Smart Contracts Deployed on Ethereum Have Plummeted 66% Since January of 2023

Ethereum’s blockchain has seen a significant drop in deployed smart contracts over the past few months. According to a recent report from BanklessTimes.com, the number of smart contracts deployed on Ethereum dropped 66% from January to February 2023, plunging from 1,276,182 to 438,184.

This downward trend began in December last year and showed no sign of slowing. Then the deployed contracts stood at 1,880,613 after falling from 1,893,883 seen just a month before.

Far-reaching Implications

The implications of the declining smart contract deployment on Ethereum are numerous and far-reaching. As the leading platform for decentralized applications, a decrease in activity could hurt its further development and growth.

The most notable effects could be in terms of reduced adoption, both by developers and end users. With the creation of fewer new projects or reduced maintenance of existing projects, developers may be unwilling to use Ethereum as their blockchain platform of choice. That could lead to less investment and slower growth for the entire ecosystem.

According to Jonathan Merry, CEO of BanklessTimes:

It’s clear that Ethereum needs to rethink its approach if they want to remain relevant in an increasingly competitive marketplace. We’re seeing an increased emphasis on different use cases beyond simple tokenization – something which could provide some much-needed support for projects built on top of Ethereum’s infrastructure.

BanklessTimes CEO, Jonathan Merry

What Explains the Declining Deployment of Smart Contracts?

The reasons behind the decline are varied. Firstly, the Ethereum blockchain is struggling to cope with its success. It’s been one of the most successful projects in terms of user numbers and transaction volumes. As such, it’s experiencing scalability issues that could make it difficult for developers to deploy new smart contracts.

Another contributing factor is the increasing competition among smart contract platforms such as Solana, Binance Smart Chain, and NEO. These alternatives offer faster speeds at lower costs than Ethereum – both important considerations for developers when choosing which platform to use for their projects. As these competitors become more popular, more developers are likely to turn away from Ethereum in favor of more viable alternatives.

Additionally, there have been growing concerns about the security of smart contracts on Ethereum’s blockchain. Although it is still one of the safest platforms for such transactions, malicious actors have exploited vulnerabilities in some smart contract codes. Such incidents may have caused people to become warrier about using them in general and prompted a pullback from Ethereum-based projects.

Finally, the decline could also be due to the high transaction fees associated with Ethereum’s blockchain. As demand for transactions has increased over time, so too have gas fees which can make transactions prohibitively expensive for some users. This could also explain why people increasingly seek alternative blockchains for their smart contract needs.