Dapp October Report: Metaverse Explosion, Seven Major Public Chains Compete for TVL Dominance
After a record-breaking quarter, the NFT sector continues to "grow wildly," showing no signs of slowing down.Source: DappRadar
Author: Pedro Herrera
Compiled by: Chen Yiwanfeng, Ostrich Blockchain
The blockchain industry in October showed a clear bullish trend. After a record-breaking quarter, the NFT sector continues to "grow wildly," showing no signs of slowing down. Meanwhile, the DeFi sector reached an all-time high in total value locked, with seven blockchains accounting for 95% of it. Finally, the gaming industry is seeing a growing audience, paving the way for potential mass adoption in 2022.
After months of bearish trends, mainstream cryptocurrencies reached their respective all-time highs in October. ETH, SOL, LUNA, AXS, and others followed BTC in their own ways, positioning themselves within the price discovery range. In the Dapp space, the blockchain industry continues to expand. An average of 2 million unique active wallets (UAW) connected to blockchain Dapps daily. Additionally, NFTs generated $4.2 billion in transactions, with some public chains starting to play a role in this category. This article will analyze the overall Dapp industry details for October and make some predictions about the industry's future development.
In the DeFi sector, competition for TVL dominance has intensified as multiple networks significantly improved their respective value metrics. Blockchain-based games, especially those involving the metaverse, gained significant market attention due to Facebook's rebranding news.
Note: Unique Active Wallets (UAW) or unique wallets refer to unique addresses that interact with a given smart contract; therefore, UAW does not translate to unique users. A person may use different wallets to interact with a single Dapp.
Key Points
The number of unique active wallets registered daily in the Dapp industry exceeded 2 million for the first time in October, a month-on-month increase of 21% and a year-on-year increase of 626%.
The on-chain market capitalization of the top 100 Ethereum NFT collections and NBA Top Shot reached $16.72 billion, an 18% increase from the figures recorded in September.
After experiencing a bull market summer in 2021, the NFT sector continues to maintain growth momentum, with a trading volume of $4.2 billion in October, a month-on-month increase of 2%.
The TVL of the DeFi ecosystem reached $219.8 billion, a month-on-month increase of 39%; 93% of the industry's TVL is concentrated in seven blockchains.
In DeFi, Solana's TVL surpassed $12 billion, a 50% increase from September, while registering $240 million in NFT transactions and offering a plethora of upcoming games.
Metaverse tokens surged, with MANA rising 303% and SAND rising 128% since Meta's announcement on October 1.
Daily interactions exceeded 2 million UAW
According to October data, the blockchain industry continues to expand. More than 2 million (2.16 million) UAW connected to blockchain Dapps daily for the first time. This represents a 21.24% increase from the average usage in September and a significant year-on-year increase of 626.5%. Aside from a 23% month-on-month decline in the wallet base of Wax, the UAW numbers for other major blockchains also increased.
Unlike the trends observed in the third quarter, the growth in UAW for DeFi was the most significant, with a month-on-month increase of 32.49%, averaging 803,500 UAW daily. This is not surprising, as in recent months, blockchains like Solana, Terra, Avalanche, and Fantom have established themselves within networks that have solid DeFi ecosystems.
Meanwhile, the gaming category is also experiencing continuous growth. The number of UAW interacting with gaming Dapps increased by 19.72% in October. The growth was most pronounced on Polygon, which is also known for its DeFi Dapps.
At the same time, the number of UAW in the NFT space is also on the rise. Over 142,000 UAW connect to NFT-related Dapps daily, primarily driven by Solana and BSC, as they improved their NFT alternatives.
The Explosion of the Metaverse
After Facebook, the sixth-largest company by market capitalization globally, announced its rebranding to Meta, the Metaverse has become a major focus for the social media giant. While this may be a familiar concept for those in the blockchain space, particularly in gaming, for most people, the metaverse remains a relatively novel and abstract topic.
