Games and NFTs are still getting most of the industry’s attention
The following report belongs to a series of Blockchain User Behavior Reports. A set of reports by DappRadar intended to provide users with a different perspective of the blockchain industry, combining a traditional behavioral finance analysis with blockchain metrics and indicators. The document analyzes trends from the blockchain industry perspective but also identifies patterns in the DeFi, NFT, and Games spaces respectively.
DappRadar is the number one platform with more than 650,000 monthly users where you can track, analyze and discover decentralized applications. Besides useful data-driven insights like the NFT and DeFi pages and rankings, DappRadar offers a wide array of products such as the Portfolio Tracker, the TokenSwap functionality, and NFT valuation tools among many others.
By analyzing different metrics, we aim to understand the main patterns and trends that occurred in the blockchain industry during the last month. Also, we try to identify who are blockchain’s main users and support the recent narratives forming around high volumes in NFTs and blockchain-based games driving the usage within the industry.
Concretely, in this report, first, we analyze the latest industry trends based on a comprehensive demographics analysis. Then, we focus on the NFT category, a space that lured most of the attention after a record month in August. Afterward, we assess how the play-to-earn movement interest has shifted from incumbent countries to include new emerging markets and advanced economies. Finally, we assess the case of DeFi; albeit, with the lack of heavy interest shown by the other peer categories, DeFi might be waiting for the perfect storm.
Key takeaways
- Games and NFTs are still getting most of the industry’s attention; the number of Unique Active Wallets interacting with the game and NFT dapps increased 27% and 7% respectively month-over-month, whereas DeFi connected wallets remained constant.
- The United States carried the largest blockchain audience with more than 110,000 users in September; Indonesia and UK increased their traffic base by 43% and 62% respectively to become the third and fourth countries in terms of traffic, surpassing China and Thailand.
- Young millennials (aged 25-34) continue to be the most dominant group among blockchain users with 37% of the total, Generation Z (18-24 years) follows with 27%, whilst those aged between 35 and 44 years represent 18%.
- In September, the women’s presence fell slightly from 25% in August to 23%; 77% of DappRadar’s users in September were men.
- NFTs overcame games as the main source of traffic during September; of the blockchain’s three main categories, NFTs represented 48% of the traffic, while games and DeFi generated 33% and 19% respectively.
- The play-to-earn movement is reaching new regions; game related traffic increased 300% month-over-month in Iran, while the Nordics, France and various African countries were up significantly as well.
Table of Contents
- Industry demographics
- Interest in NFTs riding high after record August
- Is play-to-earn reaching new geographies?
- DeFi holding its ground
- In Summary
Industry demographics
For the fourth consecutive month, the blockchain industry showed signs of growth. In September, 1.71 million Unique Active Wallets (UAW) connected on a daily average to a blockchain dapp. This number represents a 12.4% increase month-over-month (MoM) and an impressive 487% year-over-year (YoY).
Moving forward with the demographics analysis, the report considers DappRadar’s traffic during September, which includes over 650,000 users. As in previous months, the USA and Philippines remain the two most important countries in terms of traffic. Yet the gap is wide between these two countries as the US contributes with almost 110,000 monthly users to 37,000 coming from the Philippines. Moving down in the traffic rankings, we find Indonesia (33.5K) and the UK (31K) as third and fourth places. Both countries grew 43.1% and 62.1%, MoM, respectively, surpassing China (30K), Thailand (26K), India (25K), and Brazil (24K) in the corresponding rankings.
Among the other countries with the most notable traffic increase from the previous month is Iran. The Middle-East nation has been involved recently in government discussions around cryptocurrency mining. In contrast, Southeast Asian countries have been diminishing the traffic. For instance, traffic from the Philippines is down 33% MoM, while Thailand and Vietnam are 14% and 11% below August’s traffic numbers.
Another aspect that is important to monitor going forward, is the way in which blockchain users interact with decentralized applications. During the first half of 2021, mobile devices were the preferred choice for connecting to DappRadar’s sources. However, as shown in the visual below, the trend was reversed in August, and desktop devices are now the main way of interaction.
