Dapp Industry Report – April 2022

April Dapp Report
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Moonbirds and Solana help NFTs get back on track, DeFi finds multi-chain success while blockchain games continue to drive dapp and blockchain usage

This April blockchain activity measured by the number of daily Unique Active Wallets (UAW) interacting with any dapp outperformed the levels seen in March. Over 2.36 million daily UAW connected to blockchain dapps in April, a slight 0.2% increase from March.

BNB Chain and Wax saw the highest average of wallets connected with 568,000 and 492,000 daily UAW. Hive and Polygon, networks with popular blockchain games, are among the most utilized networks, proving that games fuel the industry’s activity. 

Source: DappRadar

Notably, the number of UAW connected to Solana dapps increased 58% from March and has surpassed 100,000 daily UAW for the first time. Orca Finance, a decentralized exchange (DEX), became the chain’s most used dapp and saw its usage increase by 200% from March. Magic Eden, Solana’s second most used dapp and its most popular NFT marketplace, attracted 15% more wallets than the previous month as the demand for Solana-based NFTs keeps growing. 

Nonetheless, Solana suffered yet another major outage on April 30, when the network halted operations completely for around eight hours due to botting on the Metaplex Candy Machine, a program used by Solana NFT projects to launch their collections.

April showed that cryptocurrency and dapp adoption keeps rising amid a complex financial scenario accentuated by record inflation. The NFT market appears to be hot again after a six-week cooldown with the launch of two of the most anticipated collections ever and a surge in demand for Solana NFTs. The network congestion caused by NFT activity in leading smart contract platforms Ethereum and Solana, says it all. 

Moreover, blockchain games attract VC capital at record levels and drive over half of all blockchain activity tracked by DappRadar. Meanwhile, the DeFi space faces the challenge of a fearful market alongside tumbling crypto prices.

Key Takeaways

  • The NFT market recovered from a six-week cooldown period with $6.3 billion in monthly trading volume; Moonbirds were a big driver with $0.5 billion generated in trades becoming the 11th most traded collection in history.
  • NFT trading volume on Solana grew 90% from March reaching $295 million; Okay Bears and DeGods made their way into the top 30 most traded NFT dapps in April.
  • Yuga Labs’ Otherside land drop stirs the crypto market with $340 million in APE from the mint and $420 million in secondary trades; nonetheless, the drop leaves over 55,000 ETH burnt and $4.5 million lost in failed transactions.
  • Terra’s DeFi presence grows with $29 billion locked; the industry’s TVL is estimated at $198 billion, shrinking 12% from the previous month, but 47% higher than April 2021

Contents

Moonbirds and Solana help NFTs get back on track

The NFT market appears to recover from a cooldown period experienced since mid-February. For just the third time in history, the monthly trading volume surpassed $6 billion ($6.3 billion), growing 23% from March. The trading volume rose 91% month-over-month (MoM) on the Solana blockchain after NFT trades generated close to $300 million. Ethereum marketplace LooksRare processed over $2.5 billion in trades, improving 9% MoM, while OpenSea generated $3.4 billion in volume. 

Top-tier collections like BAYC, Azuki, RTFKT, and VeeFriends flashed the robust utility of their respective ecosystems. Holders of these NFTs are rewarded with additional NFTs of ensuing collections like Otherdeeds, Beanz, CryptoKicks, or VeeFriends 2 with worthwhile floor prices. Nonetheless, it was a new NFT dapp that stole headlines in April.

Moonbirds, an NFT project launched by members of the PROOF Collective, sparked life back into the NFT market by generating almost $500 million in trades, the highest for any NFT collection in April. Moonbirds ranks as the 11th most traded NFT collection ever at writing, surpassing established projects like Meebits, Doodles, and Cool Cats in just two weeks after launching. The demand for the pixelated owls has been strong and has helped Moonbirds’ floor price rally past 30 ETH (34 ETH at writing).

The PROOF Collective, a private members-only group of 1,000 collectors and creators led by Kevin Rose and Justin Mezzell, is increasingly looking like a leading Web3 metaverse brand with solid utility and community factors. It will be worth monitoring PROOF’s activity in the upcoming months.

Source: DappRadar

Similarly, Solana-based NFTs continue to see a surge in demand. Collections like DeGods and Okay Bears made their way into the top 30 most traded NFT collections in April with $44 million and $23 million in sales respectively. The Solana NFT bull run can be partially attributed to the network’s integration with OpenSea, as the leading NFT marketplace increases the visibility of these NFTs exponentially. It will be interesting to monitor if the integration of Solana into OpenSea affects the performance of other NFT marketplaces in the ecosystem. 

Nonetheless, collections like Solana Monkey Business, Aurory, and Degenerate Ape Academy, and marketplaces like Solanart and Magic Eden are the true pioneers in Solana’s ecosystem. Along with these dapps, the network’s community has paved the way for improved performance. 

In April, Solana generated $295 million in NFT trades, increasing 91% from March’s trading volume. In the same way, it is worth noting that the average sale price of NFTs in this network has risen to approximately $350, showing value in these assets.

