State of Hedera Q1 2025

Key Insights

• HBAR’s circulating market cap decreased 32.9% QoQ to $6.9 billion. Nevertheless, its market cap rank amongst all tokens remained unchanged QoQ at 18.
• DEX volumes on Hedera averaged $10.8 million per day in Q1, increasing 0.5% QoQ, maintaining the all-time high recorded in the previous quarter.
• Hedera’s stablecoin market capitalization increased 91.7% QoQ, closing Q1 at $72.6 million. Stablecoins continue to make their way into DeFi on Hedera, with over $5.5 million worth of USDC on Bonzo Finance alone.
• Daily average transactions increased 25.8% QoQ to 708,500. This growth can be attributed to Hedera’s Crypto Service transactions, which increased 103.6% QoQ, rising from 237,300 to 483,100.
• HBAR’s circulating supply grew 10.4% QoQ, closing Q1 at 42.2 billion. By the end of next quarter, 46.2 billion HBAR (92.4% of the total supply) is expected to be circulating.

Primer

Hedera (HBAR) is a high-performance, secure, and sustainable public, permissioned distributed ledger (DLT) network. Hedera is governed by a council of up to 39 of the world’s leading institutions, with community input on the network’s features and ecosystem standards via Hedera Improvement Proposals (HIPs). While anyone can submit a transaction and view the network history and data, only pre-approved entities run the nodes that validate transactions and participate in consensus. While members of the Council currently operate Hedera’s validator nodes, the network plans to “eventually become permissionless for consensus”. Although Hedera’s network operation is currently permissioned in nature, the division of responsibility across 30 geographically and industry-diversified (collusion-proof) council members is unique among public networks.

The Hedera Network offers an optimized version of the Besu EVM for smart contracts (Hedera Smart Contract Service) alongside a native tokenization service (Hedera Token Service) and a high-throughput data writing and verification service (Hedera Consensus Service). These services are known as the Hedera Network Services, which developers can use in a permissionless fashion to build decentralized applications in a variety of programming languages. The Hashgraph Consensus Algorithm powers the network, delivering high throughput, fair ordering, and low-latency consensus for all transactions.

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Key Metrics

Financial Overview

Market Cap and Revenue

After rising significantly in Q4’24, the circulating market capitalization of HBAR declined 32.9% QoQ from $10.3 billion to $6.9 billion. However, HBAR remained the 18th largest token by market cap. The circulating supply of HBAR increased 10.4% this quarter to 42.2 billion HBAR, compared to a 1.7% increase in Q4. The price of HBAR decreased 39.2% QoQ from $0.27 to $0.16. The decrease in HBAR’s price can be partially attributed to the increased uncertainty of the global economic outlook, as cryptocurrencies across the board fell in Q1.

Transaction fees on Hedera Network decreased 55.4% QoQ to 946,700 HBAR. However, dollar-denominated fees decreased only 5.1% QoQ to $232,700. The decrease in Hedera Network’s revenue can be attributed to HBAR transfer volume, which declined 33.5% QoQ from 62.5 billion to 41.6 billion in Q1.

Revenue contracted for all of Hedera’s network services in Q1. Hedera’s Consensus Service revenue decreased 87.1% QoQ to 4,300 HBAR, while the Hedera Token Service decreased 41.7% QoQ to 270,300 HBAR. Hedera’s Crypto Service revenue decreased by 59.2% QoQ to 246,200 HBAR, and Hedera’s Smart Contract Service decreased by 57.4% QoQ to 417,800. All other sources of HBAR revenue decreased 51.9% QoQ to 8,000 HBAR.

Supply Dynamics

Hedera’s native token HBAR serves multiple network functions. It is used to pay network transaction fees, staked by validators to secure the network in the Proof-of-Stake (PoS) consensus algorithm, and rewarded to validators for securing and operating the network. Users can delegate their HBAR to network validators and earn a portion of staking rewards. In the future, the network plans to enable staking for permissionless public validators.

HBAR’s circulating supply grew 10.4% QoQ, closing Q1 at 42.2 billion. With this growth, 84.4% of the total fixed supply of 50 billion is now circulating. HBAR is distributed each quarter as reported through the Hedera Treasury Management Report. The report forecasts that 46.2 billion HBAR (92.4% of the total supply) will be circulating by the end of next quarter. The report also details that over 3.7 billion HBAR (7.4% of the total supply) will be used to support the ecosystem and open-source development.

Network Overview

Usage

The daily average number of active accounts declined 33% QoQ from 10,100 to 6,700. However, new accounts on the Hedera Network grew 6% QoQ from 7,800 to 8,200.

