Where are dApps going?
Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji)Editor's Note: This article comes from
Blue Fox Notes (ID: lanhubiji)
Blue Fox Notes (ID: lanhubiji)
, Author: Joel John, translation: MoQi, reprinted with authorization by Odaily.
Foreword: According to the data of dappradar, there are currently more than 2,700 dApps on the market, including more than 1,600 dApps on Ethereum, nearly 500 dApps on EOS, nearly 500 dApps on TRON, and more than 100 dApps on the remaining platforms. From the perspective of the number of dApps, the current main public chain platforms are Ethereum, EOS and TRON. However, the public chain structure is far from settled, because from the perspective of overall dApps, except for DeFi applications (such as MakerDAO) and game applications, the top-ranked dApp users are only a few thousand, and few tens of thousands. At present, dApps are in a very early stage, so other public chains, such as Harmony, Solana, Polkadot, Cosmos, etc. still have opportunities, as long as killer dApps can be produced, especially dApps in the fields of finance, games, video or social media, then , the pattern of the public chain may change at any time. We may not be too far away from the singularity of dApp history. Look forward to dApp developers and public chain developers hand in hand.
Decentralized applications have been hailed as the path to mainstream adoption. Now the hype based on them seems to be fading away. The current state of dApps is very similar to the state of the Internet before Netscape launched. Unfortunately, Brave's rapid growth has not been able to bring new users into the broader dApp ecosystem.
What I've always wondered is if dApps are slowly dying, as has been the case with previous ICOs? As the token ecosystem shifts to focus on new trends, such as DeFi, staking, and DAOs, it is valuable to observe previously “hot” trends. The dApp data comes from dApp.review, which does not include Blockstack.
1. The number of active dApps has slowed down
The active dApp mentioned here refers to any dApp that has transaction activity on its smart contract within 24 hours. I think of it as a "daily" metric of how often people are interacting with dApps. The reason for this is that in a more traditional app ecosystem (such as a software or mobile app), a higher open rate means higher utility and better stickiness.
If a person only opens a dApp once a quarter, it would make perfect sense if the transaction size is large and the profit percentage of the transaction is high. This is also the case for many DeFi applications.
So far, there are about 600 dApps that are used by people every day. Compared with traditional applications, there are currently more than 2 million mobile applications and more than 1 billion websites.
Building dApps is hard even for experienced developers. Due to the good ecology (such as iOS and Google Play customer channels, no need to write code to build websites, etc.), websites and mobile applications have achieved considerable scale. The above comparison of numbers allows us to estimate the current position of dApps.
According to Statista, in 1993 there were 130 websites on the Internet. In 1994, it increased by 30 times, reaching 3000 websites. Based on these assumptions, it is reasonable to say we are in the early 1990s of dApps.
While it may not be fair to compare mobile internet and internet growth rates, it is safe to say that there is a broad trend that mobile devices are turning to integration through private key management (Samsung, HTC) and browsers (Opera, Brave). wallet). We may see an explosion of dApps in the future. But those days are not here yet.
Note: Many charts use "number of dApps" as a metric. I think this is a poor indicator because the number of dApps has continued to grow over time, which has been the case since 2016. Or in other words, it actually also counts dApps that are not active. It's like drawing a conclusion that there are more than 10 billion people on Odaily, including all the people who have existed for millions of years. That's not smart, is it?
2. We need to focus on developer incentives
The number of "active dApps" has declined over time. What I mean by "dApp health" is a percentage metric based on the number of active dApps versus all dApps at any point in time.
I interpret this data as
The percentage of active dApps on Ethereum does not seem to be improving, but the likely fact is that active dApps are increasing over time. Why? Because the total number of dApps is bound to increase over time.
If the number of active dApps does not increase proportionally, it will decline. Because the other two public chains, EOS and TRON, have obvious downward trends, mainly because their ecosystems are relatively young. Although the number of dApps on the two public chains is increasing, their active retention rates are decreasing. Over time, many dApps will be created, deployed, and then ignored.
