February Dapp Industry Report
- The industry’s number of daily Unique Active Wallets dropped 10% to 1.6 million per day
- The activity dominance of the DeFi sector grows to 24%, while gaming saw a decline and now sits at 45.43%.
- DeFi’s TVL increased by 7.70%, reaching $81 billion.
- NFT trading volume spikes to $2 billion for the first time since last May, up 117% from the previous month, with 6.3 million sales count.
- Blur dominates the NFT market with $1.3 billion trading volume and 64.8% market share, while Opensea trails behind with $587 million and 28.7% share.
- OpenSea remains the most used marketplace with 317,000 unique traders in February, 227% more than Blur.
- Hackers have managed to exploit dapps and users for a total of $142 million in February.
Table of Contents
- Dapp Industry Overview
- DeFi TVL soars to $81 billion
- DeFi’s footprint in NFTs on the rise
- NFT market continues to boom with $2 billion trading volume
- Competing for market share: Blur vs. Opensea
- Yuga Labs’ dominance in the NFT landscape
– Yuga Labs takes a bold step with TwelveFold: the future of Bitcoin NFTs?
- Blockchain gaming industry pushes forward despite slight decrease in activity dominance
- $142 million lost due to exploits and hacks
1. Dapp Industry Overview
The dapp industry experienced a slight slowdown in February 2023, with an average of 1.6 million daily Unique Active Wallets (dUAW) interacting with dapps contracts. This implies a decrease of 10.54% from January 2023. This decline is consistent with previous years, as February typically tends to be a slow month. It would appear that the blockchain industry did not attract new users during this period.
Despite the slight decrease in activity, blockchain gaming remained the most dominant sector in the industry with an average of 736,225 dUAW.
Meanwhile, DeFi continued its upward trend, with an average of 390,675 dUAW, increasing its dominance from 21% in January to 24% in February.
The NFT sector also increased its dominance, reaching 9.46% from 8.47% in January, with an average of 153,337 dUAW.
Among the top blockchains, BNB Chain and WAX had the most unique active wallets in February, with an average of 411,172 dUAW and 402,537 dUAW, respectively. Both blockchains maintained their activity levels from the previous month with minimal changes.
Ethereum, Arbitrum, and Klaytn were the top gainers in February. Ethereum saw an increase of 23.25%, reaching an average of 147,924 dUAW driven by the success of Uniswap V3, Uniswap NFT aggregator and the Blur NFT marketplace. Arbitrum saw an increase of 83%, reaching an average of 46,740 dUAW, driven by the popularity of its DeFi dapps GMX and Vela Exchange. Klaytn had an increase of 93.71%, reaching an average of 19,175 dUAW. This growth came primarily from the gaming platform Iskra and the decentralized exchange platform KLAYswap.
However, there were also some not-so-well-performing blockchains. Optimism saw a decrease of 67.52%, reaching an average of 15,602 dUAW, as the end of its “learn-to-earn” incentives program on January 17 did not attract new wallets to its DeFi dapps. Over in the Polygon ecosystem an average of 162,374 dUAW connected with various dapps, which means that Polygon saw a decline of 21.39% from their January numbers.
At the same time, Solana keeps getting hit. In February the Solana ecosystem saw a dramatic decline of 34.54% in its daily Unique Active Wallets, only reaching 38,825 wallets per day on average. Solana is still dealing with the aftermath of the FTX collapse, and needs to re-establish consumer and developer trust to regain its former glory. Unfortunately, the Layer-1 suffered yet another outage during last weekend. We’ll keep monitoring the state of the leading networks.
2. DeFi TVL soars to $81 billion
In February 2023 the industry’s Total Value Locked (TVL) continued to rise. At the end of January 2023, the TVL was $75.25 billion, thanks to an increase of 26.8% from the December numbers. This momentum continued into February, with a further 7.70% increase. Right now the industry’s TVL has reached $81 billion. This growth is a testament to the increasing interest and adoption of DeFi among crypto investors.
