Dapp Industry Report – January 2022

Dapp Industry Report January 2022
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Record month for NFTs despite the crypto crash

The Dapp Industry Report for January 2022 shows that blockchain activity remains, despite the crypto market crash. Gaming and NFT collections once again had an important role in the key metrics, while the TVL in DeFi logically saw quite a drop.

Even though the dapp industry took a big step towards adoption in 2021, the crypto market is undergoing a bearish period due to a series of macroeconomic events. The essential cryptocurrencies, including Bitcoin and Ethereum, are as much as 50% down from the all-time highs seen in November, tarnishing the market with a feeling of fear, uncertainty, and doubt.

In contrast to the market sentiment, categories like NFTs and games perform positively. 

The NFT market amassed a record-breaking month of $16 billion in sales, although 60% of it originated from artificial trading. The games category keeps building momentum as the top play-to-earn dapps continue to grow their player base, and several projects are attracting millions in investments. Meanwhile, the DeFi space showed maturity amidst the highly volatile period and underwent intriguing changes to the TVL leaderboard.

Key Takeaways

  • Despite the crypto market crash, 2.47M UAW connected on average per day to a blockchain dapp, decreasing only 2% from the numbers seen in December. 
  • Excluding LooksRare $10.7 billion in sales volume, the NFT space amassed $5.3 billion in trades; almost 90% were transacted in OpenSea. 
  • The floor market cap for the top 100 NFT collections estimated at $14.8 billion decreased only 15% from November despite the 50% drop in ETH’s price over the same period. 
  • The industry’s TVL is estimated at $178 billion, shrinking 23% from the end of December; 65% is locked in Ethereum.
  • The games category continues to drive the usage as 52% of dapp’s users come through games.

Table of contents

2.47M unique active wallets per day

Despite the negative trend in the cryptocurrency market, the usage across the industry mostly remained consistent. An average of 2.47 million Unique Active Wallets (UAW) connected to a blockchain dapp per day in January, decreasing 2% from the 2.53 million registered in Q4 2021; however, there is no time for concern yet. 

For the first time since June 2021, the industry registered a decrease in the number of wallets connected to dapps, coinciding with a bearish trend in the crypto markets. However, this time, the drop was way less sufferable. To put in perspective, in June 2021, the number of UAW decreased 23% after May’s crypto crash. This time, the usage appears to be more resistant, even though the price dip was more severe. 

A good amount of that support came from blockchain games, as the category increased its usage dominance across the industry. In January, game dapps accounted for 52% of the dapp’s usage, improving from the 49% measured at the end of 2021. 

UAW connected to NFTs grew 2%, with over 185,000 UAW on average per day in January. On the other hand, DeFi dapps appear to be more sensitive to the crypto market. The usage of this category tumbled 3%, with 825,000 UAW connected daily to DeFi dapps in the last month. DeFi’s user dominance fell from 36% at the end of last year to 33% at the time of writing.

From the blockchain perspective, Polygon was the biggest gainer. The scaling protocol grew its wallet base by 78% compared to December, with blockchain-based games behind the boost. Harmony, another scaling solution, saw its user base grow 23% thanks to DeFi dapps that include ViperSwap and Sushi

On the other hand, there is a steep decrease for BSC. The Binance-branded network saw its number of unique active wallets decline by 20% compared to December. The crypto crash had a more visible effect here, as the blockchain relies heavily on DeFi dapps. It will be interesting to see how BSC native dapps respond to this setback.

LooksRare propel NFTs to record-breaking $16 billion month

Last year, the NFT market exploded en route to generate $25.5 billion in trades, 18,400% more than the four previous years combined. And the first 31 days of the year confirmed that NFTs are gaining even more momentum. 

The NFT market witnessed the successful launch of the newest Ethereum marketplace, LooksRare. Relying on a community-driven approach that rewards users for their activity within the platform, LooksRare has presented a challenge to OpenSea’s marketplace dominance.

LooksRare has amassed over $10.7 billion in trading volume after launching on January 10. That’s more than double the rest of the entire NFT market combined. However, most of these trades are inorganic.

