State of Pyth Network Q2 2024

Key Insights

Performance Analysis

Pyth’s TVS showed some volatility throughout the quarter, ultimately falling 15% QoQ. However, it remained above $4 billion throughout all of Q2 and ended at $4.7 billion, which is 158% higher than its TVS at the end of Q4’23. The above chart is based on DefiLlama data, which does not yet cover Ethena

Demand grew for Pyth oracles as price updates increased 17% QoQ, reaching 246 million updates in Q2. After transitioning

Since Pyth transitioned its oracles on Solana to a pull model, most price updates have been sponsored. Sponsored updates

Activity on EVM chains also grew in Q2, reaching 2.5 million price updates, up 23% QoQ. Base, zkSync Era, and Arbitrum saw outsized growth in price updates in Q2, processing 227,000 (+455%), 250,000 (+37%), and 172,000 (+45%) updates throughout the quarter. The growth of Base’s dominance indicates that Pyth oracles are becoming increasingly popular among various other chains. Arbitrum’s growth may have been partly inspired by the grant

Yet to show meaningful revenue due to price updates (which is expected until it increases the oracle fee), Pyth Entropy added $19,000 to Pyth’s revenue in Q2. Because 99% of price updates are processed on three chains, Pyth’s increase of the oracle fee on Sui, Aptos, and Solana will likely have the most impact on revenue. Pyth is in a unique position in that it can significantly increase its oracle fee without disrupting the end user experience — especially since most of the volume is on high-throughput chains. Even a small fee adjustment (to the user) could greatly increase protocol revenue. As Pyth continues to onboard new chains and get integrated into more applications, its potential to grow revenue will become more potent as it considers adjusting the oracle fee for all protocols.

Pyth Entropy was launched at the end of February 2024. It started to pick up meaningful traction in late May. Since launching, it has processed 265,000 requests, bringing in $19,000 in revenue for the protocol. In addition to price updates, entropy requests are another avenue for Pyth to achieve protocol revenue. As Pyth expands Entropy’s support to more chains, requests and revenue should continue growing.

The Dencun/EIP-4844 upgrade

Though Pyth’s transactions as a percent of total Solana transactions fell to 6% at the end of Q2, it is still one of the most used protocols on Solana. This drop was foreseeable (and predicted the previous quarter

Despite a 68% fall in the price of PYTH and a 72% drop in the amount of staked PYTH (leading to a larger amount of PYTH eligible to be sold), the market cap only fell by 22%. This is largely attributable to the 142% growth in the circulating supply, as 2.1 billion PYTH was unlocked in Q2’24. This unlock had two principal effects: a high degree of sell pressure and the initial spike in market cap size in May. This foreseeable jump in sell pressure may have encouraged PYTH stakers to unstake, adding sell pressure to the asset. The added pressure ultimately led to the dollar amount in PYTH staked dropping from $1.3 billion to $359 million by the end of Q2.

PYTH’s first token unlock occurred in the middle of Q2’24. On May 19, 2024, 2.13 billion PYTH was distributed to the following parties/for the following purposes:

Push oracles push price updates to individual blockchains at set intervals, paying gas costs for every onchain update. Adding price feeds or decreasing latency between onchain updates incurs more costs for the oracle network, impeding its ability to scale. Additionally, during times of congestion and high volatility, price updates can be unreliable with different Solana users paying priority fees to publish valuable transactions (i.e., liquidations or DEX trades). Pyth’s pull oracle

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