One explanation for this is that developers often build gambling and gaming dApps first to learn how to build dApps and scale them before moving on to more complex use-case builds. Regardless, it is clear that over a long enough period of time, the number of active dApps is declining due to a lack of incentives for individuals to maintain and market dApps.
Rare exceptions are products like LocalEthereum that achieve product-market fit fairly early on. To increase the likelihood of dApps surviving and scaling, more incentives for developers (such as donations, compensation, or direct investment) are needed so that developers have a runway to take off before they turn a profit.
We’ve seen this early trend, with the likes of UniSwap and InstaDApp raising funding, but there’s more work to be done.
3. The need for a killer app is becoming more apparent
The number of users of EOS and TRON far exceeds that of Ethereum. This may be related to the design of transaction fees. A "user" here refers to any active wallet that has interacted with the smart contract during the day. The problem with this assumption is that it is possible for a bot to be interacting with a gambling or gaming dApp.
Until self-managed identities become the standard for dApps, there is no practical way to measure this metric. When calculated together, there are more than 500,000 users at the peak. What dApp developers are competing for is a small niche market, in which it is relatively easy to obtain a large market share, but it becomes difficult to expand to more incremental markets .
For founders, this can mean two things:
Given the niche nature of the market, early advertising dollars spent on word of mouth and organic marketing may be more effective.
Due to the small size of the entire industry today, the likelihood of high market share penetration is high in terms of market share.
The exception here is that some apps extend their existing user base to new apps. There was a time when users were used to "subscribing" to AOL and Napster. But for many Indians, their first experience with the web is "Google".
Basically, an app outperforms its surrounding ecosystem mainly due to the substantial increase in value it brings to users. Unless there is a killer application emerging from these dApps, it is difficult to break through the ecosystem.
I'd bet on the content/social media platform, which is gaining attention due to Brave/Opera's appeal. Considering that in an age of fake news and toxic social media causing mental problems, blogging that combines reputation and micropayments could be the next big thing. Cent is doing some interesting work on this front. Let's trade without bots getting in our way.
This is good news. On a decent day, the dApp can see around 5 million transactions. There is also bad news. Most of these transactions are likely to be generated by automated bots involving in-game Ponzi scheme mechanics as well as gambling-related dApps.
Remember, as with everything, there are very clear power laws at play here. A small number of wallets complete most transactions on dApps, so more research in this area is warranted.
However, purely from a scalability perspective, these bots can test where the upper limit of each individual chain is. If looking at an indicator of how much of the main chain’s activity a dApp is consuming, it makes sense to look at the percentage of total transactions that a dApp contributes to on a single main chain.
Based on rough calculations, Ethereum dApps contribute 10% of the transaction volume, EOS dApps contribute 5% of the transaction volume, but TRON’s figure is 50%. From this figure, TRON’s dApp ecosystem is the most active and healthy, but there are a few things that make me want to know whether its entire system is run by robots.
To understand why we need to observe two indicators. One, the average transaction volume per user on these chains, and two, the average transaction volume of these chains. Keep in mind that robot accounts greatly increase the average.
ETH is an outlier with only 4 transactions per user. Most are related to Gas requirements. The fees on Ethereum are much higher than those on EOS and TRON, and Ethereum is not a good choice for bots to process transactions. However, it is similar to what the average user would do with a mobile application such as a food delivery or e-commerce app.
It is safe to assume that the average user will open a dApp 4 times for a transaction. However, EOS and TRON live in their own world. Notice how TRON started January with an average of 200 transactions? This is largely related to (1) the upper limit of the organic user test chain; or (2) a large number of bots active on the chain in the early days.
As the dApp ecosystem around TRON matures, it becomes more and more similar to the low-fee chain EOS. Interestingly, on the low-end, no-fee EOS and TRON, there is about an average of 20 transactions per user. While both chains have the capacity to accommodate more transactions, it is curious to what extent adoption is manifested by "bots" rather than real users.
