Dapp Industry Overview: August 2021

NFTs are driving record volumes and the DeFi space looks more competitive than ever

August 2021 was an important month for the industry. Record trading volumes confirmed that this is the summer of NFTs, whilst some collections have surpassed $1 billion in market cap. The surge of play-to-earn games continues as certain gaming dapps contribute to the increased usage of blockchain dapps. Finally, the Decentralized Finance (DeFi) race gets more interesting as three important blockchains are becoming relevant within this space. 

The blockchain industry experienced important events during August. On one hand, some of the renowned cryptocurrencies like Cardano, Terra, and Solana reached all-time highs, with the last two being boosted by their strong performance in DeFi land. However, the headlines were once again absorbed by the NFT and gaming spaces. 

Ethereum’s NFT marketplace OpenSea generated $3.3 billion during August alone. Collections like CryptoPunks and Bored Ape Yacht Club (BAYC) seem to be perceived as a store of value and have surpassed the $1 billion mark in their respective market caps. New and established collections continue to develop interesting roadmaps as added utilities reward their owners.

Source: Google Trends

The play-to-earn revolution continues in full display with Axie Infinity dictating the pace. The game surpassed $1.7 billion in historical sales volume and keeps engaging more than one million daily players. BSC games continue to attract a good audience, whilst Wax, Hive, and EOS are mostly driven by gaming dapps. 

Note: Unique Active Wallets (UAW) or unique wallets refer to unique addresses that interact with a given smart contract; therefore, UAW does not translate to unique users.  A single individual might utilize different wallets to interact with a single dapp. 

Table of Contents

Key takeaways

  • The dapp industry registered more than 2 million daily unique wallets during August, an 18.14% increase from the previous month and an 883% increase year-over-year.
  • BSC continues to be among the most used networks in the entire industry with over 1 million unique active wallets, the network is being driven by the play-to-earn paradigm as of lately.
  • The NFT space exploded in August surpassing $14.27 billion in market cap. 
  • Axie Infinity and OpenSea ($355 million and $78 million respectively) generated $433 million in revenues during August alone, collectively representing 87% of Ethereum’s total revenue.
  • The DeFi ecosystem’s TVL reached  $142 billion where 68% of it still concentrated on the Ethereum network. Avalanche and Solana made a solid entry with more than $5 billion locked. 
  • The usage in Ethereum is shifting towards NFTs, DeFi’s unique active user wallets decreased by 17% whilst unique users interacting with NFTs increased by 202%

Usage in the industry driven by gaming

The blockchain industry continues to expand. In August, more than 2 million unique wallets interacted with a blockchain network. This number represents an 18.14% increase month-over-month and an 883% increase from August 2020. The rise in usage has been mainly driven by the rapid increase in the number of blockchain gamers. 

Source: DappRadar

The blockchain gaming sector saw its usage increase by 17% when compared to July. Around 880,000 unique gaming wallets interact with a smart contract on a daily basis. A clear example can be observed by analyzing Binance Smart Chain (BSC). BSC is amongst the most used blockchains in the industry with over 1 million unique active wallets. A protocol that initially relied on DeFi now became home to more than 470,000 blockchain gamers.  

Hive, a blockchain with high-speed and low-fee transactions, is now amongst the most used protocols and presents the second-biggest increase in terms of adoption. Over 224,000 unique wallets connect to the Hive blockchain, an impressive 459% increase from the previous month. This, mostly in part thanks to the massive rise of Splinterlands, another play-to-earn dapp that has seen massive usage spikes. 

Source: DappRadar

WAX, a blockchain that is self-defined as the King of NFTs, hosts the second most played game in the industry: Alien Worlds. The blockchain game attracted more than 580,000 unique wallets, driving most of WAX’s usage. 

The play-to-earn movement is in full swing. The most used blockchains are all supported by popular gaming dapps and the trend is probably going upwards. Whilst NFTs are getting most of the attention, it is safe to say that, currently, gaming drives blockchain usage.  