As the metaverse gradually gains traction, the prices of cryptocurrencies closely associated with it have seen a direct impact. For example, virtual worlds like Decentraland, The Sandbox, or Ember Sword. On Halloween night, Decentraland's native token MANA reached an all-time high of $4.11.
A similar situation occurred with the native token SAND of Sandbox. Currently, SAND is within a price discovery range of $2.35, an increase of 125% from the all-time high set in September.
Although most of these projects are still in development within the metaverse, it is becoming increasingly clear that the metaverse has the potential to change the way we socialize and even tokenize certain aspects of our lives. The concept of creating a community space where people can gather to play, trade, and roam around was just a dream a few years ago. Now it is evident that this concept has completely transcended the blockchain.
Gaming Accounts for 55% of Dapp Industry Usage
Despite DeFi being the fastest-growing category in terms of UAW, blockchain-based gaming still represents a significant portion of activity in the Dapp industry. In October, 1.19 million UAW connected to gaming Dapps. The dominance of the gaming category remains at 55%, an improvement from 49% in the third quarter.
Splinterlands is one of the major contributors. In the third quarter, the user base of this card trading game grew by 320% quarter-on-quarter, and Hive Dapp continued to grow in October. Splinterlands has consistently been the second-largest game in the industry based on on-chain activity, with over 651,000 UAW registered in October, a 44.38% increase from September.
From off-chain data, Axie Infinity is undoubtedly the most played game in the entire industry. According to the Sky Mavis team, there are over 2 million active users daily. However, the surge in on-chain activity in October made it the third most popular Dapp when considering only on-chain data. Driven by the AXS staking feature, users connected to the popular Dapp more frequently. In October, a total of 647,000 UAW were linked to AXS, a 27% increase from September.
Additionally, there is an interesting case with BSC. Since the third quarter, BSC has become a reference point for GameFi. The network hosts popular games like Mobox and CryptoBlades, with gaming usage increasing by 16% month-on-month. Although the two Dapps mentioned above saw declines of 26% and 25% respectively, new GameFi Dapps continue to boost BSC's monthly player base.
While Mobox (157,000 UAW) and CryptoBlades (89,700 UAW) seem locked in as the top 10 games, new BSC alternatives emerge every month. In October, CryptoMines attracted over 112,000 UAW.
Polygon Sees Significant Growth
Not long ago, Polygon was solely a DeFi player. While it had a favorable ecosystem, its activity lagged behind other networks. However, in October, the second-layer solution emerged with gaming activity, revitalizing the Polygon ecosystem.
A play-to-earn mobile game called Arc8, developed by Gamee, launched in September. At the game's launch, they also announced a mining program to make registration more attractive. After the mining phase ended, the Arc8 application fully launched, enabling new mini-games and positively impacting the price of the Dapp's native token GMEE. In October, despite the end of mining activities, over 373,000 UAW connected to Polygon games.
In addition to Arc8, Polygon also has established gaming options like the GameFi Dapp Aavegotchi and the racing game Revv Racing. Furthermore, upcoming metaverse projects like The Sandbox and Ember Sword are integrating into the Polygon network. Besides the obvious relevance that the metaverse will provide, the recent announcements of Bollywood and cricket stars entering the NFT market may play a significant role in Polygon's prospects.
It is worth noting that Polygon is an India-based project. The importance of Bollywood and cricket in this region is comparable to the influence of Hollywood and sports stars in the United States, such as Tom Brady or Stephen Curry, or the impact of Lionel Messi and F1 in the Eurozone.
Under DappRadar's monitoring, several Hollywood and sports celebrities have joined the NFT trend in recent months, from joining blue-chip collections like CryptoPunks or Bored Ape Yacht Club (BAYC) to launching their own NFT series on Ethereum or other alternative blockchains, giving the space a unique feel.
Additionally, the Bollywood effect will certainly be a point of interest in the coming months. As part of the future NFT market, recognition from celebrities in the global region will not only strengthen Polygon's NFT offerings but also push the NFT market beyond a highly concentrated base in the United States, while also interacting with a very active game-earning-driven region in Southeast Asia.