Currently, the most important Web3 features are available on desktop only, or at least more efficient on computers. However, as wallets and some blockchain games become ubiquitous in mobile devices, the trend will most probably change again.
Additional demographics analysis shows that the age range has been one of the most constant variables in DappRadar’s traffic. Young millennials, aged 25 to 34, are the dominant group generating more than 37% of incoming traffic. This group is followed by Generation Z, 18 to 24 years, accounting for 26%, and those in the age group of 35 to 44 years create 20% of the traffic. When compared to August numbers, there is no significant difference in any range.
Finally, analyzing the gender of September’s traffic, we identify a slight decrease in the involvement of women within the space. Whilst the man to woman ratio is very close to 3:1, it is trending upwards from the instance that until May was dominated by men in a 4:1 ratio.
Overall, the main demographics indicators do not show any visible change from the previous month. The most notable changes can be seen in the geographies, where Indonesia and the UK users surged during September, whereas the interest appears to cool down in South East Asia. The following section will dive deeper into the three most important dapp categories
Interest in the NFT space riding high
Since the start of Q3, the game and NFT categories have enjoyed a positive run. On one hand, the play-to-earn movement led by Axie Infinity made thunderous headlines that helped get blockchain games into mainstream outlets. This trend was especially related to emerging economies, where the potential value of passive income was notorious.
On the other hand, the hype around NFTs helped the space reach stratospheric levels. In just the three months of Q3 2021, the NFT space generated over $10.67 billion in trading volume. To put into perspective, that is more than the entire volumes of 2019, 2020, and the rest of 2021 combined.
Analyzing DappRadar’s traffic by category, we are able to see a trend reversal happening during September. NFTs became the leading category in terms of traffic for the first time. After a record-breaking August that saw $5.2 Billion in NFTs trading volume and headlines like VISA purchasing CryptoPunk #7610 for $150,000, NFTs overcame the high interest attained by the play-to-earn narrative in previous months.
According to the interactions measured by DappRadar, the USA is the country with the most NFT-related events on record. China is the distant second with ⅓ of the interactions registered from the US. Turkey, Russia, and Thailand complete the top 5.
It is expected to see the US atop the NFT rankings. According to Forbes, the USA hosts a $5.4 billion sports memorabilia market and has one of the biggest sports fan bases in the world. In addition, Hollywood celebrities like Snoop Dogg, Jay-Z, and Stephen Curry have become true ambassadors of the NFT community.
Even though some of the established NFT collections like CryptoPunks or NBA Top Shot were far from the volumes generated in previous months (58% and 45% decrease respectively in trading volume MoM), newer collections like the CrypToadz, MekaVerse, and Sneaky Vampires Syndicate, have generated more than one quarter billion in less than one month of existence.
Either by generating utility in different manners or by creating well-bonded communities, older, but well-designed NFT projects, are achieving to spark the interest of investors. Also, by giving visibility to digital artists around the world, the NFT space is getting more global.
It is notable to see Russia’s NFT interactions grew 108% MoM, a country where Rarible, one of the most notable NFT marketplaces, was created. Along with Russia, the UK saw its NFT interactions increase by 44% from the previous month. Ukraine and Romania are other countries where NFT interactions at least doubled from the previous month.
Is play-to-earn reaching new geographies?
It might seem that the play-to-earn narrative is losing steam. Somehow diluted between the massive coverage received by NFTs and the most recent surge in crypto prices. Yet on-chain analysis suggests otherwise. The usage in the industry has been driven by games since July 2021.
While Asian countries like the Philippines, Thailand, or Vietnam were amongst the main traffic drivers along with China during the past couple of months, September numbers tell a different story. The Philippines, Taiwan, and Vietnam drove 58%, 43%, and 40% less game-related traffic when compared to August.
