DappRadar August Industry Report
Surpassing the 2 million daily Unique Active Wallets milestone once again, the dapp industry continues to demonstrate its vibrant growth and dynamism. Our August 2023 report dives into the key factors and trends that have led to this landmark achievement.
Key Takeaways
- Daily Unique Active Wallets (UAW) hit 2 million, a 17% month-over-month increase. On-chain gaming UAW rose 6%, holding a 37% industry dominance.
- The TVL in the DeFi sector has declined by 5%, settling at $72 billion.
- NFT trading volume decreased by 16% to $559 million, and sales count dropped 13% to 3.2 million.
- Blur leads with a 38% market share in trading volume, while OpenSea drops to a yearly low at 14% but retains 212,000 active traders.
- $28.4 million in crypto assets were lost due to hackers exploiting smart contracts and duping investors.
Table of Contents
- Dapp Industry Overview
- Stargate Finance retains top spot as most-used dapp
- DeFi TVL drops 5%, Ethereum holds 71% share
- NFT trading hits $559M volume, 3.2M sales
- DeGods defied the NFT market slump
- Blockchain gaming holds 38% dominance over the dapp industry
- $28.4 million lost due to exploits and hacks
- Conclusion
1. Dapp Industry Overview
In the digital world of decentralized applications (dapps), the industry has recently seen a resurgence in user engagement, crossing the 2 million threshold for daily unique active wallets (dUAW). This signifies a 17% month-over-month growth, fueling optimism for a Web3 revival. With September on the horizon, historical data suggests that a seasonal uptick in both business and investor interest is likely.
In the various segments of dapp categories, gaming reigns supreme. With an average of 758,330 dUAW, it posted a 6% growth rate, consolidating its dominant role in the dapp ecosystem.
Contrary to the gaming dapps, the decentralized finance (DeFi) sector experienced a slight drop of 2% in its dUAW, clocking in at 499,800. Despite this, DeFi continues to command a significant 24% of overall dapp user activity.
Non-Fungible Tokens (NFTs) have seen a whopping 347% increase in dUAW, establishing a 15% share of total industry activity. The NFT sector averaged a remarkable 314,614 dUAW in the last month.
While Social dapps saw unprecedented growth in prior months, their dUAW dropped by 19%, settling at an average of 208,940 and holding a 10% market share in dapp activity.
In the blockchain arena, BNB Chain holds its leadership position despite an 8% decrease, hosting 500,456 dUAW and claiming a 24% market share. Within the BNB ecosystem, PancakeSwap continues as the front-runner, contributing to 30% of all activities. On the other hand, Polygon has rebounded with a 24% increase in dUAW, now standing at 183,726. This aligns with their recent flurry of partnerships and announcements.
Not to be overlooked, zkSync has also recorded growth of 9% in user activity, and has risen to the fourth position among the top blockchains in terms of dUAW.
In the next section, we provide a detailed breakdown of the top dapps by UAW in August 2023, offering an in-depth view into the dynamic world of the Dapp industry.
2. Stargate Finance retains top spot as most-used dapp
The DeFi sector is firmly establishing its dominance in the ever-evolving landscape of Web3 technologies. In the top 10 dapps ranked by Unique Active Wallets (UAW) for August 2023, six belong to the DeFi ecosystem. This sustained trend over multiple months highlights the increasingly pivotal role DeFi is playing within the blockchain community.
At the forefront of this DeFi dominance is Stargate Finance, boasting an eye-catching monthly UAW count of 1.87 million. This dapp’s impressive metrics serve as a testament to its enduring popularity among users. The popularity of Stargate can’t be seen separately from the rise of L2 solutions such as Arbitrum, Optimism, Base and zkSync.
Second in line is LifeForm, an NFT marketplace operating on the BNB Chain. LifeForm aims to redefine the digital identity framework, granting users a secure and personalized experience in the metaverse. This coincides with the rise in social dapps that we have observed, suggesting a growing integration of NFTs and social aspects within the dapp sphere.
A new entrant making waves in our rankings is KAI-CHING, currently occupying the 8th position. Earlier this year, Cosmose, the company behind this dapp, announced a strategic investment from the NEAR Foundation—renowned for its Web3 technologies—that valued the company at $500 million.
Cosmose Media and KaiKai, both products of Cosmose AI, are set to benefit from this partnership, pushing the boundaries of Web3 innovations. By effectively leveraging the NEAR Protocol, KaiKai has introduced its dapp, Kai-Ching, optimized for payments, cash-back, and rewards. This introduction has led to expedited payment processing times and significantly reduced transaction fees for both retailers and consumers.
Another notable dapp making a mark on our list is Mute. As highlighted earlier, zkSync is garnering attention, and Mute exemplifies this trend. It operates as a native stable/normal pool automated market maker (AMM) decentralized exchange (DEX) within the zkSync environment, featuring limit orders, farming platforms, and bond platforms.
