Ethereum user activity is up 64% in Q1 2020 YoY
While high levels of volatility are always to be expected in the blockchain and crypto sectors. The first three months of 2020 proved to be extraordinarily dynamic.
In early February, crypto prices rose quickly to their highest levels since mid-2019 only to crash by 30-40% following the ‘dash to cash’ that saw all liquid investments sold off as COVID-19 uncertainty panicked global markets on 12 March 2020.
Obviously, such an acute trend proved to be the prime influence on the dapp ecosystem during late March. Reversing what for smart contract blockchains such as Ethereum and TRON had been a period of strong growth. In terms of overall wallet activity during the earlier weeks of Q1 2020.
However, the crypto price crash wasn’t the only factor in play. Especially when considering many of the smaller blockchains still struggling for scale. Nor in the case of EOS which has now been in decline for two quarters.
In this context. What will be fascinating to see in the coming months is whether the loss of activity triggered by the crypto price crash (and more general market uncertainty) will prove to be a temporary blimp. An event that reverses the momentum of the dapp ecosystem, or an inflection point for broader blockchain adoption.
- Ethereum’s growth continued in Q1 2020; up 64% year-on-year in terms of daily activity and 371% in terms of USD value
- The crypto price crash on 12 March did have an impact. However, with all Ethereum dapp categories hit by 10% or more in the immediate aftermath
- Daily activity across all TRON dapps was down 15% year-on-year, with value down 85%
- Daily activity across all EOS dapps was down 74%, with value down 7%
- Of the other smaller blockchains. Only WAX and NEO experienced a significant rise in user activity. Which in both cases was due to the release of new dapps
Top three overview
Table of contents
Across the quarter, the Ethereum dapp ecosystem experienced growth of 16% in terms of combined daily active unique wallets across all dapps during Q1 2020. Ending March with 17,489 active wallets. On a year-on-year basis, the growth was 64%.
Looking at token value. Ethereum accounted for 81% of the total value of $6.7 billion of value that interacted with all smart contracts across all blockchains during Q1 2020.
However, it’s clear the crypto price crash of 12 March had a strong impact, with an immediate 19% drop in daily activity, also triggering a more prolonged downward trend for the remainder of March.
It’s also important to note the drop in ETH price impacted different types of dapps in different ways.
For example, the initial price volatility actually caused a large upward spike in decentralized finance and exchange dapp activity. As users attempted to limit their losses and/or generate profits. These dapps typically experience more activity during periods of price volatility.
Yet this activity had the knock-on effect of raising the gas price paid to get any transaction saved onto the Ethereum blockchain. In turn, making many transactions much too expensive. This resulted in a large decline in daily activity for some dapps, especially for blockchain games. For example, the most popular Ethereum game My Crypto Heroes lost over half its daily audience on 12 March.
When the gas price returned to normal, so did general dapp activity on Ethereum, with the exception of DEX and DeFi dapps. Users of such dapps clearly wanted to get a better idea of what was going to happen next before making any new decisions.
In addition, in the aftermath of what was an extreme stress test for the entire DeFi ecosystem, many DeFi dapps removed certain features. For example, MakerDAO reduced the Dai Saving Rate to 0%, while Fulcrum paused its trading functionality. This limited what their users could do, also reducing overall dapp activity.
Despite this, across the entire 1 January to 31 March 2020 quarter, DeFi and exchange dapps experienced the most growth on a category basis.
DeFi dapps were up 86% in terms of daily active unique wallets (on a trailing 30-day average) and exchanges up 99%. Games and marketplaces – the largest category by absolute user numbers – rose by 2% while gambling and high-risk activity was down 12% compared to Q4 2019.
In this context, it’s clear the key to continued long term growth trend for the Ethereum dapp ecosystem in Q2 2020 will be a regaining of confidence in DeFi and exchanges. Something that appears to be happening slowly as the price of ETH rises strongly from its recent lows.
It’s a measure of the unique characteristics of each smart contract blockchain that while TRON experienced a 20% decrease in daily activity in mid-March, this didn’t actually happen until 15 March, three days following the crypto price crash.
This was despite a 48% drop in the fiat price of the TRX token on 12 March.
It’s also interesting to note that – unlike Ethereum – daily activity across all TRON dapps recovered quickly. Activity was only down 8% at the end of March compared to 15 March, and up compared to the start of January 2020.
In terms of the headline figures. Activity across all TRON dapps was up 18% during Q1, although this was down 15% year-on-year.
As discussed in previous reports. TRON experienced an all-time peak in dapp activity in Q1 2019 and has been in relative decline to this ever since.
Looking at token value. TRON accounted for 6% of the total value of $6.7 billion of value that interacted with all smart contracts across all blockchains during Q1 2020.
As ever, the vast majority of activity on TRON is generated by the gambling and high-risk category. During Q1 2020, it accounted for 88% of daily activity, with exchanges taking a 7% share, and games and marketplaces 5%.
Indeed, during the quarter, the gambling and high-risk category was the fastest-growing, as well as the largest dapp category, with exchange activity actually shrinking by a substantial 45%.
It’s also worth noting that TRON’s first DeFi dapp – Zephyr Finance launched in April 2020. Offering lending and borrowing features – launched during Q1, although currently attracts less than 100 daily active unique wallets.
