Dapp Industry Report: Q3 2021 Overview

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The blockchain industry grew 25% quarter-over-quarter and 509% year-over-year

The Dapp Industry Report by DappRadar provides an industry wide overview of the latest developments in the blockchain ecosystem, using metrics and data to create an understanding of the latest trends. This reports covers Q3 2021 and dives deeper into DeFi, NFTs, gaming and everything in between.

“If I were to sum up Q3 in a single word, it would be “diversification”. The play-to-earn movement became a key driver in the space, NFTs turned towards greater utility and secured record volumes, and the DeFi space got a lot more interesting and competitive with the likes of Solana and Terra”

Modesta Jurgelevičienè, Head of Finance & Research at DappRadar

The blockchain industry continues its steady rise. During September, 1.7 million Unique Active Wallets (UAW) connected to any type of dapp on a daily average, bringing the quarter daily average to 1.54 million. Despite ups and downs in the crypto market, the play-to-earn movement continued to add gamers, the NFT space saw record volumes and the DeFi space got more interesting and competitive.

Key takeaways

  • The blockchain industry grew 25% quarter-over-quarter and 509% year-over-year in terms of Unique Active Wallets, reaching 1.54 million daily UAW on average during Q3. 
  • The NFT market cap for Top 100 Ethereum collections + NBA Top Shot is estimated at $14.19 billion, supporting the value flow into the NFT segment.
  • Games continue to drive usage within the industry. UAW connecting to game dapps increased 140% QoQ, while DeFi and NFT connected wallets decreased by 11% and 2% respectively from the previous quarter. Nonetheless, usage increased in all categories compared to August. 
  • Splinterlands became one of the most played dapps in the industry; the Hive-based game increased its usage by a staggering 1,376% quarter-over-quarter, reaching 238,000 daily UAW on average during September.
  • Axie Infinity keeps shattering records as the game became the most traded NFT collection ever, surpassing $2 billion in historical trading volume.
  • The NFT space generated $10.67 billion in trading volume during Q3, an increase of 704% from the previous quarter. Ethereum and Ronin accounted for 77.73% and 19.53% respectively from the record numbers.
  • The DeFi space gets competitive as Terra, Solana and Avalanche consolidate as DeFi players. The TVL in the industry rose 53.45% QoQ reaching $178.12 billion.

Table of Contents

Usage driven by games again

The blockchain industry continues its steady growth. During September, 1.71 million Unique Active Wallets (UAW) connected on a daily average to a blockchain dapp, bringing the quarter average to 1.54 million UAW. This number represents a 25% increase from the previous quarter and an impressive 487% year-over-year. 

Source: DappRadar

One of the main drivers behind the steady rise in the industry has been the games category. The play-to-earn (P2E) movement has attracted millions of users across several blockchains. This sector attracted 754,000 daily UAW on average during the quarter, improving the metric by 140% from the previous quarter. Networks like Hive, BSC and WAX have benefited from the P2E trend.

The visible shift to the games category is strengthened by analyzing the new dapps launched in recent months. NFT and games dapps have been rising since June. On the other hand, there is a clear decrease in the launch of DeFi dapps. Still, the dapps figures confirm that the usage is increasing within the industry.

Source: DappRadar

Despite record volumes seen in the NFT space and increased availability of DeFi protocols, usage decreased slightly in both categories. For instance, NFT dapps registered 102,000 UAW on average during the quarter. A slight decrease of 2% from the previous quarter. Yet, it is worth noting that the trading volumes represent a clearer indicator of the state in the NFT sphere.

Axie Infinity – Ronin – marketplace

Axie Infinity just had another impressive quarter. The game continues to excel since its move to the Ronin sidechain solution. According to Sky Mavis, Axie Infinity has surpassed 1.5 million active users during Q3. In addition, during this quarter, the game generated over $776 million in revenues. Easily surpassing entire blockchains like BSC and Bitcoin.

Source: Token Terminal

Yet, the most impressive milestone achieved by Axie relates to the trading volume. In September, Axie surpassed $2 billion in all-time trading volume, becoming the first dapp to reach that number. Currently, Axie Infinity’s historical trading volume ascends to $2.18 billion. To put that in perspective, the closest collection is CryptoPunks, lagging $800 million behind.

Source: DappRadar

Axie Infinity has become the spearhead of the P2E movement. The dapp dictates the pace of the game sector and it looks like it will just become stronger. AXS’ staking has just launched and upcoming updates in the battles and land mechanics will lure even more players.

High-level games snapshot

As previously mentioned, the P2E movement has become one of the main drivers behind the industry’s incremental growth. Whilst Axie Infinity continues to over exceed expectations, there are several other game dapps that are worth looking into.

Starting with Splinterlands, the trading card game hosted on the Hive blockchain. Splinterlands managed to attract 238,000 UAW in September, bringing the quarter average to 108,000 unique wallets. The quarterly usage represents a staggering 1,376% growth quarter-over-quarter. 

