What the latest blockchain behavior patterns tell us about the upcoming year
The following report belongs to a new 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 traditional behavioral finance analysis with blockchain metrics and indicators. The document analyzes trends from the blockchain industry perspective and identifies patterns in the DeFi, NFT, and Gaming spaces.
In 2021, the blockchain audience grew significantly. Trends across essential categories welcomed a new group of individuals in this evolving space. In the same way, the World’s Dapp Store, DappRadar, grew its traffic by 1,028% over the past year and now receives almost 1.4 million monthly visits based on the end of 2021 data. Considering this audience, we try to identify the most critical behavioral patterns in the final part of last year that may become significant to start 2022.
By analyzing different metrics, we aim to understand the main patterns and trends in the blockchain industry during the last months—also trying to identify blockchain protocols’ primary users that support the recent narratives forming around the most important categories within the industry.
In this report, we analyze global trends, including demographics and connectivity analysis, macro indicators, and on-chain metrics, to identify the trends that will be significant in 2022 based on behavioral patterns.
- NFTs were hardly affected by the dip in cryptocurrencies; the number of trades continued to increase constantly, while the UAW connected to Ethereum NFT dapps grew by 43% since Q3 2021.
- The usage in DeFi is visibly correlated with cryptocurrencies on the other hand, with over 1.25M UAW connected to DeFi dapps daily when all-time highs for ETH, SOL, AVAX, and LUNA were observed, and as low as 800,000 UAW during the latest bearish trends.
- Blockchain games continue to be widely used despite the recent negative trend in cryptos. Games represent 52% of the industry’s usage, increasing the usage gap with DeFi dapps.
- China is now the leader in terms of traffic, marking an increase of 166% vs November 2021. In 2021, the US dominated in terms of traffic.
Table of Contents
- The Asian footprint is becoming increasingly visible across the industry
- NFTs and games prove to be more resistant to cryptocurrencies than DeFi
The Asian footprint is becoming increasingly visible across the industry
At the end of 2021, the dapp industry attracted over 2.5M daily Unique Active Wallets (UAW). That level of usage represents a 707% growth over the last year. The industry’s rapid growth was sustained by different interest waves, mainly originated by NFTs and games.
Analyzing the traffic coming from DappRadar’s 1.4 million December visitors, we see exciting trends based on the current demographic analysis that may shape the industry differently from what we saw last year.
Firstly, China is now the country with the most extensive user base. With over 204,000 users, they increased 166% from the numbers registered in November. The traffic from Indonesia and India is worth highlighting as both countries more than doubled their metric in the last month. The Asian market continues to increase its footprint within the industry overall. With a high interest in blockchain games and the potential for NFTs, the Asian region is undoubtedly one to closely monitor.
The United States is no longer the dominant traffic source and now sits second to the Asian nation. Still, the US saw its traffic grow 38%, with over 175,000 users, it still represents the most important market for NFT collectibles overall.
The UK, Russia, the Philippines, and Brazil lost ground to India but remained engaged audiences. The traffic from these four countries surpassed 168,000 users and grew around 30% on average, with Russia presenting the most significant increase.
Good news for games: Millennials and GenZers dominate the blockchain scene
Continuing along with the demographic analysis, we focus on the age range to obtain more insights about the audience interested in blockchain. The rate of GenZers (18-24 years) getting involved in the space continues to accelerate. In December, 30% of DappRadar’s traffic came from users in this age group, whereas their presence hovered around 26% for most of 2021. Millennials’ dominance also follows the same line with 38% of the traffic, slightly growing from the 36% observed for most of the past year.
On the other hand, the most noticeable drop is in the people aged 45 to 54, where the dominance fell from the 11.5% registered in January 2021 to the mere 7% observed in December. With the strong interest shown by Millenials in categories like NFTs and games, the future is bright for both categories.
