Dapp Industry Reverses Year-Long Downtrend

Oct 2023 industry report header by dappradar
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DappRadar’s Dapp Industry Report for October 2023

This October Web3 has, for the first time this year, reversed the negative trend plaguing the dapp industry market since Q4 last year.  It could indicate that we have finally hit the bottom, and the next bull run is right around the corner.   

Key Takeaways 

  • dUAW activity has remained steady with a sub 1% change at 2.7 million UAW, while transactions saw only a slight decline of 6% to 834 million. 
  • NEAR Protocol is still the most active chain with 688k dUAW and grew its activity this month by 7% from September
  • DeFi’s TVL is up by 14% despite a 13%  drop in dUAW activity
  • The year-long downward trend in NFT trading has been broken. Trading volume is up by 32% from $306 to $405 million, returning almost to levels seen in August.
  • Gaming has increased its dominance Web3 dominance 62% which is up by 10 percentage points from September. 1.66 Million dUAW have interacted with Gaming dapps in October
  • Exploits are down by 93% from September and way below average for the quarter. MoM average amount of funds stolen is down from $14 million to $800k. It’s the lowest this year. It could be an indication that Web3 users finally have gotten savvy.

Table of Contents

  1. Dapp Industry Overview 
  2. Top 10 dapps of the month based on UAW
  3. TVL gains in DeFi as Ethereum increases its lead
  4. NFT Market sees growth first time this year
  5. Top 10 NFT collections of October 2023
  6. Gaming increases industry dominance 
  7. Number of exploits and hacks dropped
  8. Closing words

Dapp Industry Overview

Despite the tradition of frights and fears occurring in October, this month brings many good news heading into the final quarter of 2023. We witnessed the reversal of the negative trend that has been plaguing the industry since the beginning of this year. This may be the signal that we have finally hit the bottom, which then could mean that the next bull run is just around the corner. 

Dapp activity remains steady and virtually unchanged from September at nearly 2.7 million daily average unique active wallets (dUAW). Although dapp transactions took a slight dip of 6% since the surge in September, as we closed the month with a total 834 million transactions.  

The majority of the wallet activity occurs on NEAR Protocol, which remains the most active chain for the second month in a row after taking the crown from BNB Chain last month. NEAR increased by 7% this month to a whopping 687k dUAW.

Gaming continues to surge as the most active vertical of the industry. It saw its dominance increase by ten percentage points this month to a whopping 62%. In absolute numbers the dUAW activity grew to 1.66 million, which is an  increase of 17% since September.

DeFi, despite growth in TVL by 14% this month, saw its activity decrease by 12% and its dominance over the industry drop by five percentage points to 31%.

High-risk, Gambling and Social dapps UAW activity decreased by 45%, 37%, and 18%. This means that by the end of October these dapp categories had an average UAW of 12k, 31k and 227k respectively.

In turn, the NFT and Other categories have increased their UAW activity by 5% and 7% to a total of 595k and 740k UAW respectively.  NFTs and Others have naturally also increased their UAW dominance by 2 percentage points each.

industry dominance per product category in dapp market Oct 2023

Top 10 dapps of the month by UAW

The Kai-Ching marketplace on NEAR continues to be the number 1 dapp this month with 605k UAW, while increasing its activity by 5%. There is a degree of magnitude between second and first places. Second place is Alien Worlds with a mere 132k dUAW. Alien Worlds activity has remained stable since last month with a slight 2% dip.

Both Alien Worlds and Farmers World, the third spot in this top ten, utilize the WAX blockchain. We find Farmers World in third place with an average of 94,000 active wallets per day. That’s a 5% increase since September. 

In fourth place we find Seg Finance, a newcomer in the charts. This move-to-earn platform attracted an average of 69,000 dUAW in October. And we complete the top 5 with another move-to-earn platform, Sweat Economy. They boosted their activity by 30% as they launched their dapp in the United States.

top 10 dapps oct 2023

TVL gains in DeFi as Ethereum increases its lead

DeFi remains a cornerstone of the Web3 space, and the total value locked in the various dapps across the many blockchains has gone up 14%. However, the bullish market sentiment in crypto did come with increased activity. The number of transactions in DeFi dropped 5% in October, when compared to the month before. 

If we look at the 10 biggest blockchains and their TVL, then Ethereum still reigns strong. Ethereum saw its TVL grow 10% and remains the industry champion. However, the biggest growth was seen on Solana, where the TVL went up a whopping 40% in October. Yet, Solana doesn’t represent the biggest part of the DeFi industry. 

TVL on top blockchains Sept Oct 2023

Other chains such as Tron (+15%) and Arbitrum (+12%) represent more value on their chains. Various other ecosystems, such as BNB Chain and Avalanche, had very small gains. And on the other end of the spectrum we’ve seen Polygon, Optimism and Base losing some value, as their TVL shrunk 5%, 2% and 10% respectively. 

Despite the market sentiment, October wasn’t without controversies. An erroneous announcement about Blockrock’s BTC Spot ETF suggested that the SEC commission approved the ETF in the United States. This pushed the bitcoin price up from $26,800 to more than $28,000, which then instantly liquidated $30 million worth of short positions. It turned out to be an unsubstantiated rumour, and the ETF had not been approved. At the time of writing BTC hovers around $34,200.