NFT sales volumes surpass $5 billion

August has become the best month for the NFT space and it’s not close. During this month, NFTs exploded, surpassing $5.29 billion in total sales volume. This represents a 315% increase month-over-month and an outstanding 1,103% when compared to June. Demand is clearly increasing in the NFT space along with the supply as new projects are being consistently launched. Thus, we observe an expansion of the NFT space as a whole. 

Source: DappRadar

Another important indicator that supports the growth of the NFTs demand is the number of sales. In August alone, a total of 5.6 million sales were registered, increasing by 22% from the numbers seen in July. 

Source: DappRadar

Finally, by considering the top 100 Ethereum collections (by sales volume) plus the NBA Top Shot collection we estimate an NFT market cap of $14.27 billion. This figure still needs to consider the Axie Infinity NFTs as well as the activity happening on other platforms like Wax’s Atomic Hub or Tezos’  Hic et Nunc. However, it is important to start putting into perspective the real size of the NFT landscape as the growth is expected to continue. For further details, I recommend reading this article

Best month in OpenSea’s history

Besides Axie Infinity and the activity happening on the Ronin sidechain, 97% of the NFT total sales volume happened on Ethereum, prominently spearheaded by OpenSea marketplace. The most recognized collections in the industry are hosted on Ethereum, and most of them can be traded in marketplaces like OpenSea or Rarible.  As the NFT sales volume spiked considerably, OpenSea was a direct beneficiary of that particular trend.

OpenSea became the most prominent marketplace, surpassing the Axie Infinity marketplace in sales volume. The marketplace registered over $3.4 billion in trading volume during August alone. This figure represents a 743.5% increase from the previous month and accounts for 75% of the historical sales volume registered on the platform. 

Source: DappRadar

Not only collections like CryptoPunks and BAYC increased their floor price significantly, but certain NFT dapps that were launched during August started with very strong sales. For instance, 0N1 Force and the Mutant Ape Yacht Club surpassed $100 million in sales volumes respectively. The sum of these factors helped OpenSea record its best month yet. 

Moreover, according to Token Terminal, the platform generated over $78 million in revenue in August. The amount represents 17% of Ethereum’s net revenue and only lags Axie Infinity as the dapp with the most revenues during the past 30 days. Just impressive.

Source: Token Terminal

NFTs reach mainstream media

The NFT micro indicators point towards the organic growth of the space. In addition, there have been indicators at a macro level that signal positive patterns from a more general perspective. 

Last month we covered announcements by Coca-Cola, Gucci, D&G, and Burberry entering the space through digital collectibles.  This month VISA, the payment processing giant, publicly announced the purchase of CryptoPunk #7610 for $150,000. The announcement was made official on the company’s Twitter, which led to mass coverage from important media outlets. The news came along with an official statement from Visa, as well as a detailed article on their main website, highlighting the relevance of NFTs in the upcoming digitally-led future.

Source: Larva Labs

Another mainstream news outbreak was originated by Sotheby’s. Sotheby’s, the world-renowned broker of fine art, jewelry, and collectibles, announced last week that 101 pieces from the Bored Ape Yacht Club (BAYC), plus 101 more from the Bored Ape Kennel Club (BAKC) will go on auction from September 2nd to September 9th. 

Sotheby’s is no stranger to NFTs. Last June, Sotheby’s auctioned CryptoPunk #7523, an alien punk wearing a mask, for a record $11.8 million. The multinational had also participated in the auction for the WWW original source code NFT as well as other NFT pieces.

Having this type of news surrounding premier NFT projects like CryptoPunks and BAYC benefits the entire NFT space and the whole blockchain industry. If this trend continues, blue-chip collections will become a real store of value.

Axie Infinity becomes a national topic

Axie Infinity just keeps going. The Vietnamese gaming dapp attracts more than 1 million daily users and became the most valuable NFT collection ever. As of the time of this writing, Axie has generated over $1.7 billion in total sales volume. Meanwhile, AXS, the game’s governance token price has risen 73.17% approximately from the end of July. AXS is currently being traded at $71.5 according to Coingecko. 