Source: DappRadar

The NFT market continues to prove naysayers wrong. Hyped projects like Moonbirds or Otherside continue to amass massive volumes on Ethereum while Solana and other blockchains prepare to burgeon NFT markets in their respective networks. Also, monitoring Coinbase’s marketplace, which launched in Beta on Ethereum on April 20, is something to keep on the radar. 

Otherdeeds generate $760 million in 24 hours

One of the most expected NFT drops in history took place on April 30 (US time), when 55,000 out of the 100,000 Otherside land plots or Otherdeeds, were available to mint to those addresses that registered in the Yuga Labs / Animoca Brands KYC process. The event was expected to cause high gas fees as Otherdeeds probably represented the last opportunity to be part of the vibrant BAYC ecosystem. However, the gas price was worse than expected, exceeding 2.5 ETH during the minting period. The drop congested Ethereum for at least three hours, affecting thousands of users with average gas fees of 196 gwei, levels not seen since DeFi summer in 2020. Ethereum miners were happy about the drop. 

Source: DappRadar

Furthermore, the Otherdeeds drop pushed Ethereum’s burn rate to an all-time high since the EIP-1559 implementation. The minting process burnt around 56,000 ETH, or around 70% of all the assets burnt in the last seven days. Otherside managed to single-handedly turn Ethereum into a deflationary asset. 

Source: Ultrasound.Money

The Otherdeeds’ mint leaves the NFT market with a bittersweet experience. On the one hand, it is impressive to witness the awareness that Yuga Labs created as a Web3 brand in only one year, becoming one of the most exclusive communities in the world. Moreover, the full utility from minting a BAYC for 0.08 ETH one year ago, and holding it until last weekend surpasses at least $1 million in NFTs. 

The drop provides Yuga with $340 million in APE from the primary sale and at least $21 million in creator fees from the 150,000 ETH ($420 million) traded in the secondary market. Otherside positions Yuga Labs at the forefront of exploring the exciting convergence between gaming and the Web3 metaverse.

The question remains whether the team could have executed things differently to avoid the 55,000 ETH ($150 million approx.) burnt in the process. However, most importantly, what could have been done to prevent the 14,000 failed transactions, which caused more than 11,800 wallets to lose $4.5 million in transaction fees. As a positive gesture, Yuga Labs has confirmed it will reimburse those users who lost ETH in the mint process. Still, the event left the Web3 community questioning the best way to approach NFT drops.

DeFi’s TVL shrinks 12% as Terra’s TVL dominance grows to 15% 

DeFi struggles against a bearish market scenario, following the trend observed for most of the year. The declining crypto prices continue to affect DeFi blue-chip tokens like UNI, CAKE, and AAVE, having lost 80% from their all-time high set in Q2 of last year. With that decline in token pricing, the industry’s Total Value Locked (TVL) shrunk. That means that the value of tokens locked into smart contracts has dropped. 

Source: DappRadar

The industry’s TVL shrank 12% from the previous month, failing to keep March’s momentum. Blockchains rich in DeFi like Fantom and Solana have lost traction, although dapps like SpookySwap, Orca, and Raydium are still highly used. In perspective, the industry’s TVL has grown 47% from April 2021 and currently sits at $198 billion approximately. 

More importantly, DeFi has expanded into multiple ecosystems beyond Ethereum, which had monopolized 92% of the TVL one year ago. Ethereum’s TVL dominance has fallen to 59% at writing, while Terra now holds 15% of the industry’s TVL. 

Source: DappRadar

Terra stole crypto and fintech headlines last month by announcing a commitment to buy $10 billion worth of BTC to build a reserve for its native UST stablecoin. Even though the move was considered dicey, the market reacted positively to the news. Nonetheless, on April 7, the Luna Foundation Guard revealed an update to their strategy. Terra teamed up with Avalanche, aiming to diversify risk by acquiring Avalanche tokens worth US$100 million from the Avalanche Foundation to boost the stablecoin reserve in upcoming months.

The Cosmos-based network has become a DeFi powerhouse with almost $30 billion in value locked inside its DeFi protocols. Anchor, for instance, is a top 3 dapp by TVL, with over $16 billion locked in the protocol surpassing leading dapps like MakerDAO, Uniswap, Aave, and PancakeSwap. The lending and borrowing protocol offers one of the most attractive stablecoin yields, making it an enticing option for risk-averse investors. With arguably one of the most exciting and robust stablecoins ecosystems, Terra presents itself as Ethereum’s latest DeFi challenger. 

Besides Terra and its rising ecosystem, less utilized networks like Cronos, Aurora, and Near appear to gain traction amid the challenging period for the DeFi category. Investors look around to mitigate risks, and these blockchain networks could become the new rising stars. 

Cronos for instance is an EVM-compatible network sidechain by Crypto.com to scale DeFi transactions. The network relies on MM Finance (MMF), the sidechain’s Automated Market Maker (AMM), and the most used dapp. MMF hosted 101,000 UAW in April, 38% more wallets than the previous month.

In a similar way, NEAR, a PoS blockchain that implements sharding to enhance its scalability, showed signs of organic growth in terms of DeFi activity. The TVL locked inside this Layer-1 more than doubled from March and has gained 440% since the end of January. 