The insights gleaned from this month’s top-performing dapps point to a continued rise of DeFi, along with emerging trends in NFTs and new partnerships. These developments offer a glimpse into what the future may hold for the dapp industry, which continues to be a dynamic and integral part of the broader blockchain ecosystem.
3. DeFi TVL drops 5%, Ethereum holds 71% share
The decentralized finance (DeFi) sector, which experienced a surge of interest in the previous months, contracted slightly in August 2023. The Total Value Locked (TVL) in the DeFi ecosystem has seen a 5% decline, settling at $72 billion.
Ethereum continues to be the leading blockchain for DeFi, holding 71% dominance over the sector. While most blockchains observed declines in TVL, especially popular Layer-2 solutions like Arbitrum and Optimism, a new entrant has made waves. Base, the Layer-2 blockchain launched by Coinbase, has garnered significant attention from DeFi enthusiasts. In a few weeks, its TVL skyrocketed by an astounding 946%, reaching $431 million.
Circle’s announcement to launch native USDC on Base in September adds another layer of interest to this growing chain. Despite this positive news, it’s worth noting that USDC’s market cap has shrunk by more than 50% over the last 14 months. Plans for its deployment on Optimism and four more chains by November are also in the pipeline.
In legal updates, a U.S. judge dismissed a class-action lawsuit against Uniswap Labs, alleging losses from trading scam tokens on the Uniswap decentralized exchange. This decision marked a notable win for the Web3 sector, with the judge stating that the complaint sought to unduly stretch federal securities laws.
On the other side of adoption, PayPal’s PYUSD stablecoin has faced a cold reception in its inaugural month, struggling to surpass $100,000 in daily trading volume. Its adoption rate has been minimal, with only a single non-exchange wallet holding more than $10,000 of the token.
This month’s developments indicate that while the DeFi sector is facing headwinds, it’s also in the midst of noteworthy shifts and legal milestones.
4. NFT trading hits $559M volume, 3.2M sales
The Non-Fungible Token (NFT) market has witnessed several shifts this month, notably in trading volume and sales count. The trading volume has dipped by 16%, settling at $559 million, while the number of sales has also declined by 13%, totaling 3.2 million sales.
The downward trend might not be surprising for those who have been following our previous reports. One explanation for the shift could be the rise of ‘low barrier entry’ NFTs. These assets, smaller in individual value, are designed to appeal to a broader audience, thereby potentially affecting the overall metrics of the market.
On August 18, OpenSea, a prominent player in the NFT market, announced a change to its creator fee enforcement policy. The news reverberated through NFT communities and social media platforms. Many creators, who rely on royalties as a source of ongoing income, expressed concern over the policy change. This unease was exacerbated by Yuga Labs’ decision to pull its collections from OpenSea.
These changes align with larger trends in the NFT space. Blur now commands a significant 38% of the overall NFT market, surpassing OpenSea, which has hit an all-time low for the year with a 14% market share. However, OpenSea continues to attract the majority of NFT traders, boasting over 212,000 active traders.
Despite these challenges, the NFT market isn’t all doom and gloom. A recent highlight includes the gamified art project called The Monument Game by Sam Spratt, which fetched a substantial 420.69 ETH in a Nifty Gateway auction. This initiative has broken new ground by inviting the general public to engage with and interpret fine art, sidestepping traditional gatekeepers. This community-centric approach is gaining traction, not just in artistic NFTs but also within the gaming NFT sphere.
The evolving landscape of the NFT market in August 2023 offers a nuanced picture. While some metrics point towards a decline, emerging trends and bright spots suggest that the market is far from stagnant.
5. DeGods defied the NFT market slump
As we dissect the performance of the top 10 NFT collections by trading volume for August 2023, it’s evident that the NFT market is grappling with a downturn. Specifically, 8 out of the top 10 collections witnessed declines in both trading volume and floor price. This aligns with our previous observations that indicate a broader slump in the NFT industry, where even blue-chip collections are not immune to the decline.
Against this backdrop, one collection stands out: DeGods. Propelled by the launch of its Season 3, DeGods saw a remarkable 105% increase in trading volume. In a market where project updates often fizzle out without generating significant interest, DeGods managed to capture attention and investment, setting it apart from its peers.
Recent times have brought cautionary tales in the NFT space, notably the cases of Azuki and The Captainz. Azuki experienced a dramatic decline in value following the launch of its Elemental series. Once commanding a floor price above 15 ETH, Azuki’s value plummeted, struggling to sustain a floor price of 5 ETH.
Similarly, The Captainz saw a rapid 25% drop in floor price within 24 hours of releasing new artwork. Such incidents serve as a warning for both creators and investors to tread carefully in the current NFT landscape. The DeGods community, despite recent boosts in volume, remains cautiously optimistic, well aware of the volatile nature of the NFT market.