Ethereum continues to be the dominant blockchain by TVL with $53.2 billion. BNB Chain has consolidated its TVL at $7 billion, while Tron has reached $5.3 billion. Polygon and Avalanche appear to consolidated their TVL around $1.4 billion and $2 billion, respectively, despite a small 2% decrease in their TVL.
Layer-2 solutions have been a major contributor to the growth of DeFi, especially Arbitrum and Optimism. Arbitrum has seen a remarkable 58% increase in its TVL, reaching $3 billion. One of the reasons for this surge is the release of staking services by Arbitrum-based asset management protocol FactorDAO. Additionally, there has been speculation about a possible airdrop from Arbitrum, which has further increased its TVL.
Similarly, Optimism has seen a 37.55% increase in its TVL, reaching $1.1 billion. This growth is attributed to a surprise token airdrop of 11.7 million governance tokens to more than 300,000 wallets. The airdrop was conducted by the Layer-2 blockchain’s caretaker group, Optimism Collective. Users who spent gas executing transactions on the blockchain and those who delegated voting powers to other users qualified for the airdrop. This move by Optimism to encourage participation in its governance system has proved to be a major attraction for investors.
In addition, Coinbase has recently unveiled its own Ethereum Layer-2 network, Base. The project will be powered by Optimism, and Coinbase has partnered with the DAO for open-source development on the OP stack. The launch of Base is expected to create a new home for Coinbase’s on-chain products and provide an open ecosystem for millions of new decentralized apps.
It is worth noting that the TVL in DeFi has also found a place in the NFT sector. This is a trend that will be analyzed in the next section.
3. DeFi’s footprint in NFTs on the rise
The Total Value Locked (TVL) in NFT marketplaces has been on an upward trend, with platforms such as Blur, BendDAO, NFTfi, and Sudoswap leading the way.
Blur has seen a significant rise in its TVL, hitting a new all-time high of $148 million at the end of the month as buyers lock their assets into bidding pools. At the same time Blur has been attracting lots of buyers recently, resulting in a surge of its TVL. The platform has also used airdrops to incentivize users to join the platform, which has further boosted its growth.
BendDAO is another platform that has seen remarkable growth with a TVL of $327 million. The platform has been showing an upward trend since the beginning of the year, with an increase of 168% in its TVL. This P2P NFT liquidity platform allows users to trade NFTs with ease and has attracted a large number of users.
NFTfi is a marketplace for P2P loans with NFTs as collateral. At the end of February, NFTfi had a TVL of $10.32 million. Sudoswap completes the list with a TVL of $2.85 million. The platform offers a unique set of features such as P2P trading and liquidity mining.
The growth in TVL in NFT marketplaces has not only been fueled by increased usage but also by the launch of new tokens with unique features and use cases. Platforms like Looksrare, X2Y2, Blur, and SudoSwap have introduced their own tokens to attract users and compete with established players like OpenSea.
The launch of these tokens by LooksRare, X2Y2, Blur, and SudoSwap highlights the growing importance of tokenomics in the NFT market. By offering unique features and benefits to users, these marketplaces are aiming to compete with established players and attract more people to their platforms.
While the TVL in NFT dapps is impressive, it cannot compare to the value locked into DeFi platforms. However, the TVL growth in NFT dapps is a positive sign for the NFT market as more users flock to these platforms. Innovation and competition push the NFT sector forward, and therefore we can expect to see even more growth. It’s safe to say that the future looks bright for NFTs.
4. NFT market continues to boom with $2 Billion trading volume
Continuing the trend seen over the last two months, the NFT market has experienced a significant spike in trading volume in February, reaching $2 billion for the first time since May 2022, mostly driven by Blur. This represents a 117% increase from the previous month. However, this increase of trading volume happened despite a 31.46% decrease in sales count. In February a total of 6.3 million were sold.
Ethereum has maintained its dominance and importance with $1.6 billion in NFT trading volume, representing an 83.36% dominance over the entire NFT market. The blockchain’s superiority has been consistent with previous months.
