Layer 1: Activity report September 2024 (Ethereum, Solana, Sui, Hyperliquid)
October 24, 2024
After a quiet summer period, the cryptocurrency market rebounded in September. Despite notable performances for Layer 1 blockchains, on-chain activity has not necessarily returned. In this report, we detail the metrics of the main Layer 1 blockchains to provide a clear and actionable picture of the evolution of this sector.
Key information
- Sui (SUI) showed the best performance in the Layer 1 sector (+122.9%) in September 2024.
- Sui's TVL increased by 61.9%, which is less than SUI's price, indicating a potential outflow of capital.
- Avalanche's BOOST campaign is proving successful, as the quantity of stablecoins climbed 12.4%, despite a drop in DEX activity.
- The number of transactions and active addresses on The Open Network (TON) exploded, while volume on DEX fell, suggesting that activity is predominantly non-financial.
- Solana dominates on-chain metrics: 1.1 billion transactions and 3.8 million active addresses per day on average, twice as many as in August.
- The end of Hyperliquid's points campaign doesn't seem to have had any impact on the protocol, as TVL and the quantity of stablecoins continue to grow steadily.
Financial Analysis of the Layer 1 Sector
Price and Market Cap
After a particularly difficult month of August 2024 for the cryptocurrency market, Bitcoin (BTC) finally rebounded in September, posting a gain of +7.38%. Following its lead, most of the major cryptocurrencies from Layer 1 blockchains also showed positive performances.
Tron (TRX) was the only asset in this category to close September 2024 with a loss (-1%), which is a logical correction after a countertrend performance in August (+23%), mainly due to the launch of SunPump, a memecoin creation platform inspired by Solana's Pump Fun. Ether (+3.5%), Cronos' CRO (+3.7%), TON (+5.3%), and BNB from the BNB Chain (+6.5%) all recorded gains, although they were smaller than BTC's during the same period. It's worth noting that Ether underperformed other assets in its category, despite having shown the worst performance in August (-22.6%).
Among the most notable performances, Solana (SOL) surged by 12.6% during the period. Solana's success, which has been solid since early 2023, also benefited other Layer 1s fitting into the narrative of monolithic blockchains: ultra-scalable, extremely fast, and with low transaction fees. Thus, in September, Aptos (APT) increased by 18.4%, Sei (SEI) soared by 72.5% (not covered in this report), and especially Sui (SUI) exploded with a 122.9% increase.
Several factors explain Sui's rise, including the end of token distribution from the Private Sale and the recent Mysticeti update from July, which significantly improved its performance while reducing transaction fees.
Financial Revenues
Protocol revenues correspond to fees generated by user activity and indirectly by decentralized applications and other protocols built on Layer 1 networks, with part of these revenues often burned. It’s important to note that these are gross revenues, not accounting for various network expenses such as token unlocks or validator rewards.
In September 2024, the average revenues of Layer 1 blockchains were around 700,000 dollars. Ethereum remains by far the most profitable network, generating 68 million dollars in just one month, marking a significant increase of 95% compared to August 2024. However, these revenues are still far from the levels reached at the start of 2024, before the introduction of EIP-4844, which exceeded 500 million dollars. As a result, the protocol’s profits remain deeply negative (-129 million dollars).
Tron reported 48.1 million dollars in revenue for September 2024, a 21% decline compared to the previous month. We’ll explore later how this correlates with the drop in on-chain activity on Tron, explained by the premature end of the memecoin trend on the SunPump application.
Lastly, Solana completes the podium of Layer 1 blockchains generating the highest revenues, with 11.8 million dollars in September 2024. Although this figure may seem low compared to Ethereum, it must be viewed in light of the transaction fees: approximately 0.0085 dollars for Solana versus 1.47 dollars on Ethereum (base fees). Solana’s net profits also remain negative in September 2024 (-300 million dollars).
Noteworthy progressions also include Sui and The Open Network, whose revenues increased by 79% and 100%, respectively, in September. In Sui’s case, revenues remain relatively low (around 69,000 dollars), while TON exceeded 2.4 million dollars, surpassing both the BNB Chain and Avalanche.
Fundamental Analysis of the Layer 1 Sector
Stablecoins
The market capitalization of stablecoins on Layer 1 blockchains is a particularly relevant metric as it reflects capital movements between different networks. In September 2024, stablecoin flows showed slight overall growth, signaling a recovery in activity on Layer 1 blockchains.
Except for Solana, which recorded a 3.8% decrease in the circulating amount of stablecoins, all other networks posted positive performances. Tron, which has the second-largest stablecoin capitalization, grew by 0.6%, reaching 59.9 billion dollars. Similar performances were seen for Cronos (0%), BNB Chain (0.1%), and Hyperliquid (0.4%), with very modest flow variations.