Following a 99.6% decrease in Q4’24, average daily transactions rose 25.8% QoQ, from 563,200 to 708,500. Transaction activity is now more evenly distributed across all of Hedera’s network services, with the Q1 percentage share of average daily transactions broken down as follows:

• Crypto Service: 68.4% share (+26.2 percentage points (ppts) QoQ)
• Smart Contract Service: 19.7% share (-3.9 ppts QoQ)
• Consensus Service: 8.6% share (-19.7 ppts QoQ)
• Token Service: 2.9% share (-2.6 ppts QoQ)
• Other: 0.3% share (0.0 ppts QoQ)

The decline in Hedera’s Consensus Service transactions can largely be attributed to Avery Dennison’s atma.io platform ceasing use of Hedera’s Consensus Service. Messari has previously reported that atma.io represented the majority of transactions on Hedera.

At the end of Q1, 15.9 billion HBAR was staked (-23.0% QoQ), representing 37.7% of the circulating and 31.9% of the total supply. This high staking percentage relative to the circulating supply can be attributed to entities such as Hashgraph, which stake their HBAR allocations, and the Hedera Treasury, which assists validators in meeting the minimum staking threshold to participate in network consensus. It’s worth mentioning that these entities have chosen not to collect staking rewards. As of Q1 close, 63.1% of staked HBAR do not receive rewards.

Hedera Network staking data was unavailable between Jan. 29, 2025, and Feb. 19, 2025. During this period of time, the total amount of HBAR staked decreased by 22.3% to 15.9 billion. Most of the withdrawn HBAR belonged to the no-rewards category of staking, which decreased by 4.5 billion HBAR (30.5% of the no-rewards staked supply). The rewards category of staking remained relatively unchanged, only declining 1.7% during this period.

Development

Daily average active contracts grew by 213.3% in Q1 from 200 to 600. Moreover, daily Active contracts reached an ATH of 6,300 on March 28, 2025. Throughout the quarter, Hedera has actively introduced improvements for various developer-focused tools and products via various Hedera Improvement Proposals (HIP) like HIP-755, HIP-756, and HIP-991 (detailed below).

Enhanced Smart Contract Capabilities

On March 26, 2025, Hedera upgraded its smart contract functionalities by introducing two Hedera Improvement Proposals (HIP-755 and HIP-756) as part of its mainnet release 0.59. HIP-755 enabled smart contracts to directly handle scheduled transactions within the Hedera Smart Contract Service (HSCS). This allows for autonomous execution of complex transactions, including schedule authorizations, signature management, and generation of synthetic transaction confirmations. Complementing this, HIP-756 introduced the capability for smart contracts to initiate scheduled token creation and manage coordinated account roles, e.g., treasury accounts, directly from the contract logic. These improvements simplify complex multi-party workflows and reduce operational dependencies for Hedera’s smart contracts.

Monetization and Access Control in Hedera Consensus Service

Hedera introduced HIP-991 on March 26, 2025, which brings new functionality to the Hedera Consensus Service (HCS). This proposal enables the creation of an optional fee for HCS messages that affect a specific topic. A topic is a unique identifier assigned to each message that acts as a classifier, grouping all messages under a given topic. This facilitates clear organization and separation of HCS messages. Operators are entities or individuals responsible for managing these message topics and can now monetize topic usage. Operators can set a fee for submitting messages under a topic they manage and require that fee be paid in HBAR or fungible tokens created via the Hedera Token Service (HTS). This upgrade makes the HCS more suitable for structured and controlled environments, benefiting DAOs, automated computing systems, and premium content distribution platforms.

Hiero: Hedera’s Move Toward Decentralized Open-Source Governance

On Feb. 3, 2025, Hedera took a strategic step towards decentralization by donating its complete codebase, which includes core services, SDKs, and development tools, to the Linux Foundation Decentralized Trust (LFDT). LFDT is an open-source initiative that supports neutral governance frameworks, enabling broader community involvement in technology development. This transition positions Hedera within a larger collaborative environment, enhancing governance transparency, ensuring sustainability, and potentially attracting greater industry participation through collective stewardship of the project’s technology stack.

Ecosystem Overview

DeFi

Hedera DeFi TVL in USD fell 41.7% QoQ from $166.6 million to $97.1 million. Furthermore, TVL in HBAR decreased 4.1% QoQ from 620.6 million to 595.0 million. The delta between the decrease in USD TVL and HBAR TVL indicates that the depreciation of the price of HBAR is responsible for the decline in USD TVL, not capital outflows. At the end of the quarter, Hedera ranked #37 by TVL among blockchain networks, up one spot from Q4’24.

