DappRadar July Industry Report
Despite a bitter end to July with the Curve exploit, the Dapp industry’s resilience shines through. Our data highlights continued user engagement and a vibrant sense of optimism, painting a nuanced picture of this evolving landscape. Discover the pulse of the dapp industry here.
- July witnessed a 13% decrease in the dapp industry’s unique active wallets (dUAW), averaging 1.7 million daily dUAW. Despite a 0.5% decrease in dUAW, gaming re-emerged as the dominant category with a 41% share in the dapp industry.
- The TVL in the DeFi sector has slightly declined by 2.27%, settling at $75.91 billion. Tron managed to reclaim its position as the second-largest DeFi platform by TVL, which grew by 3% to reach $5.852 billion.
- NFT trading volume fell 29% from the previous month to $632 million, while the total number of NFT sales also dropped by 23% to 3.7 million.
- Polygon experienced a significant uptick in NFT trading, with 772,424 traders, dominating the sales count by 27%.
- $363 million in crypto assets were lost due to hackers exploiting smart contracts and duping investors.
Table of Contents
- Dapp Industry Overview
- Stargate Finance retains top spot as most-used dapp
- DeFi TVL decreases slightly amidst high-profile exploits
- NFT trading hits $632M volume, 3.7M sales
- Is Yuga Labs losing its grip on the NFT market?
- Blockchain gaming: driving Web3 user interaction forward
- $363 million lost due to exploits and hacks
1. Dapp Industry Overview
The dapp industry in July 2023 saw a contraction in Unique Active Wallets (UAW), registering a 13% decrease to an average of 1.7 million daily UAW (dUAW). Several factors potentially contributed to this decline. On one hand, the excitement generated by fresh investments and intriguing partnerships offered some optimism. However, ongoing regulatory uncertainties in the US may have contributed to a slight pullback in user activity. Not to forget, we’re in the heart of the summer season, which traditionally aligns with a quieter market cycle.
In the realm of dapp categories, gaming has made a comeback, recovering its dominance to reach 41%. In the previous month, gaming dominance hit the lowest level since 2021. Its dUAW experienced a minor decrease of 0.5%, standing at 712,611.
Contrarily, DeFi, after a user surge last month, underwent a 26% decrease in UAW to 510,654 dUAW, while still holding 30% of the industry’s total user activity.
The social dapp sector remained stable, with a 2% decrease in dUAW, reaching 257,726. Its dominance holds steady at 15%. As highlighted in our previous report, the burgeoning potential of decentralized social media could fuel the sector’s growth in the upcoming period.
The NFT sector, however, continues to experience a downward trend, with a 19% decrease this month to 70,338 dUAW, making up only 4% of the industry’s total activity.
Upon examining blockchain performance, BNB Chain emerged as the leader, hosting 546,779 dUAW, a 21% dominance over the industry. Within BNB Chain, PancakeSwap retains its leading position, accounting for 27% of the activity. WAX and Polygon, despite marginal decreases, remain significant players, led by Alien Worlds and Stargate Finance, respectively.
In the next section, we provide a detailed breakdown of the top dapps by UAW in July 2023, offering an in-depth view into the dynamic world of the Dapp industry.
2. Stargate Finance retains top spot as most-used dapp
The dominance of DeFi dapps continues unabated in the Web3 world. Out of the top 10 dapps by UAW (Unique Active Wallets) for July 2023, an impressive 7 belong to the DeFi sector. This continued trend, observed over several months, underscores the growing impact of DeFi on the blockchain community. As per our monthly rankings, it’s evident that DeFi dapps are consistently increasing their domination.
Stargate Finance, a favorite in this landscape, continues to lead the pack with a staggering monthly UAW of 2.4 million. This figure surpasses even the combined mUAWs of established giants like PancakeSwap V2 and V3, and Uniswap V3. Stargate Finance’s popularity can be partly attributed to its pivotal role in L2 airdrop searches, another trending activity in the Web3 realm.
Making its presence felt in the top 10 is the social dapp Galxe, securing the third position. Galxe’s success serves as a testament to the growing importance and potential of social dapps, an issue we delved into last week. The recent rebranding of Twitter to ‘X’ has cast a spotlight on the centralized nature of social media. By contrast, Web3 solutions like Galxe offer a more decentralized, user-centric experience.
The only hiccup noticed in July’s top 10 dapps by UAW is a slight dip in volume or UAW for most dapps. This could be a reflection of the seasonal trend of Web3 enthusiasts stepping away from their digital avatars to enjoy the summer holidays. Could the Web3 world be taking a summer break too?