In contrast, Ethereum continues to show stable but moderate growth, with a 2.2% increase in its stablecoin capitalization, reaching 84.6 billion dollars. This is the highest level since the last bull cycle, although it remains below the historical highs of over 100 billion dollars.
Among the notable increases, Avalanche saw its stablecoin capitalization rise by 12.4%, once again exceeding the 2 billion dollar mark. This growth is largely attributable to the BOOST campaign organized by the Avalanche Foundation, launched in July 2024, which aims to reward users and liquidity providers across several key protocols in the ecosystem.
Finally, emerging blockchains continue to generate interest, with Sui and Aptos reaching new historical highs in terms of circulating stablecoins, with respective growths of 15.8% and 17.8%. However, the amounts remain relatively low: 420 million dollars for Sui and 211 million dollars for Aptos, far behind Solana’s 3.8 billion dollars and the BNB Chain’s 5 billion dollars.
Total Value Locked (TVL)
The Total Value Locked (TVL) generally increased across the main Layer 1 blockchains. To begin with, Ethereum saw positive capital inflows as its TVL rose by 7.3%, while ETH's price increased by 3.5%. The same trend was observed for Solana, with a TVL growth of 13.79% (compared to 12.6% for SOL), the BNB Chain with a TVL increase of 14.5% (versus 6.5% for BNB), The Open Network with a TVL rise of 21.5% (versus 5.3% for TON), and Aptos with a TVL increase of 30% (versus 18.4% for APT).
In fact, the TVL growth for these Layer 1 networks outpaced the increase in their market capitalization during September 2024. In other words, the expansion of their decentralized finance ecosystems is partly due to user capital inflows rather than solely driven by the market growth of their tokens.
On the other hand, despite a significant 61.9% rise in TVL, the Sui blockchain saw a capital decrease, as the price of SUI surged by 122.9% during the same period. Overall, September presented an opportunity for all Layer 1s to recover some of the losses incurred in August 2024.
On-Chain Activity Analysis of the Layer 1 Sector
Active Addresses and Transaction Counts
As previously mentioned, on-chain activity on Sui exploded in September 2024, with daily active addresses exceeding 1.2 million and a transaction count of 127.4 million, representing respective increases of 181% and 21% compared to August.
Solana continues to dominate the on-chain metrics, with over 1.1 billion transactions in September and an average of 3.8 million daily active addresses, twice as many as in August. This significant growth may be explained by renewed interest in memecoins, boosted by the recent statements of entrepreneur and influencer @MustStopMurad, who introduced the “memecoin supercycle” theory at Token2049 in Singapore.
The Open Network also continues its growth, with nearly 1 million daily active addresses in September and a total of 90 million transactions, representing respective increases of 98% and 97.5% compared to August.
Volumes on DEXs
Except for Sui (+28%), decentralized exchange volumes declined in September 2024: -5% for BNB Chain, -9% for Hyperliquid, -18% for Avalanche, -20% for Aptos, -28% for Ethereum, -38% for Tron and Solana, and -64% for The Open Network.
It is interesting to note that while the number of active addresses and transactions on TON nearly doubled, DEX trading volumes dropped by 64% during the same period. This suggests that the network’s activity is driven more by non-financial use cases, such as Play-to-Earn games, which have seen huge success in recent months.
It's also worth noting that, despite a drop in the volume of transactions passing through Ethereum's decentralized exchanges, the protocol's revenues soared by 95% in September. This was due to a significant rise in transaction fees on the network, which had reached their lowest level in August.
Additionally, Hyperliquid is now ranked second among Layer 1 blockchains in terms of DEX transaction volume, with 30 billion dollars. This is slightly less than Ethereum (35 billion dollars) but more than Solana or the BNB Chain (25 billion and 18 billion dollars, respectively).
As we mentioned earlier in this report, Tron's revenues are down by around 21%, due to a slump in on-chain activity. The number of active addresses and daily transactions fell by 4.5% and 1.9% respectively, while volumes on decentralized exchanges plummeted by 37%. This was due to the departure of investors who had tried their luck on the SunPump memecoin creation application, whose interest waned as quickly as it appeared.
Conclusion
Overall, the data presented in this report offers a contrasting view of the Layer 1 sector in September. While the capitalization of the various cryptocurrencies - and a fortiori, the TVL of blockchains - are on the rise, on-chain activity is rather slow and does not reflect market enthusiasm.
As is often the case, fundamentals have a more limited impact on the market than short-term narratives. Recent weeks have been marked by growing interest in latest-generation blockchains (Sui, Aptos, Sei), which is partly reflected in on-chain metrics. It will be important to continue monitoring these indicators to detect whether this trend will continue over the long term or fall back soon.