It’s been a while since I did one of these, although I have indirectly discussed the topic plenty. But as speculation returns to crypto, there’ll be all sorts of utterly pointless numbers paraded, so it’s ever more critical to focus on actually useful numbers.

Now, of course, economic activity metrics can be gamed, but when we’re talking about billions of dollars, it gets significantly harder to do so without being obvious to onchain analysis. Further, considering a slew of metrics gets us closest to understanding what chains are actually being used. It is also important to note that there can be chains with large consumer activity but negligible economic activity (though no such chain exists today) - which is absolutely fine, but that also implies that chain isn’t worth much.

I have tried coming up with an exact number, but perhaps that’s something a Token Terminal or a DefiLlama can do. So, instead, I’m going to separate things into ballparks by orders of magnitude and note that this is my subjective opinion. As explained before, there are two categories: active and passive.

The active metrics I’m looking at are: token transfers (largely dominated by stablecoins, BTC and ETH), DEX volumes, NFT volumes, fees paid by users as a sanity check. Passive metrics: Adjusted TVL (eliminating double-counting and other gameable metrics), usage as SoV, usage as collateral in DeFi.

So, let’s begin with Active:

Tier 1: $X0B

1. Ethereum

2. Tron

Tier 2: $XB

1. Bitcoin

Tier 3: $X00M

1. Arbitrum One

2. BSC

Tier 3: <$X00M

Everything else, but at this point it’s negligible and not worth discussing.

Ethereum is settling $20-$25B in token transfers daily - dominated by stablecoins and ETH. Ethereum is already an integral part of the global financial system. For reference, BIS settles trillions every day. Tron is less diversified, and it’s mostly USDT. However, USDT on Tron alone accounts for $10B per day, easily bringing it into the same order of magnitude as Ethereum.

It is also interesting to examine differences between activity on Ethereum and Tron. Ethereum has much higher average transfers, suggesting it’s being used more by organisations and institutions to transfer money. Meanwhile, Tron has much lower average transfers, but many more active users (yes, this is a flawed metric, but over the long term filtering combined with onchain analysis it does give you a decent idea). This corroborates anecdotal evidence that Tron is being used en masse via CEXs.

At first glance, you may assume that this is because Tron is cheaper, but this isn’t quite true - USDT transfers cost ~$1 on Tron nowadays, so it’s purely just network effects. Users use Tron because their friends, merchants use it for USDT, and it does everything they want it too.

Bitcoin’s disadvantage is it’s just BTC (not counting Omni and such, which have pretty low volumes anyway). As a result, it only settles $3B-$5B per day. This is still the highest for a crypto native asset, but the lack of stablecoins means BTC is one order of magnitude lower than Ethereum or Tron.

I’ll note Ethereum also has the highest DEX volumes, NFT volumes and other smart contract economic activity - however, all of these combined are less than $2B, so the stablecoin, BTC and ETH transfers dominate economic activity in general.

Passive:

Tier 1: $X00B+

1. Bitcoin

2. Ethereum

Tier 2: $X0B+

1. Tron

2. BSC

Tier 3: Once again, skipping this.

It goes without saying alternative SoV/reserve asset is the #1 usecase for crypto, and BTC still dominates in this regard. Despite Ethereum settling thousands of other assets of different types, BTC is now ahead. You may recall the last time they were similar, but as BTC has appreciated faster in anticipation of spot ETFs, it secures a larger amount. Still, Ethereum is not far behind, settling $400B in value, with $25B-30B in protocols.

Tron is once again a one-trick pony, but boy is it crypto’s greatest trick! With $43B in USDT, and $5+B in protocols, Tron is easily the #3. It’s worth noting that $TRX has proven to be a terrible SoV - it’s basically trading like a pure computing platform play with zero monetary premium (indeed, one could argue, negative). BSC comes in well below, however it does have a more diversified base.

I’ll note that Arbitrum One may not have the most passive, but this is also expected as it can simply rely on Ethereum’s. You could argue, that Ethereum L2s basically inherit all of Ethereum’s passive economic activity, once decentralized (Arbitrum One is pretty close! It’s at Stage 1 already, and 2 or 3 upgrades away from the final Stage 2)

Once again, everything else is negligible.

Here are my overall thoughts: crypto is now a maturing industry settling significant economic activity, and is already an integral part of the global financial system. I have not even mentioned off-chain activity.

The market has spoken pretty clearly, and it’s evident Ethereum, Tron and Bitcoin are the dominant players. Ethereum L2s can tap into Ethereum’s liquidity, of course. Can this change? Sure. But there needs to be a good reason, and 15 years later, the reasons just aren’t there. The above three platforms offer great services in their respective fields, and the tradeoffs are appreciated by their users.

So, the question is, what will it take for significant economic activity to migrate away from Ethereum, Tron or Bitcoin? 1) Better security and sustainability guarantees; 2) Global scale $100B+ marketing and onboarding campaign; 3) Something new we haven’t seen/imagined yet. My best guess is Base + USDC pairing can offer a bit of 1) and 2) in the long term to take market share away from Tron/USDT, but remains to be seen if they can execute. Certainly, the BSC+BUSD gambit failed, so I’ll believe it when I see it.