Source: DappRadar and Coingecko

Whilst we can continue providing with more of the impressive Axie’s metrics (another one, $355 million in revenues in August, probably nothing), the game has become larger than itself. Axie Infinity has become relevant enough to raise the attention of the Philippines government, a country that is home to more than 500,000 active Axie gamers. 

Axie players can earn Smooth Love Potion (SLP) tokens through gameplay. The tokens can be re-invested to improve their current gaming status but can also be cashed out for fiat money through centralized exchanges. Finance Undersecretary Antonette Tionko publicly stated all earnings from the play-to-earn platforms will become subject to tax legislation. Something to monitor in the upcoming months. 

BSC keeps adding on the gaming side

As previously mentioned, BSC is amongst the most used blockchains in the entire industry with more than one million unique active wallets. Whilst the network became mostly relevant due to the high speed / low transaction costs that allow DeFi dapps to thrive, it has been the gaming dapps that have recently boosted the network’s usage. A reflection of what is happening across the entire industry.

Source: DappRadar

Last month, CryptoBlades engaged over 350,000 unique wallets. A number that made it the third most played game in the entire industry. In August, CryptoBlades attracted more than 511,000 unique wallets, good to maintain itself among the most played games and the second most used dapp in the BSC ecosystem, only behind PancakeSwap. Yet the metrics likely show the dapp is heading towards a cooldown period.

On the other hand, dapps like X-World Games and Mobox are consistently driving new users to the Binance network. Mobox, a dapp that combines gaming features with NFT staking and yield farming, attracted over 140,500 unique wallets during August, a whopping 439.6% increase from the previous month. 

Source: DappRadar and Coingecko

Although BSC games do not offer the best gaming experience, they still manage to attract an important audience. Mostly in part due to simple in-game mechanics, BSC games have experienced an important increase in popularity. Whilst some of these games will eventually cool down, others entail a larger context behind them. Such is the case of Mobox, an important representative of the GameFi movement. 

Single games boosting entire blockchains

One of the blockchains that made the most strides during August was Hive. The Hive blockchain is known for its rapid transactional speed and low fees, making it an ideal place to host blockchain games. Home to several social dapps, Hive registered more than 224,000 unique wallets in August, a 459% increase month-over-month and a stunning 1,408% increase from the previous year. 

Splinterlands drives the success of Hive and has become the latest play-to-earn game to enjoy mass usage. The card game attracted over 207,000 unique wallets in August alone. In the same timeframe, the game created a stunning 61.24 million transactions (60.59% increase month-over-month) whilst generating over $530,750 in transaction volume. Splinterlands currently represents 92.43% of the network’s total usage. 

Source: DappRadar

A similar case occurs on WAX, where Alien Worlds creates more than half of the chain’s usage. The number could be even higher if we isolate the players that only trade Alien World items within the Atomic Market Hub. During August, more than one million unique wallets connected to the game, a 10.98% increase from July. Both Splinterlands and Alien Worlds already had sustained usage, yet they keep growing.

EOS is the third blockchain whose usage is driven by a blockchain game (Upland). The fact that one (game) dapp can nurture a whole ecosystem is perplexing and underlines the massive success the play-to-earn movement is enjoying. 

Changes in the DeFi leaderboard

After a massive summer in 2020, the DeFi space appears stagnant. Whilst there is no sugarcoating for the decrease in DeFi usage, the numbers are not particularly dire. In August, 641,000 unique wallets interacted with DeFi dapps, a 2% decrease from July’s numbers. However, the most important metric to assess the DeFi space shows better results. 

The DeFi industry’s Total Value Locked (TVL) stands at $142.1 billion at the time of this writing. This figure represents a 22% increase from the numbers seen at the end of July. It is important to mention that the aforementioned TVL considers 6 blockchains: Ethereum, BSC, Terra, Polygon, Solana, and Terra. 

