DeFi & NFT Fusion: Reshaping Finance, Empowering the Future
This report provides an overview of the dapp industry in April, focusing on key trends, developments, and performance indicators. The analysis covers the DeFi and gaming sectors, NFT market dynamics, and notable shifts in market share among leading platforms.
Key Takeaways
- In April, the dapp industry witnessed a marginal decline of just 0.12% in daily unique active wallets (dUAW), averaging 1,788,673 dUAW. DeFi’s dominance rose to 29% and gaming’s share dropped to 38%.
- DeFi’s TVL experienced minimal growth of 0.02% between the end of March and April, settling at $83.7 billion.
- For the first time, the top three dapps by UAW are all DeFi platforms, with Stargate Finance leading at 1.51 million UAWs, overtaking PancakeSwap.
- April saw an 18.76% decrease in NFT trading volume ($1.4 Bn) and a 9.72% decrease in sales count (5.6 M); the number of NFT traders (364,911 traders) hit a 20-month low.
- Captainz and Nakamigos leveraged the meme trend to drive growth as their trading volume rose 49% (to $18.5 million) and 89.91% ($39.2 million) respectively.
- Blur maintains a 65.94% market dominance as the leading NFT marketplace, while OpenSea’s market share stands at 21.93%.
- Users have lost $104 million in crypto from hackers who managed to exploit smart contracts or scam investors.
Table of Contents
- Dapp Industry Overview
- DeFi TVL consolidates $83.7 billion
- NFT market: correction results in nearly 20% drop in trading volume and sales count
- Blur vs. OpenSea: the battle for NFT marketplace dominance heats up
- Is the dominance of blockchain gaming slipping?
- $104 million lost due to exploits and hacks
- Conclusion
1. Dapp Industry Overview
In April 2023, the decentralized application (dapp) industry experienced a marginal decline of 0.12% in daily unique active wallets (dUAW), averaging 1,788,673 dUAW. Despite this slight decrease, key sectors within the industry have shown promising signs of growth and consolidation.
The gaming sector remains the most dominant in the dapp industry, with 671,828 dUAW, accounting for 38% of the overall dominance. However, this represents a 10.51% decrease from the previous month, marking the lowest dominance since July 2021.
Decentralized finance (DeFi) has been on an upward trend since the beginning of the year, with a 24.48% increase in April, reaching 515,169 dUAW. This growth expanded DeFi’s dominance to 29%, consistent with the increased adoption of DeFi services by retail users following the fall of SVB and the surge in popularity of meme projects.
Social dapps have been gaining traction within the dapp industry, and despite a 9.09% decrease from the previous month, they reached 246,699 dUAW in April, becoming the third-largest sector with a 14% dominance. The NFT industry experienced a 3.22% increase in April, reaching 133,922 dUAW, and maintaining a 7.49% dominance.
Despite a 2% drop, BNB Chain maintains its lead in terms of daily unique active wallets (dUAW) with 498,524 dUAW in April. The top dapp on BNB, Hooked, has overtaken PancakeSwap in terms of unique active wallets, holding a 25% dominance on the blockchain.
Wax and Polygon followed, with the former recording a 5% month-over-month increase, and the latter experiencing an 8% decrease.
NEAR blockchain has become the top gainer in April. The blockchain saw a 222% increase in dUAW, reaching an average of 52,000 dUAW. The driving force behind this growth is Sweat Economy, a fitness-based dapp that rewards users with cryptocurrency for completing physical activities. With a 92% dominance on the NEAR blockchain, Sweat Economy resonates with users seeking to combine fitness and blockchain technology.
Arbitrum and Optimism, two of the most popular Layer-2 blockchains, experienced significant growth in April. Arbitrum recorded an 89% increase in dUAW, reaching an average of 112,000 dUAW, while Optimism saw an 82% increase, reaching an average of 28,000 dUAW. Stargate Finance, an innovative DeFi platform offering a wide range of financial services such as staking, yield farming, and lending and is the bridging technology between Ethereum and the L2’s, is the most dominant dapp on both blockchains. On Arbitrum, Stargate Finance holds a 24% dominance, whereas, on Optimism, it enjoys a larger market share of 55%.