Bonzo Finance, a non-custodial lending and borrowing protocol, launched on Hedera at the end of October 2024. Based on Aave V2, Bonzo Finance is optimized to run on Hedera’s EVM and natively uses HTS infrastructure. Bonzo Finance’s USD TVL has grown steadily since its launch, peaking in Q1 at $36.7 million in TVL. Thereon, its TVL declined for the remainder of the quarter, closing Q1 at $22.0 million, down 13.6% QoQ.

SaucerSwap remained the top DeFi protocol on the Hedera Network despite a 48.2% QoQ decrease in USD TVL to $64.6 million. The rest of Hedera’s DeFi TVL is split across HbarSuite, HeliSwap, DaVinciGraph, and HLiquity. HbarSuite ended Q1 with $3.3 million in TVL, a 57.5% QoQ decrease. HeliSwap and DaVinciGraph TVL both declined as well. HeliSwap declined 31.3% QoQ from $6.6 million to $4.5 million, while DaVinciGraph declined 53.6% QoQ from $2.9 million to $1.3 million.

DeFi Diversity measures the number of protocols that constitute the top 90% of DeFi TVL. A higher DeFi Diversity score implies a larger distribution of TVL across protocols and suggests a lower risk of widespread ecosystem contagion from adverse events like exploits or protocol migrations. The Hedera network ended Q1 with a DeFi Diversity score of 2 (unchanged QoQ), with SaucerSwap and Bonzo Finance constituting the top 90% of DeFi TVL. Notably, liquid staking is not included in DeFi TVL.

Hedera DEX volumes maintained their growth from Q4 (+553.4% QoQ), with average daily volume increasing only 0.5% QoQ in Q1. Daily average DEX volumes in Q1 were $10.8 million, with SaucerSwap accounting for $10.6 million. HbarSuite grew its daily average volume from $170,700 to $193,300 (+13.2% QoQ).

Although liquid staking TVL is not included in the DeFi TVL figure, it remains a relevant metric. Stader is the only liquid staking provider on the Hedera network. Liquid staking TVL in USD decreased 38.9% QoQ, from $128.7 million to $78.6 million. This was due to the 39.2% QoQ decline in the price of HBAR, not capital outflows. Moreover, liquid staking TVL in HBAR increased 0.5% QoQ, moving from 479.6 million to 481.9 million HBAR staked.

Liquid staking as a percentage of HBAR stake receiving rewards remained flat QoQ (-0.3%), representing 8.2% of the total HBAR stake receiving rewards on Hedera at the end of Q1. Due to staked HBAR decreasing 23.0% QoQ, liquid staking represented 3% of all staked HBAR at Q1 close, up 30.4% QoQ.

The only natively deployed stablecoin on the Hedera Network is USDC. USDC market cap on Hedera grew 91.7% QoQ, from $37.9 million to $72.6 million. As of writing, 1.2 million USDC, 278,800 USDT, and 65,100 DAI have been bridged to Hedera, representing roughly 2% of the total stablecoin market cap on Hedera. A significant portion of natively issued USDC and bridged stablecoins are used in Hedera’s DeFi ecosystem, with roughly 7.5% of natively issued USDC (5.5 million) supplied in Bonzo Finance alone.

Gaming

Karate Combat is a full-combat karate league that offers fans a unique entertainment experience and has contributed to activity on the Hedera network. Fans vote on who they believe will win a match via Karate Combat’s mobile application, web application, or Snapshot. The protocol calls this voting process “playing” and requires KARATE tokens to participate. When fans correctly predict the winner of a match, they are rewarded with KARATE tokens, and if they are wrong in their prediction, they lose nothing.

The KARATE token is available on Hedera and Ethereum, but there are some differences depending on where fans have their tokens and how they want to play. Fans who vote on the Karate Combat mobile application use the Hedera network. In contrast, Hedera and Ethereum wallets are available to web application fans. Snapshot voting is only available to fans with KARATE tokens on Ethereum. Additionally, fans voting on Ethereum need to claim their KARATE token rewards. In contrast, fans using the mobile application have their KARATE tokens airdropped to them, which is a benefit of using the Hedera Network.

The KARATE token is also used as the league’s governance token. After suggestions for the league’s ruleset are fleshed out in the governance forum, KARATE holders can vote on the proposals. The latest rule change to the league, KICK-10, was approved and now permits elbow strikes.