3. DeFi TVL decreases slightly amidst high-profile exploits
This month, the DeFi sector registered a slight contraction in Total Value Locked (TVL), falling by a modest 2.27% to conclude at $75.91 billion. This marginal decrease reflects the multitude of events that have been unfolding in the DeFi landscape. High-profile incidents include a $50 million exploit on Curve, a significant rug pull incident involving BALD, and an exploit on Base’s primary DEX. To add to the mix, the IRS has declared that staking rewards must now be reported as income.
Dominating the DeFi sector, Ethereum experienced an 8% decrease in its dominance, settling at $50.2 billion. This month, the platform faced a tumultuous period following the significant exploit on Curve Finance’s liquidity pools. As a result, Ethereum witnessed a record payday in Maximum Extractable Value (MEV) block rewards. July 30 saw the highest MEV rewards since last year’s Merge, with validators earning an estimated 6,006 ETH ($11.1 million), according to data from mevboost.pics.
While Ethereum remains the powerhouse, DeFi’s landscape extends beyond its borders. Tron managed to reclaim its second spot in terms of TVL, registering a 3% increase and reaching $5.852 billion. Conversely, BNB Chain underwent a 21% decrease. Amongst others, only Optimism posted a growth, witnessing a 7% increase in its TVL.
Despite the dramatic happenings, it’s crucial to remember that DeFi’s future remains bright. An increasingly strong consensus amongst crypto traders dictates that DeFi is set to play an integral role in the future economy. Even amidst turbulence, the DeFi sector continues its trajectory towards a more decentralized financial landscape.
4. NFT trading hits $632M volume, 3.7M sales
The NFT market this month has seen some significant changes. Notably, there’s been a continued downtrend in trading volume. In the first week of July 2023, NFT trading volume stood at approximately $182 million. By the fourth week, it dropped sharply to around $57.5 million, representing an almost 68% decrease within just three weeks. Consequently, the total trading volume for the month totaled $632 million, marking a decrease of 29% from the previous month.
Simultaneously, the number of sales has also seen a drop, from roughly 727,413 to 368,331, indicating a 49% decrease. However, from a monthly perspective, the decrease appears less dramatic at 23%, with a total of 3.7 million sales. This can be partially explained by the lowering of the average transaction price.
This observed shift could be due to the emerging popularity of ‘low barrier entry’ NFTs. These assets, smaller in individual value, cater to a wider audience. The NFT market, in its diversity, allows for such shifts; a decrease in trading volume doesn’t necessarily signal diminishing interest in NFTs as a whole. Rather, it could hint at a shift in where that interest is focused, such as the burgeoning DeFi sector. Historically, a rise in DeFi often corresponded with stagnation or decrease in NFT industry growth, and vice versa.
Interestingly, the Polygon platform experienced a surge in NFT trading, registering 772,424 traders in July and dominating the sales count by 27%. This trend may signal a broader shift in the NFT market towards platforms that offer more affordable and accessible NFT options.
Despite the general downward trend in NFTs, generative art performed quite well. Several Fidenza, Ringer and Squiggles NFTs sold around or over 50 ETH. Themes and Variations, a relatively small collection, generated 992 ETH in less than 7 days.
Therefore, the observed decrease in NFT trading volume across certain categories should not be misconstrued as a sign of stagnation or retreat. It might well signify an industry maturing, undergoing recalibration and expanding into new territories, seeking wider and more diverse participation.
5. Is Yuga Labs losing its grip on the NFT market?
The NFT landscape in July 2023 revealed a rather intriguing turn of events. Upon analyzing the top 10 NFT collections by trading volume over the past 30 days, we’re witnessing several significant shifts that could potentially reshape the NFT market dynamics.
Notably, Yuga Labs, the creators of the popular Bored Ape Yacht Club collection, seem to be slowly losing their once unshakable dominance. While Bored Ape Yacht Club remains the most traded collection, only two other Yuga Labs collections made it into this month’s ranking. This stark contrast to a few months ago, when Yuga Labs claimed over 50% of every ranking, raises an interesting question: Are we seeing the end of the Yuga Labs monopoly and the rise of a more diversified NFT industry?
In terms of trading volume, it’s noteworthy that 6 out of the 10 top collections witnessed a decrease, with sellers contributing more to the volume than buyers. This pattern suggests a shift in the market dynamic that warrants further analysis.
Despite having three collections in the top 10, Azuki hasn’t fully recovered from last month’s downturn. Only Azuki Elementals displayed a robust 55% increase in sales. Yet, an essential caveat is that a significant portion of these sales came from traders.
Interestingly, Pudgy Penguins seems to be faring relatively well in these circumstances. Their strategy to target younger generations and launch toys on Amazon appears to be paying off. But is this the recipe for creating a blue-chip collection? Only time will tell.