April 2023 saw the dapp industry consolidate its unique active wallets, reflecting a stable foundation for future growth. The continued expansion of DeFi, the emergence of social dapps, and the success of various blockchains indicate that the dapp ecosystem is thriving and evolving to cater to diverse user needs.
2. DeFi TVL consolidates at $83.7 billion
The decentralized finance (DeFi) ecosystem has proven its resilience in April 2023, despite a relatively flat total value locked (TVL) performance. The TVL witnessed a marginal increase of 0.02% from the end of March to the end of April, reaching $83.7 billion. A notable surge occurred on April 17th when the TVL reached $91 billion, a value not seen since August 2022.
Despite hardly any growth in TVL, the DeFi landscape has shown encouraging signs, particularly in the increase of Unique Active Wallets (UAW) and the rising popularity of DeFi services among investors.
The increase in UAWs, particularly following the fallout of Silicon Valley Bank (SVB) and more recently First Bank, demonstrates that DeFi services are becoming increasingly popular among investors. This shift indicates a growing demand for alternative financial solutions that provide more autonomy, security, and flexibility.
Ethereum remains the dominant player in the DeFi market, with a 66% market share and a total TVL of $55.5 billion, marking a 0.54% decrease from the previous month. While other top blockchains experienced minimal growth, Solana emerged as a surprising contender, witnessing a 12.77% increase in TVL, reaching $892 million.
Fantom, on the other hand, experienced a significant decrease of 16.97% in its TVL, settling at $489 million.
For the first time, the top three dapps by Unique Active Wallets (UAW) are all DeFi dapps. Stargate Finance has taken the lead, boasting 1.51 million UAWs, a massive 480% increase from the previous month. Furthermore, the top DeFi dapps have seen impressive growth in UAWs, with PancakeSwap registering an astonishing 52,484% increase, and WOOFi 1,074% increase, reaching nearly 245,000 monthly Unique Active Wallets.
The DeFi ecosystem has remained steadfast in the face of recent financial market turbulence, including the collapse of Silicon Valley Bank. Contrary to expectations, the Web3 community’s commitment to DeFi and Web3 technologies has only grown stronger, as evidenced by the increased Unique Active Wallets and user engagement. DeFi services are poised to disrupt traditional banking as more people seek alternatives to traditional financial institutions.
Additionally, DeFi’s expansion into the NFT landscape, which will dive deeper into the fourth section, signals a promising future for decentralized finance and its potential to reshape the global financial system.
3. NFT market: correction results in nearly 20% drop in trading volume and sales count
After a staggering rally in February 2023, the NFT market is witnessing a correction in April, with an 18.76% decrease in trading volume, amounting to $1.4 billion, and a 9.72% decrease in sales count, now at 5.6 million. NFT unique traders have dropped to a 20-month low at 364,911, representing a 28% decline from the previous month. Ethereum blockchain continues to dominate the market, accounting for 84.15% of the trading volume, with 70% of it coming from Blur.
The first three positions in the top 10 NFT traded collections are held by Yuga Labs ecosystem projects. For a deeper understanding of this ecosystem, we recommend reading the latest report on Yuga Labs.
Securing fourth place is Azuki, with an impressive 89.81% increase in trading volume reaching $87.84 million, and an 18% growth in floor price. The collaboration between Chiru Labs, the Web3 startup behind Azuki, and Line Friends media and merchandise property through IPX has fueled the growth. Furthermore, BEANZ, ranking seventh, has experienced a 45.27% increase in trading volume, reaching $26.17 million.
Nakamigos, launched in March 2023, has surged by 89.91% in April, with $39.21 million in trading volume. Despite having the highest number of traders among the top 10, its floor price remains at an accessible 0.25 ETH. Beeple’s pledge to create a “chapter 2” for Nakamigos if its floor price hits 1 ETH has added excitement to the collection, although the target hasn’t been reached yet.
DeGods migrated from Solana to Ethereum in April, experiencing a remarkable 358% increase in trading volume, reaching $23.84 million, and a 4% growth in floor price, amounting to 8.86 ETH. The collection has managed to maintain its blue-chip status even after the transition.