Karate Combat events are free to watch and can easily be found on their YouTube channel. They have amassed over 775,000 subscribers and frequently get over 100,000 views on their event streams. On Hedera, the average amount of KARATE played on each event increased 35% QoQ, from 5.9 billion to 7.9 billion HBAR. Furthermore, Karate Combat’s fans increasingly choose to play on Hedera, with Hedera’s market share rising to 90% (+11.7% QoQ) of all KARATE played.

Network Services Overview

The Hedera Network Services are the core offerings of the Hedera network. These services include the Consensus Service (HCS), Smart Contract Service (HSCS), and Token Service (HTS). The Hashgraph algorithm supports all these services and offers official SDKs for accessing the API in programming languages such as JavaScript, Java, Go, and Swift, as well as community SDKs supporting .NET, Python, and Venin SDK for JavaScript. Usage frequency varies depending on the service, as each has its intended use cases and primary users.

Consensus Service

The Hedera Consensus Service enables verifiable time-stamping and ordering of events for Web2 and Web3 applications. Users submit messages to the Hedera Network, where the messages are time-stamped and ordered by the Hashgraph algorithm. These messages form an auditable history of verifiable and trustless events. The Consensus Service is utilized by various applications such as tracking supply chain provenance, logging asset transfers between blockchain networks, counting votes in DAOs, monitoring Internet of Things (IoT) devices, and more.

HCS’s daily average transactions decreased 61.8% QoQ from 159,200 to 60,900. This decline follows a decline in Q4’24 (99.9%), attributed mainly to Avery Dennison’s atma.io platform ceasing use of HCS. Daily average active accounts decreased 51.8% QoQ, from 1,200 to 600.

Crypto Service

The Hedera Crypto Service enables users to perform essential operations on the Hedera Network, including creating and managing accounts, transferring HBAR, fungible, and non-fungible tokens, rotating account keys, and approving account allowances.

Daily average active accounts declined 15.8% QoQ from 5,600 to 4,700, while daily average transactions grew 103.6% QoQ, from 237,300 to 483,100.

Smart Contract Service

The Hedera Smart Contract Service (HSCS) enables developers to create and deploy smart contracts on Hedera. The service works with the Hedera Token Service to enable users to create and deploy fungible and non-fungible tokens. The service is also EVM-compatible via the HyperLedger Besu EVM client, providing support for Solidity-based smart contracts and core Ethereum tooling.

Daily average transactions grew 5.0% QoQ, from 132,800 to 139,400, while daily average active accounts declined 30.8% QoQ from 4,000 to 2,800.

Token Service

The Hedera Token Service (HTS) allows users to mint and manage custom fungible and non-fungible tokens on Hedera. Tokens issued on Hedera are also configurable with customizable parameters such as account KYC verification, freeze, token supply management, transfer, etc. Token transfers on Hedera have a fixed transaction fee of $0.0001 USD, paid in HBAR.

Daily average transactions for Hedera’s Token Service decreased 33% QoQ, from 30,800 to 20,600, and daily average active addresses decreased 34% QoQ from 3,700 to 2,400.

Closing Summary

Hedera closed Q1 with steady network usage and development progress, despite a 32.9% QoQ drop in market cap to $6.9 billion. HBAR’s market cap rank among all cryptocurrencies held steady QoQ at 18. Average daily transactions rose 25.8% QoQ to 708,500, driven by a 103.6% increase in Hedera’s Crypto Service activity, while average daily DEX volumes remained at $10.8 million for the second quarter in a row. Hedera’s stablecoin market cap nearly doubled to $72.6 million, led by natively issued USDC. DeFi TVL fell 41.7% to $97.1 million due to HBAR’s price drop.

Development remained active, with major upgrades like HIP-755 and HIP-756 enhancing smart contract capabilities. Hedera also advanced decentralization efforts by joining the Linux Foundation’s open-source governance framework. Karate Combat saw a 35% QoQ increase in activity, with 90% of KARATE token usage occurring on Hedera. Overall, Hedera demonstrated ecosystem resilience, network growth, and strong developer momentum amid broader market challenges.

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This report was commissioned by Hedera Hashgraph, LLC. All content was produced independently by the author(s) and does not necessarily reflect the opinions of Messari, Inc. or the organization that requested the report. The commissioning organization may have input on the content of the report, but Messari maintains editorial control over the final report to retain data accuracy and objectivity. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. Past performance of any asset is not indicative of future results. Please see our Terms of Service for more information.

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