In a climate where enthusiasm for NFT updates is often met with skepticism or indifference, the stories of Azuki and The Captainz serve as cautionary tales. Yet, DeGods shows that targeted, well-executed updates can still ignite interest and drive trading volume. To delve deeper into why DeGods succeeded where others faltered, be sure to read our upcoming detailed article.
While the general sentiment may tilt towards caution, the NFT market continues to be a space of dynamic change. With new developments on the horizon, it remains to be seen how these trends will shape the future of this volatile yet captivating industry.
6. Blockchain gaming holds 38% dominance over the dapp industry
This month, the on-chain gaming sector continues to thrive, clocking in 758,330 unique active wallets (UAW) and marking a 6% increase over the previous month. With a commanding 37% dominance in the Web3 space, on-chain gaming persists as a cornerstone of the decentralized world.
Although a detailed analysis of blockchain gaming is slated for our upcoming gaming-specific report, we can’t overlook a noteworthy trend from this month’s data. Remarkably, each of the top 5 most-traded NFT collections originates from blockchain games. This interplay between NFTs and gaming is no mere coincidence; it signals the increasingly integrated role that NFTs are playing within the gaming ecosystem.
Our data indicates that the trading behavior in these top 5 gaming NFT collections leans significantly towards buying rather than selling. Such a purchasing trend serves as a barometer for the growing interest in these blockchain games and by extension, the larger integration of NFTs into gaming.
What do these trends tell us about the future? Simply put, blockchain gaming commands the highest user engagement across all Web3 categories. This reflects not only its current prominence but also its immense potential for future growth. As more users get acquainted with the seamless integration of NFTs into gaming, the sector is poised for even more dynamic developments.
For those interested in a deeper exploration of these trends, our comprehensive gaming report is scheduled for release next week. If you’re reading this after 14 September, we invite you to visit our reports page for full insights into the evolving landscape of blockchain gaming.
7. $28.4 million lost due to exploits and hacks
According to Rekt Database, this month, the cryptocurrency world faced a grim reality as 44 exploits led to losses totaling $28.4 million. Ethereum is the blockchain most affected, accounting for 30 exploits — representing 68% of all incidents. BNB Chain follows with 10 exploits, contributing to 22% of the total.
In a disturbing trend, a significant majority of this month’s exploits were rug pulls—about 70% or 31 cases. This glaring statistic underscores the urgent need for comprehensive Web3 education to help users navigate potential pitfalls in the decentralized landscape.
The largest exploit this month was orchestrated against Exactly Protocol, a lending and borrowing platform built on Optimism. The attacker exploited a reentrancy vulnerability to siphon off 4,332.92 ETH, valued approximately at $7.1 million. These funds were subsequently moved to the Ethereum mainnet, partially via Across Protocol and partly through the Optimism Bridge.
Coming in second was the exploit targeting Magnate Finance on Coinbase’s new Layer-2, Base. The unfortunate incident, amounting to $6.5 million in losses, stands as a textbook case of an exit scam. The team behind Magnate Finance abruptly took down its website and deleted its Telegram group on 25 August, raising immediate red flags among the community.
Hours after erasing their online presence, the project manipulated their protocol’s price oracle and drained all assets, leading to a collapse of the $6.4 million in total value locked (TVL) within the system.
As these incidents indicate, the decentralized ecosystem, while promising, is fraught with risks that often stem from lack of awareness and due diligence. A better-educated user base can potentially mitigate such risks, emphasizing the necessity for ongoing, quality Web3 education.
For anyone engaged in the Web3 space, these exploits serve as a sobering reminder of the importance of security and due diligence. Ensure you’re staying updated on the latest best practices to protect your assets in this rapidly evolving digital frontier.
8. Conclusion
August 2023 presented a narrative of growth and caution in the decentralized applications (dapp) ecosystem. With daily Unique Active Wallets (UAW) hitting the 2 million mark—marking a 17% month-over-month rise—and on-chain gaming expanding its domain to a 37% industry share, signs of robust activity were evident.
At the same time, some segments of the industry presented scenarios requiring careful observation. The DeFi sector, for instance, saw its Total Value Locked (TVL) taper by 5% to $72 billion. The NFT marketplace didn’t fare any better, contracting by 16% in trading volume and 13% in sales count.
Security also remained a poignant topic, as $28.4 million was lost due to exploits—underscoring the need for heightened vigilance and user education in the decentralized world.
This isn’t a tale of setbacks but rather a portrait of an evolving industry. Like July, August too had its share of fluctuations, signaling not a regression but a complex interplay of market forces and user preferences. As we move forward, these shifts serve as reminders that the ability to adapt and evolve is crucial to the long-term resilience and success of the Web3 ecosystem.