Captainz, capitalizing on the current meme trend, has made it to the ninth position in the top 10 NFT traded collections. The power of memes in today’s digital landscape is undeniable, and Captainz has successfully harnessed this trend to drive its growth. As a result, the collection has experienced a 49% increase in trading volume since last month, alongside a 43% increase in the floor price, which now stands at 7.69 ETH.
Rounding up the top 10 is Milady, which has seen a staggering 579% increase in trading volume, reaching $21.95 million, and a 136% increase in floor price, now at 3.48 ETH. Despite lacking a roadmap and having a peculiar art style dubbed the “ugliest” NFT, its neochibi aesthetic continues to captivate a significant audience.
April 2023’s NFT market performance highlights a period of correction, as the market adjusts and adapts to the evolving landscape. With unique collections like Captainz and Nakamigos leveraging meme trends and others demonstrating various factors driving their success, it is evident that the NFT market continues to present new opportunities for investors, artists, and collectors.
In our next section, we will dive deeper into the NFT marketplace war and examine the key players and strategies shaping the future of this dynamic industry.
4. Blur vs. OpenSea: the battle for NFT marketplace dominance heats up
In the past six months, the NFT marketplace landscape has experienced a major shift, with newcomer Blur causing a stir in the once undisputed reign of OpenSea. This upheaval has led to renewed discussions around creator fees, market manipulation, and the balance between Web2 and Web3 ideals within the NFT community.
OpenSea, feeling the pressure from Blur, launched its pro-trader-focused platform, OpenSea Pro (OS Pro), at the beginning of April 2023. With zero percent marketplace fees (temporarily) and a minimum creator royalty of 0.5 percent, OS Pro aims to make high-volume trading more attractive. However, even with this new offering, OpenSea’s trading volume has decreased by 28% this month, reaching $274 million and holding a market dominance of only 21.93%.
Meanwhile, Blur maintains its position as the dominant NFT marketplace, boasting a market dominance of 65.94% despite experiencing a 33.19% decrease in trading volume, reaching $826 million. In an effort to further innovate, Blur introduced Blend on 1 May 2023, a peer-to-peer perpetual lending protocol developed in collaboration with venture capital firm Paradigm.
Blend allows NFT collectors to finance their purchases, much like a traditional mortgage, without any oracle dependencies or expiries. Blend charges no fees to borrowers and lenders and supports the use of NFTs as collateral.
The introduction of Blend has been met with significant interest, with data from Dune Analytics revealing that Blur facilitated 8,820 Ether (approximately $16.37 million) in loans through the perpetual NFT lending protocol just one day after its launch. Blend comes to Blur near the end of Season 2, the airdrop period of $300 million worth of its native BLUR token.
While Blur with Blend became a popular NFT lending protocol, it is important to note that it is not the only one available in the market. Other platforms have also emerged as strong competitors, attracting a large number of users and increasing their Total Value Locked (TVL) significantly.
One such platform is BendDAO, which has a TVL of $227 million and has been on an upward trend since the beginning of the year. This P2P NFT liquidity platform offers users a seamless trading experience and has been widely popular among investors.
Another platform, NFTfi, operates as a marketplace for P2P loans with NFTs as collateral. The TVL of NFTfi at the end of April was $28 million, showing an impressive increase of 180% since the beginning of the year. This platform has attracted many users and is considered a formidable player in the market.
Lastly, Sudoswap is a platform that offers a unique set of features such as P2P trading and liquidity mining. Despite having a relatively lower TVL of $4.6 million, the platform has shown a 58% increase since the beginning of the year and is a notable player in the market.
As the NFT marketplace war heats up between OpenSea and Blur, innovations like Blend and OpenSea Pro are challenging the status quo and redefining the way users interact with NFT platforms. With new developments on the horizon, it remains to be seen which platform will ultimately come out on top in the battle for NFT marketplace supremacy.