Additionally, Polygon has shown an impressive 147% increase, reaching $39 million this month. Among the other chains that have seen growth, we find Immutable X and BNB Chain. Immutable X puts lots of focus on video games, and saw its trading volume go up 71% to $24.4 million. In addition, BNB Chain noticed a similar growth and recorded $7 million in NFT trading volume.
5. Competing for market share: Blur vs. Opensea
Among the top-performing NFT platforms, Blur has emerged as the dominant player with $1.3 billion in trading volume, representing 64.8% of the entire NFT market trading volume. In contrast, Opensea, the leading competitor, trailed behind with $587 million, representing 28.7% of the market. Other NFT marketplaces like X2Y2 and LooksRare trailed far behind with $39 million and $29 million, respectively.
What sets Blur apart from other NFT marketplaces is its unique trading patterns. Unlike the typical wash trading seen on other platforms, Blur’s trading activity is largely driven by NFT whales farming on the platform.
Despite Blur’s impressive trading volume, it is worth noting that OpenSea still has a much larger user base, with over 316,199 traders compared to Blur’s 96,856. This confirms that the trading patterns on Blur are largely driven by NFT whales farming on the platform rather than typical trading activity.
In an effort to attract more NFT creators, Blur has been focusing on royalty payment options. The platform now offers a minimum royalty fee of 0.5% and has implemented measures to restrict sales of NFTs on secondary marketplaces that do not honor royalties. By doing so, Blur hopes to become more attractive to NFT creators and increase its market share.
As the competition between Blur and OpenSea continues to intensify, it will be interesting to see how these platforms evolve and what innovations they introduce to the growing NFT market. While Blur has gained significant momentum, it remains to be seen whether its growth will be sustainable.
6. Yuga Labs’ dominance in the NFT landscape
Yuga Labs dominates the NFT market as five of its collections (BAYC, MAYC, BAKC, Otherdeeds, and Sewer Pass) are among the top 10 NFT collections, representing 30% dominance over the entire NFT trading volume on Ethereum ($1.6B).
Additionally, Azuki and Clone X continue to consolidate as NFT blue chip collections, with trading volumes of $98 million and $74.3 million, respectively.
Further consolidating Yuga Labs’ domination, six of the top ten NFT sales in February were CryptoPunks, which together gained $5.3 million. The biggest NFT sale of the month, was the Golden Key Sewer Pass. The asset was sold by professional gamer Mongraal for a whopping 1,000 ETH.
The increase in trading volume for NFTs in February highlights the growing interest in digital ownership, especially with the rise in cryptocurrency prices. It’s expected that the NFT market will continue to expand as more industries embrace the technology and more people become aware of the possibilities of owning and trading digital assets.
Yuga Labs takes a bold step with TwelveFold: the future of Bitcoin NFTs?
The recent introduction of Ordinal NFTs, also known as Bitcoin Ordinals, has brought a new wave of excitement to the world of non-fungible tokens (NFTs). These tokens utilize inscriptions on Bitcoin’s mainnet to create unique and trackable satoshis, challenging the dominance of Ethereum-based NFTs in the market. Despite some initial skepticism, Ordinal NFTs have captured the attention of both NFT enthusiasts and critics alike.
Ordinal NFTs are different from other NFTs in their data storage, with the entirety of their data stored in the witness signature field of Bitcoin transactions. Despite initial skepticism, over 200,000 unique Ordinals have been minted, including notable projects like DeGods and OnChain Monkey, and even CryptoPunks clones have made their way onto the Bitcoin blockchain.
Now, Yuga Labs is set to debut its first-ever Bitcoin-based NFT project, TwelveFold. The collection will consist of 300 limited-edition generative art pieces, each inscribed to the Bitcoin blockchain. The pieces will feature 3D graphics and hand-drawn elements in a 12×12 grid format, paying homage to the manner in which data is stored on the Bitcoin blockchain.