Source: DappRadar, DeFistation.io, and DeFillama

Ethereum is still the leading blockchain in terms of Total Value Locked (TVL). The network’s TVL stands at $97.15 billion at the time of this writing. This figure increased 16% month-over-month and represents 68.35% of the whole industry’s TVL.  Whilst the increase is certainly encouraging, it is also worth noting that the price of ETH increased 31% from the end of July, influencing the TVL’s surge. Yet the growth appears to be organic.

The same happens in BSC, where the network’s TVL increased 24% in comparison to the end of July. BSC’s TVL currently stands at $27.3 billion and accounts for 19.25% of the industry’s metric. The BNB price increased by almost 49% maintaining the 1:2 ratio also seen in Ethereum.

It is also worth mentioning that the two most used DeFi dapps are hosted on BSC. PancakeSwap continues to be the most used dapp across all protocols. The DeFi dapp attracted over 2.5 million unique wallets during August, a 24% increase from July’s numbers. 

In addition, ApeSwap surpassed Uniswap V3 in unique wallets during August. ApeSwap registered more than 319,000 unique users during the last 30 days increasing its audience by 27.62% month-over-month. Although the volumes are still in very different categories, the engagement produced by the dapp is still remarkable. 

Source: DappRadar, DeFistation.io, and DeFiLama

A less ideal situation occurs on Polygon where the network is now fourth in terms of TVL. Despite enjoying a late success thanks to the multichain paradigm, a trend that saw multiple dapps expanding their features to Polygon, the sidechain’s TVL growth does not seem truly organic. A total of $4.87 billion are locked in Polygon, with almost half of it locked in Aave. The current TVL represents a 6% increase from the previous month. At the same time, the price of MATIC increased by 35%, leaving the TVL price increase ratio almost at 1:6.

Meet DeFi’s new players

The DeFi landscape is getting crowded. In recent weeks, three blockchains have made their footprint visible within the DeFi ecosystem. Terra, Solana, and Avalanche have finally arrived after months of consistent development. It is no coincidence that LUNA and SOL, the native cryptocurrencies of the Terra and Solana ecosystems enjoyed all-time highs whilst AVAX, Avalanche token is closer to the mark since posting it last February. 

Source: Coingecko

Terra is not new to the DeFi space. The network has been active in the DeFi space since November 2020 and is home to one of the most important stablecoins in the ecosystem, like TerraUSD (UST). Currently, Terra has over $7.59 billion in TVL, surpassing Polygon already. The blockchain’s TVL has increased 74% compared to July, and an astonishing 15,130% from December 31, 2020. 

With a design that embraces the issuance of algorithmic stablecoins whilst creating a robust DeFi infrastructure, Terra is well-positioned for the DeFi race. 

Next is Solana, a network known for its high transaction speed. The network comprises a very complete ecosystem and is well suited to enable a wide array of projects, from complex DeFi dapps to NFTs. Currently, Solana has more than $3 billion in TVL, more than doubling the metric registered in July. Since March 2021, the network’s TVL has increased 1364%. 

Finally, Avalanche. Avalanche is another blockchain that can thrive in the DeFi space. The network is one of the most secure blockchains and also utilizes high-speed transactions. A couple of weeks ago, the blockchain announced Avalanche Rush, a $180 million liquidity mining program to kickstart their DeFi journey. Avalanche’s current TVL surpasses $2 billion at the time of writing. In comparison to the previous month, the TVL has increased by a whopping 1,032%. 

All in all, the DeFi space feels more complete. The wider range of possibilities will certainly help the landscape become more competitive, hopefully resulting in better products that offer a better user experience whilst reducing friction and risks. 

Usage in Ethereum flowing from DeFi to NFTs

Ethereum is one of the most important blockchains in the entire industry. Despite the high gas fees, it is still the backbone of DeFi and it has certainly become home to the most intriguing NFT projects. After seeing that the usage is being driven by gaming as of late, it is worth revisiting Ethereum, a blockchain where games are not dominant. 