Source: DappRadar

Splinterlands is one of the dapps that sustains an entire blockchain, as it represents 95.6% of Hive’s traffic. Even so, there are other peer blockchains that rely upon a game dapp to drive value into their respective networks. This is also the case with Upland on EOS, and to a lesser extent, Alien Worlds on WAX.

The BSC game sector also experienced an interesting quarter. The Binance-branded network put up impressive numbers in terms of usage during Q3, mostly driven by the GameFi movement. The daily UAW connected to BSC games reached 168,500 for the quarter, and peaked with 286,500 during August. The quarterly number represents an impressive 1,701% growth quarter-over-quarter.

Despite the cooldown in September, the network still hosts some of the most used game dapps in the industry. For the majority of August, CryptoBlades was the third most played blockchain game, and Mobox, the GameFi representative, has consolidated amongst the Top 5 most played games for more than 6 weeks.

The blockchain game sector has proven that it will become one of the key foundations of the industry going forward. A set of new projects and enhancements to existing ones are set to launch in upcoming months. To learn more about the game sector, keep an eye on DappRadar’s upcoming in-depth game sector review.

Behind the record numbers in NFTs

The last two months have been a literal explosion for the NFT market. August was a record-breaking month with over $5.2 billion in trading volume. In September, the volumes slowed down from the blistering August numbers, but still, the numbers are impressive. In Q3, the NFT space generated over $10.67 billion in trading volume. This represents an outstanding 704% increase from the previous quarter and a colossal 38,060% increase year-over-year. Simply remarkable.

Source: DappRadar

There is not a single but multiple reasons behind the outstanding performance. The space is evolving completely. NFT projects are finding their way to become more than simple profile pictures. Furthermore, they are becoming brands. Renowned celebrities like Snoop Dogg, Shaquille O’Neal and Steve Aoki are amongst the latest members to join exclusive communities, further strengthening the social outlook of the NFT space.

Steve Aoki
Shaquille O'Neal
snoop dogg

Moreover, blue-chip NFT projects like CryptoPunks or the Bored Ape Yacht Club (BAYC), and the metaverse, have propelled the NFT space into mainstream land. In our August report, we covered Visa’s purchase of CryptoPunk #7610 for $150,000. To add more interest into the event, the payment processing giant highlighted the relevance of NFTs in the upcoming digitally-led future. In September, Sotheby’s, the famous broker of fine art, jewelry, and collectibles, successfully completed the auction of 101 BAYC NFTs for $24.4 million.

The mainstream media coverage is expected to grow even further. Top fashion brands like Gucci, D&G and Burberry have been involved in the NFT space in recent months. In August, Burberry launched a skin collaboration with Blankos Block Party, an important game metaverse, whilst D&G completed the sale of a digital fashion collection featuring new pieces on September 27th, selling for a total of $5.65 million.

Besides the undeniable mainstream signal provided by celebrities and big brands, there is another aspect that is gaining relevance in the industry: the utility offered by owning a NFT. The projects are getting creative. Whether by receiving additional NFT drops (Meebits, Punks Comic, etc.) or by generating passive income, these NFTs are finding a way to reward their owners beyond the art itself. 

For example, projects like CyberKongz and SupDucks provide holders with passive income by holding their respective NFTs. In the case of CyberKongz, a Kongz holder receives 10 BANANA daily as yield. At the current BANANA price, this translates to $497 per day. Not bad if you do the math. 

The NFT narrative gains relevance, when the intersection with the game space is disclosed. NFTs are one of the main backbones in blockchain games. In contrast to traditional games, NFT allows blockchain gamers a true sense of ownership on their playing items. And they have become a fundamental part of the NFT space as a whole. In Q3, in-game items generated $2.3 billion in trading volume. This amount represents 22% of the total NFT volume. The games are creating a true synergy with the NFTs creating a more visible footprint on both ends. 

All in all, the NFT space seems more established. Considering the top 100 Ethereum collections by trading volume, plus Flow’s NBA Top Shot collection, we estimate an NFT market cap around $14.19 billion. That represents a miniscule 0.54% decrease from the previous month. However, the price of ETH decreased in 13.28% during the same timeframe, having a down effect on the aforementioned figure.

Source: DappRadar

From the period that goes from July 2020 until June 2021, the space generated $2.63 billion, a figure that is easily surpassed by August or September figures alone. New collections are releasing enticing value propositions, whilst the old ones are getting consolidated amongst the most interesting projects in the entire blockchain industry. On top of that, there is the game factor, and blockchains like Tezos and Solana are preparing to become relevant within the space. Expect the NFT space to grow further. 

State of DeFi: deep overview

Whilst most of the spotlight was stolen by both NFTs and games, the panorama in the DeFi race got even more interesting. At the time of writing, the DeFi space has around $178.12 billion in Total Value Locked (TVL), with 92.37% or $166.38 billion locked in 6 blockchains. From the end of the previous quarter, the industry’s TVL grew by 104%, reaching a peak of $195 billion on September 6. 