Development of NFT Tracks Across Public Chains
The NFT sector experienced explosive growth in the third quarter, with cumulative trading volume exceeding $10.4 billion. Impressively, the sector maintained its growth momentum in October. In just the past 31 days, NFT trading volume exceeded $4.2 billion, slightly increasing by $148 million from September's figures.
Moreover, the on-chain market capitalization of the top 100 Ethereum collections, along with Flow's NBA Top Shot, increased by 17.81% from September's record, reaching $16.72 billion in the process. Although some blue-chip collections saw their floor prices decline month-on-month, the overall floor prices still increased. For example, the floor price of CryptoPunks decreased by 21.44%, BAYC's floor price dropped by 10.23%, while the floor prices of CyberKongz and Cool Cats fell by around 6% compared to the end of September.
On the other hand, amid the current hype surrounding the metaverse, projects like Decentraland and The Sandbox have pushed up their floor prices, contributing to the increase in floor market capitalization. Additionally, ETH's price rose by 50.32% compared to September 30.
It is noteworthy that the dominance of in-game items slightly decreased in October, contracting by less than 2%, bringing the dominance of NFT games down to 15.46%, down from 17.02% in September. Most notably, Axie Infinity reduced its trading volume, negatively impacting NFTs within the game. Despite the negative circumstances, the NFT sector continues to expand.
While the market for NFTs remains undersupplied, October saw a historic high of 3.7 million unique NFT traders. This also indicates that the NFT market is still developing in a positive direction.
On Ethereum, some managed collections are widely regarded as units of value storage, while others serve as genuine sources of passive income. Some of the previously mentioned NFT projects, along with others like Art Blocks and Cryptoadz, fall into this category.
The status of blue-chip collections certainly plays a role in Ethereum's dominance in the NFT space (accounting for 82.11% of total NFT trading volume). However, as mentioned earlier, the decline in some of these collections has opened the door for a surge in other unnamed markets on OpenSea.
While Ethereum's trading volume increased by 1% month-on-month in October, the most important market on the network, OpenSea, saw its trading volume decline by 14.37% during the same period. This marks the second consecutive month of decline for OpenSea in this metric, further supporting the notion that the NFT sector does not rely on a single blockchain.
Notably, Solanart is the NFT market on Solana, with trading volume exceeding $187.3 million in October, a month-on-month increase of 13.79%. Based on October's trading volume, this sales level makes Solanart the third-largest market, only behind the existing OpenSea and Axie's market.
Additionally, AtomicMarket on Wax saw a significant surge in trading volume. Driven by the NFT game project from FarmersWorld, AtomicMarket's trading volume increased by 459.25% compared to the previous month.
On BSC, PancakeSwap has become the most used Dapp in the entire industry. However, in October, the DeFi platform solidified its new feature, the PancakeSwap NFT market. In October alone, PancakeSwap attracted over 37,000 unique wallet addresses as a market, accumulating over $39 million in trading volume. These figures represent significant increases of 140.72% and 676.67%, respectively.
Impressively, PancakeSwap's market ranked sixth in trading volume in October, surpassing NBA Top Shot, despite the "Run it Back" series selling successfully, which boosted Top Shot's market trading volume by 122.42%, and its unique wallet address count increased by 30.46%, reaching 124,000.
TVL Reaches $219.8 Billion, Setting a New Record
In DappRadar's third-quarter industry report, we noted that notable stories like Solana's strong DeFi products and Avalanche's intensive liquidity mining programs have emerged in the DeFi space. Furthermore, driven by soaring crypto prices, the industry's TVL reached an all-time high of $219.8 billion in October, a 23.4% increase from September's value. At the same time, seven blockchains hold 93% of the industry's TVL.
In terms of the aforementioned metrics, Ethereum remains the leader. By the end of October, Ethereum held $120 billion in TVL, nearly 55% of the industry's metrics. Despite an increase in the supply of DeFi Dapps in recent months and the negative impacts of high gas fees, Ethereum remains a network rich in DeFi activity.