LooksRare incentivizes trading by rewarding the users with 100% of the 2% trading fees collected by the marketplace in eligible collections (previously, at least 1,000 ETH of historical trading volume). The fees collected are then distributed to those users staking LOOKS, the marketplace’s governance token, awarding them with an extra yield to the APY obtained for staking the token. This tokenomics model has led to a surge in inorganic activity in the marketplace, often labeled as wash trades.

Collections with 0% royalty fees such as Meebits, Loot (for Adventurers), Terraforms, and several others, have been targeted for this type of activity. Analyzing over 36,000 January sales in LooksRare, we identified more than 4,600 trades involving Meebits with an average price of 366.14 ETH. A significant difference compared to Meebits trades outside of the LooksRare marketplace, where the average sale price is 4.65 ETH. 

Without a question, looking only at the trading volumes may indicate that LooksRare is overperforming OpenSea and other peer marketplaces by a wide margin. However, in-depth analysis in other on-chain metrics indicates otherwise. 

While the trading volume of LooksRare is impressive, the metric is inflated by artificial trading. Around 535,000 unique traders transacted at some point in OpenSea during January, almost 1,800% more traders than the 35,000 identified in LooksRare. The sales count follows the same pattern, with over 4.7 million trades executed in OpenSea compared to the 33,750 hosted in LooksRare.

While the community-centric approach might be beneficial to the market as a whole, there is a glaring need to acknowledge the current situation and understand that a high percentage of the trading volume (estimated around 90%) in the marketplace is inorganic. An amount that might be on the rise as the dapp announced that all collections will now be eligible to reward stakers. On the other hand, NFT projects like Loot are already reacting to artificial trading, in this case, by imposing a 2% royalty fee. 

If you want to learn more about the LooksRare marketplace and its impact on the market, you can take a look at this report

Bull run in the NFT market despite crypto crash

Unfortunately, LooksRare artificial trading slightly shadowed the impressive start of the year NFTs had. Even without the impact of LooksRare, the NFT market surpassed $5 billion in trading volume for the first time since August 2021. It is worth noting that January sales reached almost $5.3 billion (measured in USD) despite the low ETH price levels.  

At the same time, OpenSea had its best month yet. In January, OpenSea accounted for almost 90% of the NFT trading volume, excluding LooksRare.The marketplace became the most used Ethereum dapp and collected $4.5 billion in sales, a record for the platform. Also, it saw a record number of unique traders and sales. 

Contrary to the use trend in other categories, the interest for NFTs is riding high (see the first chart). It feels like the NFT market is currently undergoing a bull run. An important trend to consider is the fact that NFTs are gradually consolidating as an asset class on their own. 

As pointed out in our latest research in collaboration with The Defiant, the value for certain NFTs is increasing despite cryptocurrencies’ bearish trend. Collections like BAYC, MAYC, Doodles, World of Women, and many more, are not only increasing their value in terms of ETH, but the real value in USD has grown despite ETH being 50% from November. 

Following the same idea, the floor market cap estimated for the top 100 NFT collections in January is $14.8 billion. That’s 15% less than the value registered in November when the figure reached $17.2 billion. Despite the 50% hit to ETH, the value of the 100 most traded collections was affected only by 15%, showing that the category resisted the crash. 

It appears that NFTs becoming ubiquitous is inevitable. Celebrities and renowned brands are getting involved within the NFT space. People with a massive social reach are embracing the use of NFTs, most of them as collectibles. In this month, Neymar Jr, Justin Bieber, Kevin Hart, and Eva Longoria, to name a few, shared their recent NFT acquisitions on their respective social media profiles.

kevin hart

In the same way, Twitter enabled its first web3 functionality by allowing the verification of avatar NFTs, paving the way for other platforms like Instagram or Tik-Tok. Also, massive brands like Adidas and Nike joined the space last year. This month, retail giant Walmart filed for several trademarks intending to be used as NFTs in the metaverse.

New rankings in the race for TVL

DeFi found itself in a challenging situation amidst the crypto crash and lost in the hype around NFTs. At the time of writing, the industry holds $178 billion in TVL, a 23% decrease from the value observed at the end of December. Still, the drop in the industry’s TVL is lower than the 50% reduction in the price of the underlying cryptocurrencies.

