Smart Contract Platform Migrations—Can Ethereum’s Pectra Upgrade Turn the tide?

Recently, the number of daily active addresses on Smart Contract Platforms (SCPs) has sharply declined, causing concern for investors and developers.

Meanwhile, Ethereum's Pectra upgrade could be a turning point, with crypto analyst Jamie Coutts calling the current situation an ecosystem purification.

SCPs Witness Significant Drop in Active Users

Jamie Coutts, who built Bloomberg Intelligence's crypto research product, said this is the worst decline ever recorded in SCP history.

He also noted that this situation is much worse than the 2022-2023 bear market, with daily active addresses dropping 40.5% in just five months.

"This is the largest collapse in usage in SCP history," Coutts wrote.

Coutts' analysis provides deeper insight into the broader crypto ecosystem, while witnessing an increase in global liquidation and stablecoin market capitalization reaching ATH.

Although the field seems to be undergoing a purification, Coutts said this decline does not indicate the death of smart contract platforms. Instead, this is a necessary ecosystem purification.

The analyst believes the decrease in daily active addresses is due to several key factors, including the rise of artificial activity.

"Most growth from the previous cycle was artificial: Usage was inflated by bots and Sybil farms, programs creating temporary attraction without sustainability. This decline reflects the purification of fake activity, not the death of the field," Coutts explained.

The increase of bots and Sybil attacks, where bad actors create multiple fake identities to manipulate platform usage metrics, have artificially inflated activity metrics across different smart contract platforms.

Now, as these fake users are being eliminated, the true growth potential of SCPs is becoming clearer.

Moreover, this trend suggests that SCPs with weak application ecosystems or limited use cases will face significant value compression. This is especially true without stablecoin integration or real-world asset (RWA) applications.

Coutts noted that many SCP tokens risk value compression if their platforms do not provide high processing capacity, low costs, and genuine payment capabilities.

The market is likely to reward mature platforms capable of supporting real economic activity. This includes stablecoin transactions, payments, and native AI applications.

"...in the future, value will focus on platforms enabling high processing, low costs, genuine payments, and agent automation," he added.

Ethereum Staking Increase After Pectra

Interestingly, these predictions align with the recent Ethereum Pectra upgrade, deployed on 07/05/2025.

The Pectra upgrade introduces important features that can help Ethereum, the largest smart contract platform, maintain its leading position in this field. Specifically, the upgrade improves Ethereum's staking model and validator operations.

CryptoQuant recently pointed out a significant increase in ETH staking around Pectra upgrade news. Specifically, before Pectra upgrade news, ETH staking saw a net outflow of about 1.02 million ETH, reflecting uncertainty.

However, after the news, staking recovered with an inflow of 627,000 ETH, showing new market confidence in Ethereum's staking ecosystem.

"Before Pectra news (16/11 – 15/02): ETH Staking decreased from ≈34.88M to 33.86M ETH, net outflow ~1.02M ETH. This phase reflects market uncertainty and slight staking position reduction before the upgrade. After Pectra news (16/02 – 16/05): Total staked ETH increased from 33.78M to 34.41M ETH — net inflow ~627K ETH. Showing new confidence in the staking process after the upgrade," CryptoQuant analyst Kripto Mevsimi wrote.

Along with that perspective, Bohdan Opryshko, co-founder and COO at Everstake, told BeInCrypto that the Pectra upgrade could be Ethereum's most institution-friendly update. He said this upgrade is the clearest signal that Ethereum is ready for conservative capital flow.

"For the first time, institutions can stake at a large scale with operational clarity and reduced complexity. This is a green light for conservative capital to enter native Ethereum staking," Opryshko told BeInCrypto.

Moreover, Pectra's introduction of smart accounts allows Ethereum wallets to execute smart contract logic. This could boost stablecoin integration.

Simultaneously, it can enhance scalability. This will make Ethereum more suitable for processing real economic activities like payments and financial transactions.

However, Coutts emphasized the difference between price action and network activity, a common phenomenon in the crypto space. While the market is stable, activity on many SCPs remains sluggish.

Coutts notes that this difference will not last long. More sophisticated capital flows will increasingly flow to platforms that anchor real economic behavior, especially through stablecoin flows and payments.

"The market may be stabilizing, but activity is not," More sophisticated capital flows will increasingly shift towards chains that anchor real economic behavior, especially through stablecoin flows, payments, and native AI applications," Coutts said.

Finally, Coutts predicts that a price increase due to liquidation will return, driven by significant liquidity expected to enter the system in the coming months.

However, he warns that value is likely to accumulate in a subset of SCPs that can provide tangible value through real-world applications and stablecoin integration. This view aligns with the structural upgrades brought by Ethereum's Pectra Fork.