Combine traditional behavioral financial analysis with blockchain indicators
The following report belongs to the new series of blockchain user behavior reports. A set of DappRadar reports aims to provide users with different perspectives of the blockchain industry, combining traditional behavioral financial analysis with blockchain standards and indicators. This article analyzes the trend from the perspective of the blockchain industry, and at the same time determines the modes of DeFi, NFT, and gaming.
By enabling immutable, accessible, and traceable ledgers, different use cases across multiple businesses have adopted blockchain as the backbone of their future operating model. In addition, the industry is growing at an incredible rate, with several decentralized applications (dApps) and use cases being created every day. We think we need to understand who the main users of the blockchain are first? How do they work? What is the specific behavior of whales? What trend behavior do they have in common? In this report, our goal is to analyze and draw some existing patterns based on current user behavior.
First, we will analyze global aspects and trends, such as geography and devices used for interaction. Then, we will dive into this industry and show the relationship between DeFi users and NFT users. After that, we will try to draw some patterns between DeFi/NFT specific indicators and industry indicators. Finally, we analyzed the top wallets of some of the most important NFT collections of Ethereum to observe the behavior of crypto whales.
The interest in NFT mainly comes from the United States and Indonesia, with Russia and India also participating. As far as DeFi is concerned, the United States is still the country with the largest traffic, while Brazil, Thailand, and Russia have the most prominent traffic.
Emerging economies support the economic theory of “playing games to make big money”; the Philippines has the most traffic of game dapps, followed by India, Brazil, Venezuela, and the United States is interesting.
From a global trend, the market share of mobile phone users is gradually surpassing that of desktop users; DappRadar’s data shows that this global perspective is supported, with 53% of users connecting via mobile devices, and about 46% of users using desktops. Since May 2021, these numbers have been changing.
According to DappRadar’s portfolio tracking tool, 85% of DeFi users also interacted with NFT. Compared with May, this number has increased by 10%, supporting the view that NFTs have become more and more popular in the past two months.
Over time, NFT collection has been more adopted. Among the top 5 Ethereum collections, Bored Apes Yacht Club is the most widely distributed; only 4% belong to the top 5 wallets, and it currently has more than 5100 individual owners.
On the other hand, the Whale Concentration Index of CryptoPunks and Avastars is much higher, 9% and 21% respectively; however, in the past two months, we have seen an increase in total holders.
The U.S. and Asia are driving the blockchain industry
DappRadar attracted more than 500,000 users in July 2021. In addition to useful data-driven insights, such as NFT and DeFi pages and rankings, DappRadar provides a wide range of products, such as Portfolio Tracker, TokenSwap functions, and NFT valuation tools.
In the first part, we analyze the overall audience of DappRadar. This analysis can be used as a starting point for the potential behavior of the entire blockchain industry. After that, we will delve into the most popular parts, especially DeFi, NFT and games.
Analyzing the period from July 1st to August 7th, we found that the Philippines is the country with the most users, followed by the United States. Between Vietnam and Indonesia, more than 65,000 users use our products. If you count the figures of other major countries, Asia’s participation in the industry dominates. Also worth noting is its strong influence in Brazil, Russia and the United Kingdom. The BRIC Group fully represents this industry.
Going deeper into the blockchain field, we first analyze which users are interested in DeFi in July 2021. In this DeFi, NFT and game analysis, we considered the click-through rate of each category.
As far as DeFi is concerned, we see the prominent presence of the United States. The United States seems to be the country most interested in DeFi, followed by Brazil. Asia has also developed a strong interest in the DeFi industry. Binance Smart Chain (BSC), Polygon and Ethereum are prominently represented by China, India, and Russia, respectively, and promote a large number of uses. However, Thailand stands out as the country most interested in this field. In Europe, Spain and the United Kingdom, users usually use DeFi’s dapp to interact.
On the one hand, this result is expected. Countries such as the United States and the United Kingdom have important capital markets. On the other hand, it is also encouraging to see the participation of countries such as Brazil and Thailand. Gaining exposure in this type of country will certainly promote mass adoption of search. Because of their large population.
In terms of NFT, the situation is slightly different. The United States seems to be most interested in NFT collections and markets, but the profit margins are higher compared to other countries. From rare toys to sports memorabilia, the United States has always been one of the main markets for various collectibles. It’s not surprising to see them replicate people’s interest in digital space. In Asia, Indonesia is particularly prominent. Russia and India also seem to be interested in NFT, but to a lesser degree than DeFi.
