How did the Dapps fare in 2019?
4 Charts depicting the progress of decentralization applications in the preceding year & in the long-term
Decentralized Applications have been the new rage with the advent of blockchain technology and the Ethereum blockchain has been the premier platform that has provided the foundation for the proliferation of such applications. Other smart contract platforms like EOS & Tron also entered the space, being dubbed infamously as the “Ethereum killers.”
The much proclaimed technical advantage of these Dapp platforms hasn’t really helped them in capturing a user base comparable to Ethereum and both EOS & Tron have struggled to grow their user base. Ethereum is not only the most popular Dapp platform by far, but it has also successfully nurtured Dapps across a broad range of categories — DeFi, Exchanges, Games, and Gambling and High-Risk.
Although 2019 started the year with a lot of hype around the stable coins, the latter part of the year was resonating with the rhetoric around the paradigm shift being caused by decentralized finance — an open financial system that is interoperable, programmable, and composable.
The Defi movement was further fuelled by crypto lending platforms launched by industry bigwigs like Binance. This also heightened the interest in developing Defi applications. Despite the ballooning interest surrounding the growth and popularity of DeFi applications last year, growth in gaming & gambling Dapps still far outstrips the prior.
Current State & Long-term Trend:
Looking at the long term chart above (Figure 1), after a slow start to the Dapps for the first two years between 2015–2017, the interest began to spike with the bullish crypto market in late 2017. While the Crypto prices took a turn for the worst in 2018, Dapps continued to grow by leaps & bounds till Dec. 2018 before dropping off for the next six months.
The Dapps development has picked up again since Jun. 2019 but is still nowhere close to the interest we saw back in late 2018. While the longer time decline in Dapp adoption still seems to persist but the general optimism regarding the blockchain technology acting as the infrastructure for the new Internet would probably resume the longer time uptrend in a maturing Dapp market. The market is too small right now, however, to predict any timelines for when this is going to happen.
Dapp User Growth in Different Categories:
Looking at some other micro-trends, Dapp users have converged to yearly lows in all three main categories of DeFi, gambling & gaming by the end the last year (Figure 2). Broadly speaking, the primary growth of DeFi applications came on the Ethereum blockchain — where 75% of such applications are active, followed by 11% on EOS blockchain, according to Dapp.com.
Most notable was the drop in gambling Dapp users from the peak in Jun. 2019. However, the DeFi app user interest has steadily declined since Aug. 2019. And while the gaming & gambling Dapp users are showing some growth to end the year, DeFi app user growth remains anemic.
Dapp User Growth on Ethereum:
Since Ethereum is the most popular Dapp platform, let’s review how the Dapp users here match up with the overall users over the last year (Figure 3). Gaming users remained the most popular segment on the platform with a late summer weakness in interest giving way to a healthy rebound later in 2019.
DeFi Dapp users were the second most popular segment but showing a marked weakness towards the end of the year. ETH gambling Dapp users remained the weakest segment although it did manage to show some growth at the end. According to the data from DappRadar, daily active unique wallets across the Ethereum Dapp ecosystem rose 118%, with daily value in terms of US dollars up 166%.
Weekly Dapps & Dapp Users:
The same report shows that Dapp users has shrunk 62% from a high of 110,000 in May to 41,000 at the beginning of December. And the active Dapps across these 10 blockchain platforms decreasing from 529 to 370. The trend is pretty evident from the weekly Dapps & Dapp users decline above, especially towards the end of the year 2019 (Figure 4).
The current trends show that the Dapp ecosystem is struggling with most of the activity being generated by a few platforms — most notably Ethereum, Tron & EOS. The development and innovation are also too narrowly focused on a few uses cases. Perhaps the industry needs more time to broaden the focus towards a wider adoption & better execution.