Research Summary
The report provides an analysis of Ethereum user trends in 2023. It highlights the fastest-growing sectors, the decline in some areas, and the dominant entry points for new users. The report also discusses the challenges in defining a daily active user of a blockchain and proposes a new approach to give more insight into user on-chain activity.
Key Takeaways
Fastest Growing Sectors
- Layer 2, Bridging, and Infrastructure Sector Growth: This sector has seen the most significant growth in 2023, with a 149.28% increase in daily user activity. This growth indicates a strong inclination towards scalability solutions.
- DeFi Sector Growth: The DeFi sector follows closely with a 52% growth rate, suggesting a continued interest in decentralized finance solutions.
Declining Sectors
- NFT and Gaming Sector Decline: Despite the overall growth in most sectors, the NFT and Gaming sector has experienced a significant decline of 61.4% YTD in 2023. This decline suggests a shift in user interest away from these areas.
New User Entry Points
- DeFi Dominates New User Entry Points: DeFi counterparties make up an average of 63% of users’ first actions, indicating that DeFi remains a dominant entry point for new users in the Ethereum ecosystem.
Challenges in Defining Daily Active Users
- Flawed Metrics: The report highlights the challenges in defining a daily active user of a blockchain. The number of active addresses on-chain is a flawed metric that does not provide much insight into general user behaviors or underlying patterns.
Proposed Approach to User On-Chain Activity
- New Approach: The report proposes grouping daily active users into specific categories to provide more insight into user on-chain activity. This approach utilizes a comprehensive entity label database to highlight visible on-chain behavioral patterns.
Actionable Insights
- Focus on Scalability and DeFi Solutions: Given the significant growth in the Layer 2, Bridging, and Infrastructure sector and the DeFi sector, businesses and developers in the Ethereum ecosystem should focus on these areas to attract and retain users.
- Reevaluate Strategies for NFT and Gaming: The decline in the NFT and Gaming sector suggests a need for businesses in this area to reevaluate their strategies to regain user interest.
- Optimize Entry Points: With DeFi being a dominant entry point for new users, businesses should optimize their DeFi offerings to attract new users.
- Improve User Activity Metrics: The report’s proposed approach to user on-chain activity suggests a need for improved metrics to better understand user behaviors and patterns. This could involve developing more sophisticated analytics tools or methodologies.