In August, we identified 75,000 unique wallets interacting with DeFi related smart contracts, whilst 48,600 engaged with NFTs. Although the first-time impression might suggest that DeFi is still the trend in Ethereum, a deeper analysis offers another perspective. 

When looking back at Ethereum’s DeFi’s usage, we can observe a downward trend. First, BSC and Polygon’s entrance into the DeFi landscape, and the full display of the multichain paradigm, lured a good amount of users that were exhausted of Ethereum’s high gas fees. In addition, the NFT mania experienced in recent months attracted users to some extent. 

Source: DappRadar

Just by comparing the trends we clearly see a shift towards NFTs happening on Ethereum. The unique wallets that interacted with NFTs increased an important 226% from the previous month and 1,440% when compared to January’s numbers. On the other hand, DeFi unique wallets decreased 16% month-over-month and have decreased 51% since the beginning of the year. 

Although the 2020 DeFi summer feels like a distant memory, in-depth analysis is required to confirm whether the real value is really shifting hands. Nonetheless, it is undeniable that NFTs have become the entry door for blockchain newcomers, and are probably attracting users from DeFi as well. 

Road ahead

The industry is expanding at increasing rates. On one hand, the usage is coming from the gaming space, whilst NFTs are driving record volumes and the DeFi space looks more competitive than ever. Overall, a great place for the blockchain industry. 

NFT mania put forth another month of impressive performance. OpenSea just had the best month in the history of all NFT marketplaces. Collections like CryptoPunks and BAYC have surpassed the $1 billion market cap and have finally gotten mainstream attention. Newer collections like 0N1 Force and Mutants Ape Yacht Club have broken the charts in less than a month of existence. Social media platforms like Twitter and Discord are flooded with avatars that represent a myriad of projects. 

Nonetheless, whilst it appears that the demand for NFTs will increase forever, it is natural to expect some kind of slowdown, especially in the avatar collections. During the last month, we started to observe a trend where generative art pieces, especially from the Art Blocks collection, are getting sold as high as $5.6 million.

Furthermore, it will be definitely interesting to see what happens to those projects that lack a tangible utility once the price of ETH increases significantly. It seems that it is just a matter of time when those projects that will not offer enough utilities to their communities, will be replaced by other types of NFTs that satisfy our inner artists’ needs such as pictures, music, or generative art itself. Whilst the current demand satisfies with the ever-growing avatars supply, a time not far away will come when users are sated with avatar NFTs. 

The blockchain gaming industry is also on a tear. The play-to-earn is becoming a way of living and is becoming especially relevant in emerging markets. Traditional gaming organizations and investors are starting to turn their heads into the space. With virtual lands and metaverses one step closer to full display, we are all waiting for the time when some of the premier NFT collections become full gaming experiences.

For now, recognized gaming dapps like Axie Infinity, Alien Worlds, and Splinterlands will continue to enjoy success at the top. On the other hand, whilst the BSC games really achieve to engage an audience, it is true that these dapps will need to revamp their in-game experience at some point to compete with a true game immersion offered by other dapps. 

Finally, DeFi. Although it seems to lose relevance during the last couple of months, the landscape feels healthier than ever. Ethereum and BSC seem settled as the top two blockchains for the space. On one hand, Ethereum still is the main place for big-time investors (whales) whereas BSC is driven by high usage as seen in PancakeSwap and ApeSwap. With the entrance of Avalanche, Solana, and Terra, DeFi users will have a plethora of options to maximize their yields. 

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The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, ADA, MATIC, SOL, AVAX, DOT, KSM, XTZ, LUNA, UNI, SUSHI, xSUSHI, ORN, AKRO, KNCL, EGLD, BAT, CRO, SHIB, LINK, BAND, BNB, CAKE, OOE, DNXC, DPET, TVK, POLS, POLK, RAMP, XED, AXS, SPS and owns collections like NBA Top Shot, CyberKongz VX, Ghxsts, Cool Cats, RSoP, SupDucks, Legendz, Punks Comic, Pixel Vault DAO, Avastars, Dogs Unchained, VeVe NFTs, and 1/1 art pieces.

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