On the positive side, the DeFi space showed maturity and improvement once again. The multichain paradigm is still on full display and remains a critical aspect of the performance of certain DeFi dapps. Moreover, the behavior of the most relevant stablecoins was solid. The programmatic designs of these assets proved that stablecoins could resist the high volatility periods observed in the market. 

In terms of TVL, Ethereum is still the dominant chain, holding 65% of the industry’s metric, albeit a two percent decrease from the 67% dominance observed at the end of last year. At the time of writing, Ethereum holds $113 billion in TVL, 25% less than in December. 

Meanwhile, BSC and Terra remain locked in a battle for the second position. Both networks hold more than $13 billion each, although this month, their TVL decreased by 24% and 28%, respectively.
The biggest gainer in terms of TVL was Fantom. The highly scalable layer-1 solution almost doubled its TVL in the last 30 days surpassing $9 billion during January. Dapps taking advantage of the multichain paradigm and the right incentives program have propelled the network to the fourth spot in the TVL rankings.

Games absorb 52% of blockchain users

The game category flashed positive signs amid news surrounding NFTs and cryptocurrencies. As previously mentioned, the game category accounts for 52% of the dapp’s connected unique wallets. A good reason is high retention achieved by top game dapps, one of the most vital indicators for games. Based on January’s on-chain metrics, the top blockchain-based games successfully retain their player base.   

From the top 5 most played games, only Alien Worlds failed to increase the number of UAW from the end of 2021. Splinterlands is still the most played dapp game in the industry (based on on-chain activity). In January, the play-to-earn trading card game attracted over 305,000 UAW, expanding the number of wallets connected in 2021 by 4.5%. 

Farmers World, the GameFi dapp hosted on Wax, became the third most played game in the industry, attracting over 111,000 daily UAW on average. Axie Infinity and Upland round up the top 5 most played blockchain games.

The impact generated by games is quite visible in the Polygon network. The sidechain increased its usage by 78%, as previously mentioned, with blockchain games behind the rise. Leading the way is Sunflower Farmers, a farming play-to-earn dapp that managed to attract almost 480,000 UAW in the last month. Sunflower Farmers became the most played game on the network and generated over $2.4 million in transactions.

Crazy Defense Heroes, a tower defense play-to-earn dapp developed by Animoca Brands, has also climbed the game rankings. The second most played Polygon game doubled its player base from 2021, with almost 170,000 UAW registered in January. Arc8, a mobile play-to-earn game, rounds up a complete gaming ecosystem in the Polygon sidechain.

Polygon’s current situation exemplifies the boost that curated blockchain games may give to an entire blockchain. Established game dapps like Splinterlands, Axie Infinity, or the Wax games can sustain their networks almost singlehandedly by successfully engaging their audience. At the same time, the incursion of new game dapps has solidified the outlook of scalable solutions like Polygon, Harmony, and Immutable.

Long awaited RON token finally live

Regardless of the market conditions, the Sky Mavis team keeps delivering. This time, by publicly releasing RON, Ronin’s governance token after the 90-day window to farm RON concluded. With the governance framework in place and Katana’s enabling a full suite of DeFi features, the sidechain looks as complete as ever.

It is necessary to consider Ronin as one of the relevant networks in the industry going forward. As important milestones in Axie Infinity loom on the horizon, the sidechain home to the popular play-to-earn dapp is preparing to receive even more users as the year progresses.  


Despite the crash in the crypto market, the dapp industry showed visible signs of maturity and evolution. Starting with NFTs, which are gradually becoming a new class of assets on their own. One that is resisting the markets’ crash and even increasing their value.

The presence of LooksRare as a consolidated marketplace is intriguing, although the high artificial trading is not ideal for the space. Nonetheless, OpenSea’s records in traders, sales, and trading volume all but confirm the NFT bullish trend. 

Even though the adversity of the bear market, DeFi has flashed positive signs. The performance of stablecoins across different protocols provides trust to millions of DeFi users as the most relevant ones were able to maintain their 1:1 peg to the USD despite the highly volatile period. Plus, the completeness and competitiveness of the DeFi space will keep dapps looking for better ways to engage their users. 

Finally, the games category successfully retains its player base, a critical game indicator. And in cases like the Polygon play-to-earn dapps, it engages a new audience. With a record capital invested in the space, expect blockchain-based games to stay active on this year’s radar.

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