Another September downside in the game space can be observed by coming back to NFTs. In blockchain games, NFTs represent the in-game items, characters, and virtual lands. The trading volume of game NFTs in September decreased 17% from August creating only $640 million in sales. Also, the game dominance within the NFT trading volumes dropped by 2% in the same period.
However, there are positive signs looming on the game horizon. Firstly, there are a good amount of blockchain games still in the development phase. Several game dapps across different protocols are preparing their features to launch in the upcoming months. Metaverse and games with comprehensive tokenomics will revolutionize the way in which we play games.
Also, after analyzing the top 10 dapps that produced the most user interactions, we found that nine of the ten dapps were blockchain games. The interest in games may not be as high as in previous months, but it will not go away anytime soon.
Finally, as disclosed in the previous behavior report, the play-to-earn movement is not specific to a certain type of economy. We identified users from nations like the Nordics, Canada, and France, increasing their game interest. Also, countries like Iran and Greece are starting to show interest in this space. It is worth noting the case of Iran, whose game users increased 300% MoM. As previously mentioned, there has been discussion around crypto mining, but their game interest is genuine. As pointed out by Ian Kane, “game token mining doesn’t involve expensive equipment – just a laptop or phone. In the last three months DappRadar’s site usage from Iran is up over 160%”. It will be worth keeping an eye on this type of behavior.
DeFi holding its ground
Whilst both games and NFTs have stolen the spotlight since the first half of 2021, the Defi space has been getting really intriguing. Blockchains like Solana, Terra, and Avalanche have become extensive DeFi networks with more than $20 billion secured in Total Value Locked (TVL) altogether.
Contrary to games where there is still an Asian dominance or the USA’s hefty interest in NFTs, the DeFi space does not depend entirely on a specific region. Thailand was the country with the most DeFi interactions, followed by the USA, Brazil, Spain, and Indonesia.
Overall, the industry’s TVL is estimated at $178 billion, which is 2% down from August’s TVL, but 27% higher than July’s record. The UAW connected to DeFi dapps have stalled during the whole Q3, still, there is a sense that decentralized finance may be closing to broader usage.
The widespread use is certainly a positive sign. And while the TVL numbers may not seem encouraging, the competition brought by the three aforementioned blockchains will attract more value barring any negative event. Furthermore, the interest in DeFi is all but decreasing as shown in the monthly trend of UAW interacting with DeFi dapps. Even though the industry is expanding, the value is not flowing from DeFi to other peer categories.
In Summary
The demographic analysis applied to DappRadar’s main traffic metrics helps assess potential patterns in consumer behavior, thus better understanding the user decisions. Although there were no important trend differentials from the demographics perspective, there are some behaviors that should be noted.
It is confirmed once again that the US is still the biggest market for the industry. Their demand for NFTs is the biggest in the world, while their interest in DeFi and blockchain games remains very high. Even though some of the premier Ethereum collections remained stagnant during September, it was the newer collections that generated the value. Also, it should be noted that the NFT engagement shown by other countries like Russia and the UK, may signal that the demand for NFTs still has room to grow.
Meanwhile, the engagement of Southeast Asian countries decreased slightly. Especially in relation to the play-to-earn narrative. It might be the case that individuals from countries like the Philippines, Vietnam, and Thailand are already fully onboarded into blockchain games. Their main need is just immersing themselves in the playing experience rather than exploring other alternatives. On the other hand, there is still the case of Iran, El Salvador, and other African emerging economies, where the play-to-earn movement is just beginning. Most probably due to asymmetric information or other types of regulatory frictions that caused the delay of the movement. The mass play-to-earn media might have just arrived later than in other regions.
Like in the top NFT collections, in-game NFT items were down from August numbers. Coupled with the downtrend in Southeast Asia during the same period. Yet the scenario looks positive. With enticing blockchain games ready to be launched, and interest picking up in other regions, the play-to-earn movement is far from over.
Finally, even though DeFi has not flashed spectacular metrics recently, the TVL is holding its ground. It remains one of the most widespread categories without a clear geographic dominance. Reaching as many users as possible will be critical in the path towards mass adoption.
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