5. Is the dominance of blockchain gaming slipping?
Blockchain gaming has been a dominating sector in the dapp industry for quite some time, but its dominance seems to be slipping since the beginning of the year. According to the latest data, the number of daily unique active wallets (dUAW) in blockchain gaming in April 2023 was 671,828, which represents 38% of the entire dapp industry UAW. Although blockchain gaming is still the dominant sector, it’s on a descending path since the beginning of this year, and this dominance is the lowest number we’ve ever registered since July 2021.
However, it seems that DeFi and NFT sectors have become hyped again, as seen in the latest trends. Despite this, it’s essential to note that blockchain gaming is still an exciting and growing industry, with many projects still building and web2 gaming companies shifting their focus to Web3. This shift is evident in our latest report on the Asia gaming landscape, which shows that Web3 gaming is gaining traction in the region.
On 11 May 2023 we will launch a new gaming report in collaboration with BGA that will go deeper into what happened in the blockchain gaming sector this month. We will cover the latest trends, projects, and market movements that are shaping the future of blockchain gaming.
It’s worth mentioning that blockchain gaming has a lot of potential and is expected to grow in the coming years. The use of blockchain technology in gaming brings many benefits such as decentralization, transparency, and ownership of in-game assets. These features make blockchain gaming more exciting, secure, and fair compared to traditional web2 gaming.
6. $104 million lost due to exploits and hacks
In April 2023, according to REKT database, a total of 52 hacks or exploits happened, resulting in a loss of $104 million.
Among these, 52% occurred on BNB Chain. This value is lower than value lost in exploits inMarch and February, when the funds lost were $216 million and $142 million, respectively.
The largest exploit in April 2023 involved the MEV-Boost Relay, a software for PoS Ethereum that implements Proposal/Builder separation. A malicious validator took advantage of a vulnerability in the software, draining five MEV bots of $26.1 million worth of WETH, WBTC, USDT, and DAI.
The attacker triggered MEV bots to buy already prepared tokens from UniV2 pools and then executed transactions, front-running the bots. When the MEV bot tried to take profit, the attacker manipulated the block, making it impossible for the network to accept it. Consequently, they claimed liquidity from the unlucky MEV bots included in that block.
Developers quickly rolled out a patch that refused to return transactions if blocks were not successfully sent into networks and added a one-second delay before responding with transaction data. Further investigation revealed that three addresses, funded just 25 days ago, were used to plan and prepare various token pools. Three out of five affected bots had their entire balances drained.
Interestingly, the stolen funds were collected by MEV bots for a long period of time as a profit from front-running users. The affected bots themselves were front-runned, making this case a counter exploit.
Apart from the MEV-Boost Relay exploit, two other hacks worth mentioning occurred in April 2023. Bitrue Exchange experienced an exploit resulting in the loss of $21.8 million worth of assets from their hot wallet, while South Korean crypto exchange GDAC was hacked for $14.3 million. The hacker transferred 23% of GDAC’s total assets under custody. These hacks emphasize the importance of “not your keys, not your crypto” when it comes to cryptocurrency.
The cryptocurrency market is highly susceptible to hacks and exploits. It is crucial for investors and traders to stay updated on the latest security measures and protocols. Implementing proper security measures, such as two-factor authentication and especially cold storage, can help protect investors’ assets from such attacks.
7. Conclusion
The dapp industry’s performance in April showed a marginal decline in daily unique active wallets and a drop in NFT trading volume and sales count. The DeFi sector expanded its dominance, while the gaming segment experienced a decrease in market share. DeFi’s TVL saw modest growth with a remarkable peak in the middle of the month. Captainz and Nakamigos capitalized on the meme trend, which significantly influenced the growth in the NFT market.
Ethereum remained the dominant blockchain for NFT trading, with Blur holding a significant lead in market share. Both Blur and OpenSea, however, experienced decreases in trading volume. It is important to highlight the persistent security risks within the dapp ecosystem, as hackers managed to exploit dapps and users for a substantial $104 million.
Moving forward, it will be essential for the dapp industry to address the security vulnerabilities and foster the growth of DeFi and NFT sectors. Industry stakeholders should also continue to monitor trends and adapt to the ever-changing dynamics of the decentralized application landscape.