Source: DappRadar

Whilst Ethereum is still the leading blockchain in terms of TVL, the progress made by three blockchains, Solana, Terra, and Avalanche, was exemplary. Starting with Solana, the self proclaimed fastest network in the industry. Solana, as several other networks, has benefited directly from high transaction costs on Ethereum, which  are constantly addressed when a new, hyped NFT project launches. As of today, Solana is the third largest blockchain in terms of TVL.

At the time of writing, Solana has reached $8.28 billion in TVL, a whopping 1,300% increase from the previous quarter, Whilst there is a good number of attractive DeFi dapps in Solana, it is worth noting that Saber, a powerful decentralized exchange, Sonny a yield aggregator, and Radium, a complete DeFi platform, are well above the $1 billion mark in terms of TVL. 

It is also worth noting that only two (Ren and Lido) out of the top 20 DeFi dapps in Solana by TVL, are multichain, further strengthening the case of Solana becoming a DeFi powerhouse.

Source: DappRadar

Terra has become the fourth blockchain in terms of TVL. And it is not a surprise by any means since Terra is no stranger to DeFi. It hosts one of the most traded stablecoins in the industry, the Terra USD (UST). Currently, Terra’s TVL sits at $8.09 billion, 137% up quarter-over-quarter.

Terra’s DeFi ecosystem is home to four dapps that hold more than $1 billion in TVL respectively. For instance, Anchor, a yield optimizer, has surpassed $3 billion in TVL, whilst Lido in Terra accounts for $2.5 billion. There are reasons to remain optimistic about the potential of DeFi in the Terra network. 

Source: DappRadar

Back to the incumbent blockchains, Ethereum holds around $125.58 billion in TVL, accounting for 69.72% of the industry’s important DeFi’s metric. Compared to the previous quarter, the TVL in Ethereum is up 42.57%. Despite the multichain paradigm, Ethereum DeFi dapps are still holding their value. 

For instance, Aave, the lending protocol, saw its TVL grow 44.01% despite extending their features into Polygon. Another example is Lido, a DeFi dapp that also runs on Solana and Terra also saw its TVL grow by 213% quarter-over-quarter.  

Along with Aave, Curve, Compound and Maker, they constitute 33% of the network’s TVL. As consolidated DeFi players, Ethereum appears poised to remain atop of the TVL rankings.

Source: DappRadar

BSC appears to be established as the second network in terms of TVL as well. The Binance branded blockchain holds $17.78 billion in TVL, up 9.98% from the previous quarter. Despite BSC users turning their attention into GameFi dapps, the network’s TVL is still on the rise.

Source: DappRadar

One of the most important dapps for BSC is PancakeSwap, the industry’s most used dapp behind Axie Infinity. PancakeSwap TVL is recorded at $8.71 billion at the end of Q3. The figure represents a 39.83% increase quarter-over-quarter. The DeFi dapp registered 3.06 million UAW during the last 30 days, increasing its usage by 21% month-over-month. The outlook for PancakeSwap is bright as the dapp is introducing its own NFT collection that can be traded within the same platform. There is no doubt that PancakeSwap is BSC’s crown jewel. 

Finally, Polygon. After receiving a huge booster from the multichain paradigm that saw the network’s TVL skyrocket as high as $10.54 billion in Q2, Polygon’s DeFi outlook does not seem as positive as it was three months ago. Currently, Polygon’s TVL sits at $3.02 billion, being surpassed by Terra, Solana and Avalanche during this quarter. Nevertheless, the game factor and the price of MATIC, may help DeFi in Polygon revive the spark it has been losing in recent months.  

Source: DappRadar

Closing words

After observing how the quarter developed in the blockchain industry, there are a lot of reasons to be excited about. As pointed out by Skirmantas Januskas, DappRadar’s CEO, “The blockchain industry saw quite some results in the past quarter — 25% UAW growth is no mean feat. But it’s the developments, the attitudes changing, the new trends emerging in those three short months that really scream ‘dapps got game‘.”

The P2E movement is making a positive impact in people’s lives with no distinction whatsoever. Axie Infinity is clearly the spearhead of the revolution, and it’s expected to become even better. At this rhythm, the game may reach metrics seen in the traditional gaming industry sooner rather than later. This, coupled with enticing roadmaps from existing and upcoming game and metaverse dapps, may be the catalyst needed to take the blockchain game sector to the next frontier. 

On the NFT side, the euphoria experienced in August could be felt throughout September. The NFT collections are developing complete ecosystems and users are getting more engaged with them. Besides the flashy metrics, NFTs are building inspiring communities where celebrities and big brands are eager to be part of.

Last but not least, DeFi. The DeFi race is the latest proof of how things rapidly evolve within the  industry. The panorama changed completely in a matter of three months, seeing three blockchains consolidate as top networks. Even though the attention has turned to NFT and games, the DeFi scene, and the blockchain industry as a whole, are as complete as ever. 

“Diversification means more use cases, and with more use cases comes greater adoption. The industry is branching out. More than just a basket of assets within a portfolio, crypto is beginning to infiltrate everyday life.”

Modesta Jurgelevičienè

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