An important metric, the floor price, has shown minute increases for only two collections – Gods Unchained and Crypto Punks, both less than 1%. The other established collections experienced some of their lowest floor prices from the past two years.
Could this be an opportunity to enter the most well know NFT ecosystems at a lower entry price?
6. Blockchain gaming: driving Web3 user interaction forward
This month, on-chain gaming interactions by Unique Active Wallets (UAW) recorded a figure of 712,611, signifying a slight decrease of 0.5%. Despite this drop, on-chain gaming held a dominance of 41%, reflecting its continued prominence in the Web3 world.
Although our primary focus on blockchain gaming typically features in the dedicated gaming report – to be released next week, an interesting trend has emerged within this month’s top 5 with the most traded NFT collections. Notably, four of these collections are from blockchain games, underscoring the significant role of gaming in driving NFT trading activity.
Among these top-ranking collections, only one, from the Galxe ecosystem, is not directly gaming-related. However, this isn’t a stark deviation, considering that Galxe, a social dapp, employs gamification UX, blurring the lines between social and gaming sectors.
A closer examination reveals that most traders in these collections tend to buy more than they sell. This purchasing behavior indicates a growing interest in these games and the larger integration of NFTs into the gaming ecosystem.
What can we infer from these trends? Blockchain gaming boasts the highest number of users among all categories in the Web3 industry, hinting at its potential for sustained growth. For a deeper dive into these trends, stay tuned for our comprehensive gaming report next week. Alternatively, if you’re reading this post-10th of August, check out our reports page for full insights.
7. $363 million lost due to exploits and hacks
July 2023 has been a tumultuous month for the Web3 world, as per the latest data from REKT Database. A total of $363 million were lost in 47 exploits, marking the highest loss due to such incidents this year. The Ethereum chain experienced the majority of these exploits, 29 to be precise, followed by 13 on the BNB Chain and the rest on other chains like Avalanche.
Among these, two incidents involving Multichain and Curve stand out for their scale and impact. Multichain, already in the limelight due to previous exploits, suffered another significant setback on July 10, 2023. Unauthorized access to their system led to substantial fund loss across various chains, all transferred to a single EOA (Externally Owned Account). The slow, controlled nature of the fund transfers stirred speculation that this could be an internal operation.
The other significant incident occurred on July 30, 2023, involving Curve. This DeFi platform, which leverages smart contracts to offer financial services, has not yet confirmed the total loss from the attack. Preliminary estimates from blockchain auditing firm BlockSec suggest losses could exceed $42 million. Crypto risk modeling firm Gauntlet’s CEO, Tarun Chitra, pegged the losses at around $20 million worth of CRV and a version of ether.
In a turn of events, Curve managed to recoup nearly $5.5 million, thanks to ‘c0ffeebabe.eth’, a bot operator who ethically stole and returned 2,879 ETH from the attacker by front-running their transaction.
The fallout from the heist didn’t end there, with Curve DAO’s native CRV token price plunging by 23% to $0.56, thereby threatening to compound the chaos. This price drop potentially jeopardizes the founder of Curve’s $70 million borrowing position on Aave.
The total value of assets locked on Curve also took a hit, plummeting to $1.7 billion from over $3 billion within a day.
Despite the past few months being relatively quiet, these incidents underscore the critical importance of robust security measures in the Web3 industry. It’s a stark reminder that in this fast-evolving digital landscape, security should always be a top priority.
July 2023 was a month of shifting dynamics and relative contraction for the dapp industry. While the decrease in daily unique active wallets suggests a mild slowdown in activity, the shifts within the various segments of the dapp landscape indicate an industry that is continually evolving.
The resurgent dominance of gaming and the significant uptick in activity on the Polygon platform are clear indications of how the blockchain and Web3 ecosystems continue to diversify and adapt. While DeFi and NFTs witnessed downturns in July, these sectors are far from stagnant. Trends such as the growth in the DeFi space and the entrance of prestigious brands into the NFT market signify continual adaptation and potential new growth avenues.
Indeed, the downturn in NFT trading volume may represent a recalibration of the industry rather than a retreat. As the industry continues to mature and evolve, it’s likely that such shifts will become a regular occurrence, with different sectors waxing and waning in prominence depending on a variety of factors.
Ultimately, the key takeaway from July’s report is that the dapp industry remains a dynamic and rapidly changing landscape. While certain trends and shifts may initially seem negative, they often reflect the industry’s ability to innovate and adapt in response to evolving user preferences and market conditions. As we look ahead, the capacity for continual evolution will be key to the long-term success and vitality of the dapp ecosystem.