Finally, the hottest area in this industry is gaming. The “earn from the game” model has had a huge impact on the entire industry. The micro-economy generated by blockchain games is being accepted by emerging economies. Our traffic insights support this argument. Other countries visible in this category include the United States, Brazil, Thailand, Vietnam, and Venezuela.
Mobile devices dominate the blockchain scene
Although geographic analysis shows where users come from, it is also important to understand how users access industry data. According to DappRadar’s July network data, 53.4% of users connect via smartphones, while 45.7% use desktop connections.
Compared with June, overall usage increased by 16%, while the ratio between the two most important channels remained unchanged. In addition, our data is consistent with focusing on global trends, in which mobile market share is gradually surpassing desktop users. In the next few months, as more and more dapps are prepared for Android and iOS devices, this trend deserves attention.
After analyzing global trends such as geographic location and equipment market share, we delved into the usage indicators and patterns of blockchain.
Users tend to overlap DeFi and NFT
In this section, we only focus on those wallets that use our Portfolio Tracker function, and only consider the Ethereum ecosystem. After analyzing more than 13,000 wallets, we found that the trend of NFT overlapping with existing DeFi users is growing.
When analyzing wallets that interact with DeFi dapps through different protocols, only 15% of wallets interact with DeFi dapps, and 85% of wallets trade with the NFT collection or the market to some extent. Obviously, the strong performance of the NFT movement continues. Compared with the data in May, the NFT test usage of DeFi users has increased by 10%.
On the other hand, compared to May, we saw a 6% increase in wallets connected to Ethereum NFT. 75% of wallets with NFTs also interact with Ethereum DeFi dapps. 25% of NFT wallets are concentrated in this area.
We can conclude that the popularity of NFT is real. More experienced blockchain users (such as DeFi users) are likely to realize the full potential of NFT and its multiple applications. In addition, according to Dune’s analysis, there are currently more than 3 million DeFi users on Ethereum. Using the estimated population to extrapolate our most recent model, the result is 2.5 million NFT users. With new works coming out every day, investment in the NFT field has also set a record. There is no doubt that this field will have huge room for growth in the medium term.
Macro indicator model
Encrypted assets are one of the most important pillars of the blockchain industry. We consider encrypted assets under the efficient market hypothesis, which is applicable to traditional capital markets with rational investors and time-sensitive variables.
In this section, we will compare the indicators (macro indicators) that are widely used to analyze cryptocurrencies, as well as aggregate blockchain indicators. These indicators are essential for understanding the DeFi and NFT space separately, and will also help the blockchain industry as a Classification as a whole.
Note: DeFi users shown in the following analysis consider DeFi and DEX dapps, while NFT includes collectibles and markets.
The price of ETH
ETHgas price (GWei)
Fear and Greed Index
Although not an official indicator, the Fear & Greed Index (FGI) is widely used by cryptocurrency traders as a unit to measure the overall sentiment of the entire industry. FGI is a score from 0 to 100, which classifies the market from very fearful (0) to very greedy (100). We compared FGI with the number of independent users in the industry since April, and found unexpected but interesting results.
Source: DappRadar and Crypto Fear and Greed Index
We saw an upward trend in industry independent users in early April, and a downward trend in mid-May. Due to the collapse of cryptocurrency prices, FGI changed from “greed” to “fear” within a few days. Naturally, the heat generated by the industry was interrupted by falling prices, stopping the growth trend of usage. Nevertheless, from the end of May to mid-July, in this still worrying market, independent users still consolidated about 1 million to 1.2 million daily users. Around July 20, the industry began to gain attention, which may match the NFT boom, and was supported by the recovery of cryptocurrencies, which prompted FGI to become greedy again.
Another analysis that reflects the latest state of the industry is the comparison between the gas price of Ethereum and the independent users of Ethereum, BSC and Polygon. In our latest industry report, we emphasized the proliferation of multi-chain models due to the need for lower transaction fees and latency improvements than the current version of Ethereum.
As Ethereum reaches historical gas prices, this movement is intensified. For example, on May 12, after the gas price approached 300GWei, the number of BSC applications rose to 990,200. The fluctuation between these two parameters continued until mid-July, when the game began to run on the Binance network.
Source: DappRadar and Etherescan.io
Once the community realizes that there are options that can increase the utility of investors, the market will respond accordingly. Initially, BSC attracted thousands of blockchain users, but slowly, they also realized that Polygon is another option in the industry. Once the gas price of Ethereum reaches its peak, the multi-chain model is obviously strengthened, and the rest is history.