In terms of TVL, BSC was surpassed by Solana. Despite having the most used Dapp in the industry and increasing its TVL by 23% since the end of September, BSC could not keep pace with the hot Solana. Besides PancakeSwap, other DeFi Dapps like ApeSwap, Venus, and Alpaca Finance offer attractive high-yield operational options, attracting a large number of users. By the end of October, BSC's TVL reached $21.89 billion.
In terms of TVL, Terra remains the fourth blockchain. Terra's metrics exceeded $9.95 billion, with an 18% month-on-month increase. A positive trend, but overshadowed by Avalanche. Driven by strong liquidity mining products, Avalanche's TVL increased by 129% month-on-month. By the end of October, Avalanche's TVL was $8.38 billion. The gap between these two blockchains decreased from $4.78 billion at the end of September to $1.57 billion currently.
Fantom is another blockchain worth considering when discussing DeFi. The highly scalable network has already surpassed Polygon in terms of TVL. By the end of October, Fantom had a TVL of $5.45 billion, significantly increasing by 287% compared to the end of September.
In summary, the DeFi race is a spectacle worth watching, with seven public chains competing for TVL dominance. In less than three months, this space has transformed from being dominated by Ethereum, BSC, and Polygon to a highly competitive arena with many interesting options suitable for different types of investors. The developments in this area will be worth monitoring in the coming months.
Solana: The Three-Headed Monster
As mentioned earlier, Solana's footprint in the DeFi race has become more pronounced. By the end of October, Solana became the second-largest network in terms of TVL, reaching $24.9 billion. Its TVL increased by 35% month-on-month, currently accounting for 11.32% of the industry total.
Gradually, Solana Dapps are positioning themselves as an indispensable part of the DeFi industry. For example, the automated market maker Raydium, as a liquidity provider, has become one of the most widely used DeFi Dapps in the entire industry. In October, Raydium attracted over 238,000 UAW, ranking just behind PancakeSwap and 1inch in this regard. Serum, benefiting from Raydium's AMM, reached a TVL of $1.6 billion by the end of October.
Additionally, notable projects like Sabre, Marinade Finance, Sunny, and Orca each have at least $1 billion in TVL within their respective protocols, creating a very complete DeFi ecosystem within the network. However, we should not view Solana as limited to DeFi. The network may be one of the most powerful NFT markets after Ethereum. Although it hosts several NFT collections that are clearly spinoffs of famous Ethereum collections, the market is seeking its foundation. As evidenced by Solanart, it ranks as the third-largest market in terms of trading volume in October.
Conclusion
The Dapp industry may be experiencing its best moment, as usage and value across all three major categories are achieving organic growth. Gaming remains the primary driver behind blockchain usage. Beyond the existing metaverse, some of these gaming projects have already announced that the metaverse is a key part of their development. For example, Axie Infinity, Splinterlands, Aavegotchi, Dark Country, and many others integrate land features into their game mechanics. With recent media attention on the metaverse, the concept of virtual land ownership will gain popularity among the masses. We expect the importance of decentralized virtual worlds to grow further.
After several impressive months, the NFT sector may be cooling down. Following months of trading volume exceeding $4 billion, October's trading volume again reached $4.2 billion. While some of the most significant Ethereum collections are in a natural consolidation phase, markets on other blockchains (like Solanart, AtomicMarket, and PancakeSwap's own platform) are creating value. Additionally, it is worth mentioning that the on-chain market capitalization of NFTs is rising.
This is one of the most important metrics when evaluating NFT projects, making visibility crucial. Overall, it is important to look at floor prices, while considering rarity and other types of metrics adds another layer to the actual valuation.
Moreover, DeFi remains a "sleeping giant." The sector is becoming increasingly mature and consolidated, with mainstream public chains playing a crucial role in the decentralized finance industry. Ethereum has become a whale network, while Solana, BSC, and other blockchains will continue to attract new users, as we are now one step closer to mass adoption in the DeFi space.