Another exciting indicator appears when analyzing the preferred device of connection. Despite receiving a considerable amount of visitors due to the launch of the RADAR token, users still connected via mobile about 53% of the time. While most users prefer to use desktop versions of wallets due to security reasons, desktop devices brought in only 46% of the traffic. This may lead to a crucial behavioral trend that may gain significance as the year prepares to be heavy on blockchain games. This trend needs to be monitored closely as mobile wallets (e.g., Ronin) and mobile blockchain games are expected to undergo a giant leap in 2022.
NFTs and games prove to be more resistant to cryptocurrencies than DeFi
After a year that saw the most important blockchain indicators erupt across the dapp’s three main categories – TVL in DeFi, trading volume in NFTs, and usage in games, the sense was the market was finally preparing to take off. Nonetheless, macroeconomic events such as the latest COVID surge, the Fed’s imminent intention to raise interest rates, and the natural gas issues in Kazakhstan affect almost one-fifth of Bitcoin’s mining activity. The cryptocurrency market finds itself once again trapped in a periodical bearish trend.
This section analyzes how relevant blockchain macro indicators, such as the price of leading cryptocurrencies, the gas price in Ethereum, or the Bitcoin’s Fear & Greed Index, affect on-chain indicators. How vital are macro indicators in the behavior of blockchain consumers?
NFT metrics keep soaring despite the crypto slump
In Q3 2021, NFTs generated $10.7 billion in trades. A period followed by an $11.9 billion quarter in Q4 is already looking strong in the first ten days of 2022. On the other end, since reaching an all-time high of $4,878 in November, the price of ETH has failed to find support, falling almost 30% at the time of writing. Despite the volatile cryptocurrencies cycles, NFTs maintain a stagnant positive trend.
Not only the count of NFT sales have increased in Ethereum, but the number of UAW connected to NFT dapps (collectibles and marketplaces) has also increased. 46,800 UAW have connected to Ethereum NFT dapps on average since December, 43% higher than the numbers seen during Q3.
The undeniable role that NFTs play in both the metaverse and the play-to-earn narratives has primarily contributed to positive on-chain metrics despite unfavorable macro indicators. Plus, established projects constantly meet their respective project goals, enhancing their communities’ prospects in the process. Coupled with the never-ending list of celebrities and big brands entering the space, NFTs look as solid as ever.
Furthermore, the search for a fully interoperable metaverse only favors NFTs. Communities are banding together, and different community-driven alternatives like the recently launched LooksRare marketplace have strengthened the market for NFTs. As the outlook for this type of asset is undeniably powerful, individuals might see the negative cryptocurrency trend as a buying opportunity, as the value for the underlying asset, in this case, the ether, decreases the actual price of the NFT. Despite the decrease in the price of this asset, the trading volumes measured in USD are maintaining the pace.
Finally, regarding NFTs as collectibles, America is still the most active region. The United States leads DappRadar NFT traffic by far, with Brazil and Mexico coming in as the top four countries. The massive interest in sports, fashion, and celebrities presented on that side of the globe translates into a growing interest in the NFT space.
A strong correlation between DeFi and macro indicators
Despite taking a backseat to blockchain games and NFTs, the value locked in DeFi space reached all-time highs at the end of 2021. Driven by a surplus of robust alternatives that include attractive liquidity mining programs, the competition in this category scaled significantly. Yet, no other vertical is more affected by cryptocurrencies than DeFi, so involving macro indicators along with DeFi’s on-chain metrics may provide some hints about behavioral trends and patterns.
While the respective underlying assets highly influence the Total Value Locked (TVL) within these blockchains, the usage is not. Correlating a macro indicator such as Bitcoin’s Fear & Greed Index (FGI) with the usage levels in the industry shows that DeFi heavily leans on crypto patterns. As a note, the FGI is an analytical tool widely used in cryptocurrency trading to measure the market’s sentiment from a 0 to 100 scale that goes from Very Fearful (0) to Very Greedy (100).
The two charts below show the correlation between the FGI, the number of UAW measured in the industry overall, and the number of UAW connected to DeFi dapps only. Compared to the overall dapp industry, there is no clear correlation between both variables. As previously observed, NFTs behave independently from cryptocurrencies and are affected by their macro trends (utility, maturity, use cases, etc.). The same happens with blockchain games. However, the story is different in DeFi, where usage and values are tightly connected.
