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Scoring the Blockchain Land Grab — 2020 Q4 Report

The smart contract wars are as hot as ever, with the promise of a greater Defi explosion in 2021 and the massive runup in crypto prices over the last two months. Back in October, I published a blog that took a quantitative approach to score the layer 1 smart contract platforms as of Q3 2020. With developer ecosystems furiously enhancing the platforms, I’m going to revisit my scoring each quarter, so it’s time to look at the latest scores as of Q4 2020.

In my October analysis, Ethereum was way ahead with their first-mover advantage, while well-known competitors like Polkadot, Cosmos, Solana, and Cardano were just launching their mainnets. Has anything changed in the last 3 months? It sure has.

As a reminder, my quantitative analysis compares the layer 1 smart contract platforms across four different criteria:

  • Dapp Activity (50% weighting) — Total Dapps, Daily Active Users, and # of Contracts, which shows current usage through end-user interactions
  • Developer activity (25% weighting) — Showing potential future usage, since the space is still nacient
  • # of Transactions (15% weighting) — Showing raw usage by 24-hour transaction activity
  • Network Value (10% weighting) — Showing interest based on native token demand

A more detailed breakdown of my model is described at the end of this post. Now, on to the results!

Top Smart Contract Platforms as of Q4 2020

Key Changes from Q3 2020

Gas fees and scalability issues aren’t stopping Ethereum from being the de-facto standard smart contract platform. In fact, Ethereum’s score strengthened due to increases in Dapps and daily Dapp activity as well as the recent spike in ETH price. Other notable changes:

  • Cosmos moved into the Top 5 in Q4, gaining the #5 spot and dropping Klaytn out. This is why you see 6 platforms in the chart above.
  • Polkadot, Cardano and Cosmos — three well known, well funded, and recently launched platforms are now in the top 5 strictly because of their developer activity, transaction counts and network value. If these platforms get traction with reliable Dapp activity they could start to eat into Ethereum’s lead.
  • EOS — The platform’s score dropped primarily due to a decrease in Dapp activity between Q3 and Q4 against a massive increase in Ethereum Dapp activity over the same time period. The result has been a score decrease from 19 down to 7.

Is it Polkadot’s Time?

Polkadot is an interesting project. In some respects, it is not a direct competitor and more of a cousin to Ethereum, with parachains to perform specific use cases and a Substrate EVM that runs native Solidity code. Perhaps that is why its token price, developer activity and transaction counts remain strong, resulting in a consistent score. Once we get reliable Dapp data on Polkadot, we might see some interesting things from this platform.

Top 5 Scoring Breakdown for Totals

Here’s a breakdown of the index scores for the top 5 platforms as of Q4 2020:

Top 5 Platforms for each Criteria

Dapp Activity (50% Weighting)

Thoughts on Dapp Activity:

  • As I said in my original post, I believe Dapp activity is the most important metric and therefore receives a 50% weighting (25% for No of Dapps, 15% for Daily Active Users, and 10% for # of Contracts).
  • Ethereum is dominating, getting a perfect score of 50 in Q4 2020. The number of daily active users grew from roughly 23,000 in September to over 90,000 in December, dwarfing all other platform. Ethereum also has over 3000 Dapps on their platform, almost 10 times more than the next closes competitor, EOS.
  • As I mentioned before, the biggest hole in my analysis continues to be access to Dapp stats. Most of the information came from Stateofthedapps and Dappradar. However, of the roughly 29 protocols I analyzed, I could only find reliable Dapp information for 11 of them.

Top 5 Scoring Breakdown for Dapp Activity

Here’s a breakdown of the index scores for the top 5 platforms as of Q4 2020:

Developer Activity (25% Weighting)

Thoughts on Developer Activity:

  • I decided to combine the developer activity on Kusama with Polkadot since Kusama is Polkadot’s testing playground. This catapulted Polkadot into the top 5 platforms both in my Q3 and Q4 analysis.
  • All the big name platforms have the greatest amount of sustained daily developer activity. Cardano’s activity remains robust despite getting less attention than the rest of the top 5.
  • If developer activity for these platforms continues to sustain this pace, look for them to break out of the pack and establish themselves and the main smart contract layer 1 alternatives to Ethereum.
  • Developer Activity includes commits, issues, pull requests and other actions on a repository. Most of the data came from Santiment’s Community API, but I had to look directly at Github insights for some of the others

# of Transactions (15% Weighting)

Thoughts on Transaction Activity:

  • Although EOS continues to have the most transaction activity, the number of transactions per day has dropped precipitously between September and December, by roughly a third. With stagnating numbers across the criteria, EOS is struggling despite raising ridiculous amounts of money in 2017.
  • This is the only category where Ethereum isn’t in the top 5. But as I mentioned in my first post, I’m not a huge fan of this metric since each protocol has different block times and sizes. Nevertheless, it is a proxy for usage, which is why I gave it a nominal (15%) weighting in my model.
  • Most of the data came from Blocktivity.info. Since they didn’t have data on all of the protocols I evaluated, I supplemented with information from the Coinmetrics community API.

Network Value (10% Weighting)

Thoughts on Network Value:

  • Ethereum dominated this category even before the runup in price over the last two months. This analysis considered Ethereum’s value as of 12/31, but it has rocketed another 70% at the time of this writing!
  • Ethereum’s token value obscures what has been an impressive performance by Polkadot and Cardano as well. Both tokens have seen a substantial increase in price.
  • Not to be outdone, Stellar has exploded in price between 12/31 and the time of this writing, nearly tripling in value to over $6bb, representing the largest price increase of the top 5 tokens.

NOTE: Why Did the Q3 Scores Change from my Previous Post?

My original post has the following scores for the Top 5 platforms:

However my latest analysis revised Q3 developer activity data for Polkadot by including activity on Kusama. The combined developer activity on Polkadot and Kusama made it the #1 platform in that category, significantly impacting Tron and Ethereum’s scores in that category. The result was a reduction in Ethereum’s Q3 score and removal of Tron completely from the Top 5.

Scoring Methodology & Data Sources

Any model that weighs different variables will have some degree of subjectivity based on the weightings. My model places more emphasis on the number of Dapp activity on the protocol, because in my view a smart contract platform needs to demonstrate that the community cares about its general computing capabilities. If they just want to transfer tokens, there are plenty of layer 1 protocols that focus only on that.

Let’s look at each dimension and its individual weighting:

Dimensions and Data Sources for my Model

I looked at 29 different protocols — here is a link to my full scoring spreadsheet, if you care about all the details:

https://1drv.ms/x/s!AodJqOJ6VKmj93LlKHXsEXgQqM6n?e=QDRKTZ

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Chad Hahn

Husband, father of 3 boys, 2 time entrepreneur, tech enthusiast (esp blockchain), yellow Whole Brain thinker and supporter of under-served communities