In order not to limit robot activities in the web3.0 ecosystem, we are doomed to repeat the mistakes of the early variants of the Internet, in which click robots snatch advertising revenue, and key indicators to measure the health of various companies are controlled by programmed robots.
We raise the possibility that, when measuring the health of a dApp ecosystem, a higher transaction count does not necessarily represent a healthier system. But, before that, we need to consider the average transaction each dApp receives per day.
4. Transaction volume can tell the story, but transaction count cannot.
Although the number of transactions per dApp seen on EOS and TRON is much higher than Ethereum, when you consider the average transaction volume, it almost converges. Of course, this is not to say that EOS and TRON are less active than Ethereum, however, it can be used as a measure of how organic user usage affects the dApp ecosystem.
Ethereum is able to complete the same amount of dApp transactions with fewer transactions than EOS and TRON, which can be explained in two ways:
Whales rule Ethereum. There are data to show this. As mentioned in the previous article on InstaDapp, about 80% of the activities on DeFi products may come from a small number of whales. This is also reflected in the average transfer volume per user on Ethereum. It is about 5 times higher than TRON and EOS.
Bots dominate EOS and TRON. The reason is that the average number of transactions completed by a single user on its dApp is much higher than the normal expected number of times for an average user. It is rare to see an average of 50 transactions per user in a web2.0 application, let alone a dApp. (Blue Fox Note: This may be directly related to the two game-based applications on the chain, and related to robots.) The only way to prove its rationality is whether the entire process is automated. In view of the fact that TRON and EOS are currently mainly focused on games and gambling applications, and individuals may have thousands of transactions as a low-risk and low-reward betting method. this is possible. In the early days of Bitcoin, one could see a flood of transactions going to dice-rolling gambling sites.
The assumption here becomes clearer when looking at the average transaction volume per user transferred on these chains. For ETH, it is as high as $50, while EOS is only $3. Of course, these numbers will vary depending on the use case.
Ledgers focused on enabling high-value mortgages will have higher average transaction volume per user than users in ledgers focused on small transactions. Therefore, these metrics should not be seen as individual values, but should be observed in a broader context. Pixels are parts of a larger artwork.
What I can compare here is the average size of an Amazon order. Today's is $47. The numbers observed on EOS and TRON are more consistent with gaming applications such as Fifa, PUBG, and GTA5. It’s worth mentioning that what I find most interesting is the average transaction volume per user to a dApp.
To me, this represents a big opportunity for dApp founders. Although the user base is small, the transaction volume per user per day is much higher. For those who unlock the bulk of wallets that interact with these dApps, they are creating business models that unlock early value.
Compared to web 2.0 commerce, the user journey from getting started to generating a lot of transactions is much shorter, and the likes of InstaDapp and Juno have seen this benefit. It will be interesting to watch how these dApps turn user stickiness and transaction behavior into profits in the future.
The amount of money flowing in each transaction on the chain can be used as a measure of the security of an individual's store of value. By these measures, Ethereum is in the lead.
But it still needs to solve the scalability problem, as we have seen in the past with CryptoKitties. As for EOS and TRON - the bots on them are not unhealthy. In fact, this is also a necessary condition for testing the TPS function of these chains. There's no way to limit that from happening in free agency, but we should remind ourselves that progress isn't made on numbers like this.
I believe we are at a point in history where dApps evolve into entirely new product categories. Perhaps some sort of centralization element could be seen to facilitate utility, but it will likely be here to stay. The trend of gaming companies using NFTs points to this situation.
Other catalysts can also serve the same purpose. First, since 2016, the dApp-related developer tool environment has evolved. Tools like Fortmatic and Arkane Network take the hassle out of handling user wallets and make it easier for developers to enter the market.
In addition, the legal currency deposit channel around dApp has also made considerable progress. For example, Wyre allows dApp to interact through the payment method set in Google Play.
Another point is that investor demand for dApps has not increased. When we search for "AWS" in dApps, it's still focused on the API layer.