In addition, when analyzing DeFi and NFT separately, we can also draw some conclusions. Starting from DeFi, although there is an obvious correlation between macro variables and blockchain variables, such as the price of an asset and the total value lock (TVL) of its agreement, the usage pattern in DeFi is closely related to the price of the asset. For example, the price of Ethereum still seems to determine the trend of the DeFi market.
Source: DappRadar and Coingecko
Although both BSC and Polygon have made tremendous progress recently, Ethereum is still ahead of all protocols in terms of TVL. The market’s response was as expected, and the price of the underlying asset, Ethereum, rose, in this case, driving interest in the entire DeFi market, eager to increase revenue.
On the other hand, the basic assets of the NFT field have not yet formed a trend. Although the price of Ethereum is inherently unstable, the adoption, volume, and usage of NFTs will only continue to increase. Although there is no clear pattern between these two indicators so far, it will be interesting to see how a more mature NFT market reacts to greater volatility in ETH prices.
Source: DappRadar and Coingecko
Top wallet analysis-NFT perspective
Finally, we analyzed the top 5 wallets with the most assets (NFT) among the 5 most important Ethereum. As we have seen, the NFT field is constantly growing and evolving, so analyzing the rationale behind the most important top holders may help to understand the feeling surrounding these NFT projects.
Project under analysis
Bored Ape Yacht Club (BAYC)
CryptoPunks has become a standard for NFT and has been popular recently. At the time of writing, the reserve price has exceeded US$115,000, which prevents most industry users from accessing these pixelated characters. Since punk is regarded as a unit of storing value, it is natural to still see a high degree of concentration. The Whale Concentration Index of CryptoPunks is about 9%, which means that the top 5 holders have about 900 punks, or more than $103 million.
In addition, we also found that Punk users are very loyal to Larva Labs. Among the top 5 investors, there is no BAYC, and they have 948 Meebits and 388 Art Blocks respectively.
The concentration of whales in Meebits (7.2%) is very similar to that found in Punks. They also follow the same principle and avoid BAYC. Among the top 5 users of Meebit, two users play the same role in CryptoPunks.
Among other projects in the scope, BAYC is the most widely distributed. Only 4% of the collections belong to the top 5 wallets, and this number may be even lower. One of BAYC’s greatest strengths is its community. The main holders of Bored Apes have expressed the importance of involving as many owners as possible on Twitter and Discord. The larger the community, the stronger it may become. BAYC currently has more than 5100 independent users, which is one of the highest representative proportions (51%) in the entire NFT testing field. On the other hand, Avastars has the highest whale concentration index at 21%.
With the increasing maturity and consolidation of the NFT field, the reduction of high whale concentration will become natural and healthy.
Behavioral finance is widely used in traditional finance to identify human behavior patterns to explain their economic decisions. There are obvious differences between blockchain and capital markets, but there are also similarities. For example, we clearly see that the global penetration of smartphones has also transformed into the blockchain industry, in which mobile devices are the first choice.
We also noticed that the interest in our industry mainly comes from the United States and Asia. Individual users are gradually realizing the huge benefits of this industry. The latest trends, such as the micro-economy that makes money through gaming, promote the narrative of mass adoption by promoting the potential of cryptocurrency and blockchain as a whole to regions such as the Philippines, Thailand, and Venezuela.
In addition, we can assume that investors’ behavior in the crypto field is rational. The market sometimes feels overconfident, leading to active and speculative trading, pushing the entire industry to always seek mass adoption. DeFi users are increasingly participating in NFTs because the space uses added value and promising use cases to reward users in different ways.
After analyzing the top Ethereum NFT whale users, we also saw a trend of good behavior. Although the market has not yet had any impact on the increase in NFT demand, some crypto macro indicators are being affected by the NFT movement. Specifically, the gas price of ETH. We have seen gas price bidding wars for two consecutive weeks as users try to get popular works such as Stoner Cats, CryptoPunks, and most recently PudgyPenguins. As collectibles become less and less from the wallets of a few people, NFT is creating communities where real value is generated outside of the digital space.
As discussed, we clearly stand in front of the effective and rational market behind the industry. In this type of industry, avoiding certainty and representative heuristics is the key to success. There may be two ways to generate prejudice against certain types of people or products, so it is very important to understand the logic behind this field.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/looking-at-blockchain-user-behavior-from-nft-and-defi/
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