Near holds approximately $500 million in TVL at writing, surpassing networks like Optimism, Harmony, Celo, and Cardano despite a 23% traceback of NEAR, the network’s native token. The surge of newer blockchains like Near could trigger positive effects in the industry. For example, the one shown by the Rainbow Bridge might end up laying a blueprint to enhance security in trustless cross-chain transactions.  

In all, DeFi continues to be the most affected category amid the bearish trend in the crypto market. DeFi transactions are at a one-year low, and the industry’s TVL shrank 12% from March. Nonetheless, positive trends on Terra and other networks create positive expectations for those passionate about the fundamental DeFi industry and the wider blockchain space. 

Blockchain games drive 52% of the industry’s usage 

Blockchain games continue to drive the industry’s activity and capture the attention of diverse audiences, including players and VCs. As of April, game dapps account for 52% of the industry’s unique active wallets, despite strong resistance from traditional gamers and the hack that affected the Ronin Bridge, the Ronin Network, and Axie Infinity. Game dapps have dominated the blockchain scene regarding user activity since October of last year without signs of slowing down. 

Furthermore, networks rich in games, namely BNB Chain, Wax, Hive, and Polygon, are the leaders in on-chain activity. With game activity rising in other ecosystems like Avalanche and Harmony, the outlook of blockchain gaming looks solid. 

We can also identify notable changes in the game activity leaderboard. Splinterlands, Alien Worlds, Farmers World, and Upland retain their top 5 positions, although Axie Infinity and Polygon’s Crazy Defense Heroes have fallen off the charts. At the same time, game dapps that tap into the GameFi movement, such as Sunflower Land and DeFi Kingdoms, have gained ground.

To learn more about these leading game dapps and the most notable metaverse trends, including investment opportunities and Web3 brand awareness, read the April DappRadar x BGA Games Report.

Move-to-earn and the monetization of routine activities

One of the hottest dapps in the industry lately is Stepn. Stepn defines itself as a lifestyle dapp with GameFi elements that allow users to earn GST (Green Satoshi Tokens) by walking, jogging, or running. To play and earn GMT, runners have to acquire an NFT sneaker to start tracking their activity on their mobile apps via GPS to get rewards. GMT can be swapped or used to level up the NFT sneaker. 

The Stepn ecosystem is complemented by GMT (Green Metaverse Token), the dapp’s governance token. Both GMT and GST have performed well in April, boosting the demand for this Solana move-to-earn dapp. GMT is currently traded for $3.25, representing a 327% jump from March, while the price of GST at writing is $6.42, 40% higher than last month. 

Stepn possesses traits proper for a Web 3 ecosystem. The gaming aspect, without question, stands out. Gamification begins as a bridge between routine activities and a way to monetize them using crypto. Also, the NFT sneakers can be leased or sold in compatible NFT marketplaces, including Magic Eden on Solana, adding another monetization layer. As a note, Stepn’s NFT sneakers have amassed over 32,000 SOL or $2.83 million in lifetime trades.

Stepn is just one of many dapps to venture into new Web3 paradigms, let alone move-to-earn. Fitfi, Genopets, Dustland, Dotmoovs, and a few other dapps are also exploring this new movement. Even though Stepn is currently leading the pack, admission is one of the steepest in the entire blockchain game industry (around $1,200 for an NFT sneaker at SOL’s current prices). We’ll continue monitoring the performance of move-to-earn dapps.

Closing

April was an exciting month overall for the dapp industry. Although usage levels remain stagnant from Q1, and the entire crypto market keeps struggling, the trends and signals observed in the three main categories are promising.

The NFT market is officially back after six weeks of lower trading volumes. The launch of Moonbirds reminded everyone that the next “blue-chip” project is waiting to happen, and everyone involved will have a chance to be part of it. Meanwhile, Yuga Labs created a seismic shift in the NFT market with its Otherside drop, generating half a billion in trades in just three days. Teams like PROOF, Azuki, and RTFKT will be instrumental in the metaverse development.  

The surge of NFTs is not only a result of Ethereum-based collections. Solana NFTs experienced an increased demand spearheaded by DeGods and Okay Bears, two projects with bonded communities. With solid marketplaces and an excited and active community, the only limits for a Solana NFT market explosion might be the technical difficulties of their chain. 

Besides NFTs, blockchain games maintained their strong momentum. VC investments keep coming, and most of the leading game dapps successfully retain their audience. But perhaps the most important trend is the gamification element embedded into everyday activities. The game element that dapps like Stepn add to the move-to-earn paradigm might propel games and blockchain technology to a mainstream audience much sooner than expected.

Finally, although DeFi has faced the most significant challenges, the space showed positive signs. TVL decreases at lower rates than the underlying cryptocurrencies, offering room for growth. Likewise, the positioning of Terra as a DeFi juggernaut and the rise of networks like Avalanche, Cronos, and Near among solid options to lend, borrow, and earn passive yield paint a bullish outlook for the still completely relevant dapp category. Hopefully, the failed attack on the Near Rainbow bridge is just the start of a hot streak in DeFi land.

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