daily addresses (from 0.44M to 0.40M).

With Ethereum, we can observe slower growth in unique addresses, suggesting fewer new users joined. This may be due to two factors. The growing L2 ecosystem, but also the growing number of users of alternative L1s.

Some of the ecosystem is growing relatively fast compared to Cardano judging by some stats. For example, at Cosmos, we can observe a significant growth in the number of active addresses from 19K in Q1 to 25K in Q2. Polkadot saw similar growth from 6.5K in Q1 to 10K in Q4.

Although Avalanche is very good at this, the number of daily transactions fell from 2.9M in Q4 2022 to 2.5M in Q4 2023. However, the number of active addresses increased from 50K to 71K (including subnets) during the same period.

It is interesting for Algorand that the number of staked ALGOs is decreasing, from 3.7B in Q4 2022 to 1.9B in Q4 2023. The number of stablecoins is also dropping dramatically. USDT and USDC together reached 350M USD in October 2022. Now it is 75M USD.

Solana is probably used primarily for value transfer, as the DeFi ecosystem is failing. TVL fell from 245M USD in Q1 to 148M USD in Q4. This is an opposite trend to that of Cardano.

Bitcoin is a relatively stable ecosystem. Daily settled value, the number of active addresses and transactions was roughly the same in Q1 and Q4. In this regard, Bitcoin is stagnating. However, Inscriptions transactions grew from 7K in Q1 to 193K in Q4. That's dramatic growth.

Conclusion

Projects that are ahead of Cardano in key statistics delivered the DeFi ecosystem earlier. The lead is understandable.

The IOG team went in the direction of Partner Chains, which is probably a reaction to the success of Avalanche and Polkadot projects.

It is important to note that on-chain analysts may not detect or notice fake data. These can be, for example, transactions sent by bots from addresses to addresses. TVL pumped by VC funds has a different value than TVL which grows organically.

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