Sources used for data: Defillama, Coinmetrics, Glassnode, Token Terminal, Tronscan, Moneymovers

It’s been a while since I did one of these, although I have indirectly discussed the topic plenty. But as speculation returns to crypto, there’ll be all sorts of utterly pointless numbers paraded, so it’s ever more critical to focus on actually useful numbers.

Now, of course, economic activity metrics can be gamed, but when we’re talking about billions of dollars, it gets significantly harder to do so without being obvious to onchain analysis. Further, considering a slew of metrics gets us closest to understanding what chains are actually being used. It is also important to note that there can be chains with large consumer activity but negligible economic activity (though no such chain exists today) - which is absolutely fine, but that also implies that chain isn’t worth much.

I have tried coming up with an exact number, but perhaps that’s something a Token Terminal or a DefiLlama can do. So, instead, I’m going to separate things into ballparks by orders of magnitude and note that this is my subjective opinion. As explained before, there are two categories: active and passive.

The active metrics I’m looking at are: token transfers (largely dominated by stablecoins, BTC and ETH), DEX volumes, NFT volumes, fees paid by users as a sanity check. Passive metrics: Adjusted TVL (eliminating double-counting and other gameable metrics), usage as SoV, usage as collateral in DeFi.

So, let’s begin with Active:

Tier 1: $X0B

1. Ethereum

2. Tron

Tier 2: $XB

1. Bitcoin

Tier 3: $X00M

1. Arbitrum One

2. BSC

Tier 3: <$X00M

Everything else, but at this point it’s negligible and not worth discussing.

Ethereum is settling $20-$25B in token transfers daily - dominated by stablecoins and ETH. Ethereum is already an integral part of the global financial system. For reference, BIS settles trillions every day. Tron is less diversified, and it’s mostly USDT. However, USDT on Tron alone accounts for $10B per day, easily bringing it into the same order of magnitude as Ethereum.

It is also interesting to examine differences between activity on Ethereum and Tron. Ethereum has much higher average transfers, suggesting it’s being used more by organisations and institutions to transfer money. Meanwhile, Tron has much lower average transfers, but many more active users (yes, this is a flawed metric, but over the long term filtering combined with onchain analysis it does give you a decent idea). This corroborates anecdotal evidence that Tron is being used en masse via CEXs.

At first glance, you may assume that this is because Tron is cheaper, but this isn’t quite true - USDT transfers cost ~$1 on Tron nowadays, so it’s purely just network effects. Users use Tron because their friends, merchants use it for USDT, and it does everything they want it too.

Bitcoin’s disadvantage is it’s just BTC (not counting Omni and such, which have pretty low volumes anyway). As a result, it only settles $3B-$5B per day. This is still the highest for a crypto native asset, but the lack of stablecoins means BTC is one order of magnitude lower than Ethereum or Tron.

I’ll note Ethereum also has the highest DEX volumes, NFT volumes and other smart contract economic activity - however, all of these combined are less than $2B, so the stablecoin, BTC and ETH transfers dominate economic activity in general.

Passive:

Tier 1: $X00B+

1. Bitcoin

2. Ethereum

Tier 2: $X0B+

1. Tron

2. BSC

Tier 3: Once again, skipping this.

It goes without saying alternative SoV/reserve asset is the #1 usecase for crypto, and BTC still dominates in this regard. Despite Ethereum settling thousands of other assets of different types, BTC is now ahead. You may recall the last time they were similar, but as BTC has appreciated faster in anticipation of spot ETFs, it secures a larger amount. Still, Ethereum is not far behind, settling $400B in value, with $25B-30B in protocols.

Tron is once again a one-trick pony, but boy is it crypto’s greatest trick! With $43B in USDT, and $5+B in protocols, Tron is easily the #3. It’s worth noting that $TRX has proven to be a terrible SoV - it’s basically trading like a pure computing platform play with zero monetary premium (indeed, one could argue, negative). BSC comes in well below, however it does have a more diversified base.

I’ll note that Arbitrum One may not have the most passive, but this is also expected as it can simply rely on Ethereum’s. You could argue, that Ethereum L2s basically inherit all of Ethereum’s passive economic activity, once decentralized (Arbitrum One is pretty close! It’s at Stage 1 already, and 2 or 3 upgrades away from the final Stage 2)

Once again, everything else is negligible.

Here are my overall thoughts: crypto is now a maturing industry settling significant economic activity, and is already an integral part of the global financial system. I have not even mentioned off-chain activity.

The market has spoken pretty clearly, and it’s evident Ethereum, Tron and Bitcoin are the dominant players. Ethereum L2s can tap into Ethereum’s liquidity, of course. Can this change? Sure. But there needs to be a good reason, and 15 years later, the reasons just aren’t there. The above three platforms offer great services in their respective fields, and the tradeoffs are appreciated by their users.

So, the question is, what will it take for significant economic activity to migrate away from Ethereum, Tron or Bitcoin? 1) Better security and sustainability guarantees; 2) Global scale $100B+ marketing and onboarding campaign; 3) Something new we haven’t seen/imagined yet. My best guess is Base + USDC pairing can offer a bit of 1) and 2) in the long term to take market share away from Tron/USDT, but remains to be seen if they can execute. Certainly, the BSC+BUSD gambit failed, so I’ll believe it when I see it.

Sources used for data: Defillama, Coinmetrics, Glassnode, Token Terminal, Tronscan, Moneymovers