The launch of TwelveFold comes at a time when Yuga’s most stable revenue stream is under threat. NFT creators rely on creator royalties levied on secondary sales of NFTs on Ethereum marketplaces like OpenSea, which has recently stopped enforcing some royalties to stave off competition from rival NFT trading platform Blur. Yuga Labs had previously criticized OpenSea for considering this move. Overall, the launch of TwelveFold is a significant step for Yuga Labs and the Bitcoin NFT market as a whole.
7. Blockchain gaming industry pushes forward despite slight decrease in activity dominance
The world of blockchain gaming is constantly evolving, and February 2023 was no exception. According to industry’s Unique Active Wallets, blockchain gaming remained the most dominant sector, with a 45.43% dominance, averaging 736,225 dUAW. However, this dominance has decreased from last month, when it was at 48.5%.
One of the most exciting developments in blockchain gaming was the sale of Kyle “Mongraal” Jackson’s “Dookey Dash” key NFT. The popular esports player sold the winning key NFT to billionaire entrepreneur Adam Weitsman for a staggering 1,000 ETH, or $1.63 million. This sale means that the creators of “Dookey Dash”, Yuga Labs, will receive 5% of the sale in royalties, which equates to 50 ETH, or $81,500.
Another significant development in the blockchain gaming industry was Unity’s release of a “decentralization” category in its online storefront. Unity is the market leading game developer platform with a 23.68% market share according to research firm Slintel. The market leading video game engine now taps into Web3, adding support for 13 different blockchain-based software developer kits (SDKs).
These SDKs include chains and products such as Algorand, Aptos, Dapper Labs’ Flow blockchain, Immutable X, MetaMask, Solana, and Tezos. Unity aims to provide game developers with the resources they need to connect with Web3 gaming, a crypto sector that’s been on the rise. With the decentralization storefront in the Unity Asset Store, developers can easily tap into blockchain technologies such as non-fungible tokens (NFTs) and the metaverse to bolster gameplay experiences.
These two developments show that blockchain gaming is still growing and that people are enthusiastic about it. Next week, we will be launching our DappRadar x BGA Games Report to provide more insights into what happened in the industry in February 2023.
8. $142 million lost due to exploits and hacks
Blockchain technology has been touted as a revolutionary force that promises to revolutionize the way we transact and exchange value. However, as with any other technology, it is not immune to hacks and exploits. In February 2023, the blockchain community witnessed 15 such incidents, resulting in a total loss of $142 million, according to the REKT Database.
The BNB Chain was the most affected platform, accounting for 50% of the hacks and exploits. Ethereum, Optimism, and Avax followed with 16.7%, and Polygon accounted for 8% of the incidents. It’s worth noting that 33% of the attacks occurred on a decentralized exchange (DEX).
The most significant incident that occurred in February 2023 was the BonqDAO and AllianceBlock hack. The attackers exploited a vulnerability in the BonqDAO smart contract and manipulated its price oracle to increase the WALBT price. The exploit allowed the attacker to mint over 100 million BEUR, which they then used to manipulate the WALBT price and liquidate multiple troves.
The attacker was able to withdraw their gains, which amounted to 113.8 million WALBT and 98 million BEUR, worth over $10 million. The dumping of these tokens had a severe impact on their value, with WALBT dropping by more than 50% and BEUR dropping by 34%.
This incident underscores the importance of conducting rigorous security audits and testing of smart contracts to detect and address vulnerabilities. Moreover, it highlights the need for blockchain projects to prioritize security over speed and innovation.
The NFT market has continued to exhibit bullish on-chain metrics seen in January throughout the month of February. The total NFT trading volume reached an impressive $2 billion, which is a value not seen since before the Luna crash. Although the surge in trading volume was partly driven by wash NFT farming on Blur, this still represents a positive development for the industry as a whole.
Moreover, DeFi has started to regain momentum and found place also in the NFT space with platforms like BenDAO and NFTfi. This highlights the continued growth and innovation in the NFT market, which is attracting more investors and creators to the space.
Overall, 2023 has started on a positive note for the whole dapp industry. The growth in NFT trading volume and the renewed interest in DeFi bodes well for the future of the industry, and we will continue to monitor the development closely.