NFT Market sees growth first time this year

This October we reversed the negative trend of the NFT volume, up by 32% from September. The trading volume is now back at more than $405 million, but the number of sales is down 5%. In terms of trading volume Ethereum is still leading the pack, seeing its volume jump 50%. With $22 million Immutable X sits in second place, carried by Gods Unchained, Cross the Ages and Illuvium.

NFT trading volume 2023 Oct

Even though there was growth on Ethereum, other chains have seen a significant drop in sales volume. Polygon, Starkware, and Flow had their sales volume drop 48%, 42% and 32% respectively. 

One blockchain worth mentioning here, would be Solana. The chain was once plagued by the FTX downfall, but now seems to revive itself. NFT trading volume on Solana grew 15% in October, placing it 5th in the rankings. Newcomer zkSync Era grew its trading volume 88% to $12 million in NFT trading volume in the past month. 

Solana volume grew by 15% this month from $24 million to $27.6 million. The 6th largest chain, zkSync, saw leaping growth this month of 88% from $7.3 million to $14 million.

In terms of sales count there has been a significant pullback for Starkware from 479,000 to 264,000 by 48% and Polygon from 1.5 million to 1.2 million, which is a drop of 23%.

Top 10 NFT collections of October 2023

Yuga Labs still has a strong presence in the top NFT collections charts, as the sales volume for Bored Ape Yacht Club increased 53% in October. Volume for BAYC reached more than $54 million, which came with a 46% increase in unique traders and sales count.

top 10 nft collection oct 2023

Another Yuga Labs collection we found in second place, but the Mutant Ape Yacht Club (MAYC) did not fare as well as their bigger ape brothers. The collection recorded an 11% decrease in sales volume and sales count, while the number of unique traders remained relatively stable.  

Just like last month, the trading card game Gods Unchained completes the top 3. Their sales volume went up 10%, while the number of unique traders increased 19%. 

The Captainz has experienced the highest relative growth of its Sales Volume from September which grew by a whopping 140%. In absolute values the Sales Volume grew from $2.8m to 6.8m. Pudgy Penguins and CryptoPunks also had significant growth in  Sales Volume, which grew by 63% and 45% respectively.  

The biggest losers this month were fantasy sport platform Sorare, which lost 53% of its Trading Volume, and Azuki, which lost 20% of its Trading Volume compared to September. 

We also have a newcomer this month with Refik Anadol’s Winds of Yawanawa, an art collection by one of the leading artists in the digital age. After minting in July, Winds of Yawanawa quickly became a preferred collection for art and NFT collectors. Anadol’s latest creation managed to secure its place as the 10th most-sold collection of October 2023 with a volume of $7 million.

Top NFT Collections by Unique Traders Oct 2023

Gaming increases industry dominance

Blockchain gaming continues to dominate the blockchain activity. This month there were 17% more UAW interacting with gaming than in September, totaling 1.7 million unique active wallets. This increase also meant that blockchain gaming increased its dominance over the market by 10%. In October approximately 62% of all dapp activity came from gaming projects. 

Among all NFT collections, gaming stands out. Sorare, Axie Infinity and Gods Unchained retained their position among the most traded NFT collections. At DappRadar we see this continued interest in gaming as an important catalyst for further industry growth. We will provide a deepdive into the data in our upcoming blockchain gaming report in collaboration with the Blockchain Game Alliance.

Number of exploits and hacks dropped

A significant piece of good news this month is that the amount of money stolen through hacks and exploits in the Web3 industry has dropped. In October, the total amount of funds deprived of the industry through various illicit means plummeted 92% since September.  The drop went from $270 million stolen to $19.2 million. The average funds lost per incident also decreased from $14 million to ‘just’ $836,000.  October has seen the smallest amount of crypto stolen since May 2023, when hackers netted $22 million.

Blockchain and Web3 exploits and hacks in Oct 2023

The most popular type of scam or hack, is still the rugpull. In October, 19 out of the 22 incidents can be labelled as such. These scams account for 41% of the October’s stolen funds. However, the lion’s share (54%) belongs to the Fantom Foundation Access Control exploit and the Avalanche reentrancy attack. These two attacks drained $10.3 million from the ecosystem.

These types of attacks are rare and usually target developing chains and projects. Rugpulls still make up the majority of the cybercrime, and most of these take place on BNB Chain.

Closing words

October has been a positive one, as many vital indicators have been either steady since September or noticeably improved. Uptober sure lived up to its expectations, but we will need to see consecutive months of growth in order to really be positive about this growth. 

The NFT market has finally defied the downward trend, even though we still consider it too early for a party. More on-chain activity for gaming bodes well for this industry sector, while DeFi saw a drop in activity. 

As platforms improve and user education increases, we hope to see continued growth for the wider Web3 industry. The stars may be aligning for a new bull market, even though the adoption of dapps and blockchain technology isn’t only impacted by price but moreover by actual need or product innovation.

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