Observing in detail the correlation between FGI and DeFi users, we can see how the usage in DeFi spiked to an all-time high of 1.25 million UAW connected to DeFi dapps in November—aligning with the all-time highs presented in AVAX, SOL, and LUNA, respectively. As the market cooled down towards the end of the year, the usage decreased below 1 million UAW again.
Something similar happens when analyzing three leading blockchains in TVL and their underlying native cryptocurrencies. Starting with Ethereum, the price of ETH does not show any correlation in regards to the usage in NFTs as expected. The use of NFTs is dependent on other external factors, as previously explained. While on the other hand, some patterns can be drawn with the usage in DeFi, as it presents a slight but visible correlation with the price of its underlying token.
On BSC, the scenario is similar with the usage in games and DeFi, and their respective relationships with the price of BNB. The UAW connected to BSC’s DeFi dapps follows a similar trajectory as the price of BNB. Once again showing the correlation between DeFi and the cost of its native cryptocurrency. At the same time, the usage of games is independent of the price of BNB. Although BSC games are dependent on the game’s native tokens, they behave more from a micro perspective, where a particular token like SKILL or JEWEL, for instance, only affects the usage of its host dapp.
The last example is Solana, where the price of the underlying asset – SOL, once again has a firm saying in using the DeFi dapps in the ecosystem. Compared to the usage of NFTs in this network proves once again that the user behavior in DeFi is heavily dependent on the cryptocurrency market.
Blockchain game adoption remains steady
DeFi and NFTs follow two different paths. In the case of DeFi, macroeconomic indicators play a significant role in the usage of the category. Whereas NFTs appear to be more independent and have their macro events (microeconomic events in retrospect) that affect their market independently. The same scenario applies to blockchain games.
Last year, we witnessed blockchain games’ rapid surge and adoption thanks to narratives like the play-to-earn or the metaverse. Like in NFTs, these trends externally affect their users and how they behave. In this case, the positive sentiment around these two narratives makes people want to participate in blockchain games.
In the summer of 2021, we saw games consolidate as the most used dapp category surpassing DeFi. For most of Q3 and until mid Q4, both types of dapp shared the usage dominance across the industry. With almost 90% of the industry’s usage combined. However, amidst the negative trend in cryptocurrencies, the use of DeFi started to decrease. Since November, the gap in usage between games and DeFi grew more expansive, and games now represent 52.4% of the industry’s activity, while DeFi’s usage dominance has fallen to 34.7%. In comparison, games and DeFi accounted for 46.5% and 41.4% of the industry’s usage activity.
Without question, blockchain games have attracted more users each month, growing the player base enormously. With widely expected play-to-earn and GameFi options set to arrive in 2022, we can expect the game category to continue driving the usage in the industry for 2022.
Behavioral patterns are insightful and helpful in drawing the trends that might shape the industry in the upcoming months. The demographic analysis sheds light on the growing interest of the Asian market. They are showing a clear increased interest in games and NFTs. The age and device analysis also are helpful to monitor the potential needs in the short term.
Moreover, combining macro indicators with on-chain metrics can also provide behavioral patterns. In this case, we can observe how NFTs and games behave independently from factors that affect the industry in a general manner, such as global cryptocurrency trends and other related indicators. Both NFTs and blockchain games performed strongly in 2021, and it appears that the trend will continue. Especially when considering the upcoming project releases and the potential use cases for both ends. While the price of cryptocurrencies is volatile by nature, the adoption, volumes, and usage of blockchain games and NFTs have only increased constantly. It will be interesting to see whether maturity in both spaces will generate sensitivity to the price of their underlying tokens.
Meanwhile, DeFi will continue to rally behind the volatility of cryptocurrencies. It should not be confused with retrocession in space. Without question, the DeFi landscape is much more complete and mature from what we had one year ago, but it faces several more significant challenges than its peers. Besides the burden of macro indicators, regulations, resistance from the traditional audience. Adoption will play a role.