The long term decline of dapp activity on EOS started in November 2019, with the launch of the EIDOS airdrop that congested the entire blockchain for weeks.
Brutally put, activity has never recovered. The days of more than 40,000 daily active unique wallets for all EOS dapps are long gone. With Q1 2020 seeing a nadir of less than 10,000 daily active unique wallets during February. Amazingly, there was no obvious impact on EOS dapp activity on 12 March.
Across the Q1 period, average activity was down 10% quarter-on-quarter, and down an incredible 73% year-on-year.
That stated, EOS accounted for more value than TRON. It was 13% of the total value of $6.7 billion of value that interacted with all smart contracts across all blockchains during Q1 2020.
Given that trajectory of decline, it’s no surprise to see that all the key dapp categories on EOS decreased in Q1.
Launched in late December 2019, the WAX blockchain uses the EOS.IO SDK and hence has gained a certain amount of traction by attracting developers to port their EOS dapps.
Most notable in this regard has been the Prospectors game which has maintained around 1,500 daily active unique users.
During Q1 2020, it was joined by EarnBet (previously EOSBet), a gambling dapp, which has experienced a steady rise in users since its February launch. It ended March with over 1,000 daily active unique wallets and in turn made WAX the most fourth popular dapp blockchain. Behind Ethereum, TRON, and EOS.
In that context, the launch of a Garbage Pail Kids card collection dapp with the Topps Company sometime in Q2 will be worth watching.
More generally, WAX’s medium-term prospects to cement its position as the ‘best of the rest’ will clearly be driven by its ability to persuade more EOS dapps to make the transition.
Not much has been happening on Chinese-centric NEO blockchain recently, but Q1 2020 saw the launch of some dapps which kickstarted growth.
Launched in March, mobile game NEOFish has quickly become the most popular NEO dapp with around 1,000 daily active unique users. In comparison, other NEO dapps such as Blockchain Cuties and Switcheo have struggled to maintain 100 users.
The result was a big jump in activity, albeit from a low base. Clearly NEO’s trajectory in the near future will be determined by how popular NEOFish proves to be in the coming months.
There are dozens of dapps live on Proof of Believability blockchain IOST but only three of them – IOST Ball, Virus Battle, and XPET – have found any substantial audience i.e. more than 100 daily active unique wallets.
However, the decline in the overall activity through all IOST dapps during Q1 wasn’t driven by any one particular dapp. For example, IOST Ball, Virus Battle, and XPET all maintained their audience during the quarter.
Instead, the overall trend seems to be the result of a longer-term systemic drop in interest for most of the other dapps running on IOST.
Q1 2020 was a significant quarter for dapp activity on the Ontology blockchain but not in a positive way.
HyperDragons Go dropped from around 500 daily active unique wallets to 200, while HyperSnakes dropped from 400 to around 100.
Obviously the combined result was a massive collapse in activity across Ontology; dropping from over 1,000 to under 400 daily active unique wallets.
Another blockchain that experienced a difficult Q1 2020 in terms of wallet activity was Loom Network.
Following a corporate pivot in late 2019 away from consumer-facing products to enterprise customers, co-founder and CEO Matthew Campbell left the company and many blockchain games are now transitioning from Loom to other solutions.
And given this includes Sorare and Axie Infinity – currently still listed in DappRadar’s data and two of the most active dapps on Loom accounting for 200 daily active unique wallets – the bad news looks certain to continue into Q2 2020.
It’s a DeFi product, broadly similar in features to MakerDAO in that users can lock up collateral (in this case WAVES tokens), generating the stablecoin USDN in return. Users can also stake their USDN to earn interest.
Neutrino attracts around 200 daily active unique wallets, although this was as high as 350 during early February.
Aside from Neutrino, there are a small number of active games and gambling dapps running on Waves but, at best, these only attract tens of daily users.
Are we witnessing the rebirth of the ThunderCore blockchain in terms of dapps usage?
Granted any resurgence would be from an extremely low sub-100 level of daily active unique wallets but the end of March saw the release of a number of simple games that have significantly boosted overall activity.
Of course, giving the timing of the launch, the medium-term result of this won’t be clear until our Q2 report. But if nothing else it is a reminder that the main driver of dapp activity is products.
Given there are only two active dapps on the VeChain blockchain. Very little can be said about its dapp activity during Q1 2020.
Despite the global impact of the COVID-19 pandemic during Q1 2020, the only smart contract blockchain that was obviously affected was Ethereum, which experienced a 10% decline in daily activity.
This was mainly due to a retrenchment of the previous buoyant DeFi sector, which was hard hit by the sharp price fall of the ETH cryptocurrency and its knock-on impacts.
Despite this, Ethereum’s overall long term growth continued during Q1. Most other smart contract blockchains – notably TRON and EOS – also continued to follow their long term trends.
However, in both cases, their dapp activity peaked in early 2019 and they show no signs of regaining those metrics. There was also little change in activity for the smaller blockchains. Which continue to struggle to attract developers or users, and hence sustain daily activity of multiple thousands of unique wallets.
In that context, Ethereum’s status as the leading smart contract blockchain for dapps was merely underlined by the fact it was the only blockchain to be impacted, even if negatively, by real-world events.