In this article, we'll look at a general overview of the Dapp ecosystem. Then we'll break it down further into its major components. Along, we'll look at the development happening outside Ethereum. Into other blockchains which are growing their
A general overview of the Dapp market
In the big picture, the best estimate of how many Dapps are at the moment is 4,567. In the back end, 55,600 smart contracts are supporting all of these Dapps. Of these Dapps, roughly 3,060 are on Ethereum, and the remaining are scattered among the 18 blockchains currently able to support smart contracts.
Dapp growth on Ethereum
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As we can see above, most of the Dapp development happened during 2017 and 2018. These were the times of the ICO boom on Ethereum. Most of the projects launched over that period failed to materialize any real product.
But they did contribute to the development of the ecosystem, which is why activity during those years is much higher. Besides Ethereum, the other protocols capable of running smart contracts and Dapps are:
Of course, there are many more decentralized protocols out there. But currently, these are the ones that are capable of running smart contracts. Projects like Cardano or Tezos are still creating their Dapp developing environments.
Among all the different types of Dapps, DeFi remains the most used one. It almost has 1 million users alone. It is a number that doubles its closer competitor, decentralized exchanges.
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The entire Dapp ecosystem has around one million users in total. Daily, around 500 thousand users actively use Dapps. Historically, Ethereum represents roughly 82% of all Dapp traffic across the entire blockchain economy.
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As we can see from the above graph, Binance Smart Chain (BSC) has attracted more users since the last quarter of 2020. The main reason is that the gas fees on Ethereum have become too expensive. Most blockchain users are gravitating to the cheaper costs on BSC.
Despite this recent development, Ethereum remains the most popular Dapp platform. Almost all of the top Dapps in every category are all on Ethereum. It remains to be seen if this trend will continue and BSC will become the most popular chain.
Ethereum
Ethereum remains the most used and active blockchain in the market. Of course, now it has much more competition from long-time rivals like Tron and EOS, to newcomers, like Binance Smart Chain (BSC) and WAX.
Right now, there are 3069 Dapps on the Ethereum network. At the end of 2020, there were 3033 Dapps, a growth of 89.1% concerning 2019. Around 36 new Dapps have been launched since the beginning of 2021, most of them in the DeFi and NFT sectors.
Since the start of 2021, the Ethereum blockchain has grown 30%. This is the number of new wallet addresses that have joined the network. Despite this impressive growth, BSC took over Ethereum on new wallet addresses in 2021.
DeFi remains the most popular use case in Ethereum. There is a new sector of the Dapp economy growing exponentially this year, the NFT marketplace. Much of the growth in Ethereum has been due to NFTs, so it is an important part of the Dapp economy.
Let us look now at each sector of the Ethereum network.
DeFi in Ethereum
In February of 2021, Ethereum's DeFi economy reached a new milestone. The Total Value Locked (TVL) reached 40 billion dollars.
There are 438 Dapps in the DeFi category in all of the blockchain. Ethereum has 372 on those DeFi Dapps, and the nine most popular Decentralized Finance platforms are all on Ethereum. It accounts for 89% of the total market, and there is no indication Etherum will lose this lead any time soon. The three top Ethereum DeFi Dapps by TVL are MakerDao, Uniswap, and Compound.
All of these three Dapps remain at the top in DeFi and Ethereum at the moment. As we can see from the chart above, all three are still growing rapidly despite the high gas costs and other issues with the Ethereum network.
So, despite some setbacks in 2021, Ethereum remains the most used blockchain in DeFi. Its TVL almost quadruples that of its closest rival, BSC, at the moment.
NFT in Ethereum
NFTs are the hottest sector of blockchain in 2021. At the head of the line, we have 3 NFT marketplaces: NBA Top Shot, OpenSea, and CryptoPunks. The first one is on the Flow blockchain, while the other two are on Ethereum.
The top 3 combined represent a total trading volume of 342 million dollars. At the close of February, at Nifty Gateway marketplace, an artwork by digital artist Beeple's named Crossroad was sold for 6.6 million dollars.
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As we can see, NBA Top Shot is the most successful NFT marketplace due to having access to the popular basketball league's license. All other popular marketplaces in the NFT sector are on Ethereum.
All of these marketplaces saw sales above 50 million dollars. In Ethereum, these are Raible, CryptoPunks, Hashmask, Nifty gateway, and others. The next graph shows the top NFTs sold and their prices:
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There is no sign of the NFT wave slowing down. Other blockchains are getting into the market; Tron announced a new token standard, the TRC-721 It allows for non-fungible tokens in the Tron network, virtually an identical copy to ERC-721.
Ethereum scaling problems
By far, the biggest issue with Ethereum at the moment is scalability and, by extension, gas prices. This is the main reason why its rivals are gaining momentum. BSC, Tron, Flow, and EOS all offer lower transaction times and faster processing.
The cost of doing transactions in Ethereum is pricing out small users. At the moment, only high-value transactions in Ethereum make sense. The cost of sending small amounts of money or purchasing a small number of tokens is not economically viable. The top three gas consumers in Ethereum are:
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Despite the high costs, Uniswap and 1inch Exchange are the top gas burners. Traders everywhere are still using decentralized exchanges daily. The second-biggest gas user is the stablecoin Tether USD, which again is mostly used by traders.
The Ethereum 2.0 update remains at least two years in the future. It seems, for the time being, users of Ethereum will have to endure high gas costs or go to the competition. Yet, there is a solution at the moment that has the potential to breach the gap.
Ethereum's side chains
At the moment, most new projects developing on Ethereum are being built on side chains. These are parallel blockchains that are connected to Ethereum but have their network and blocks.\
The two most popular right now are Polygon (previously Matic Network) and xDai..
Both are being heavily used by new projects looking to escape the high development costs of the main Ethereum network. The two networks don't use Proof of Work. Instead, they use the Proof of Authority consensus algorithm.
The only issue with developing on them is that they need a bridge to the main Ethereum network. The side chains work parallel to the main net, so to move tokens from one to the other, users need to use a special service known as a bridge. The bridge can move assets back and forth, but it can be slow and is expensive to use.
Regardless, many new projects are launching in the Ethereum side chains. They seem to be the temporary solution to deal with high gas prices on Ethereum.
Binance Smart Chain (BSC)
BSC has had an excellent 2021. As said before, it has taken over Ethereum inactive wallet addresses. Right now, BSC has 108,000 active wallet addresses, while Ethereum has 67,000. The growth has been in the last three months, and the trend seems to be sustainable.
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The reversal is also apparent in the total transaction volume. Ethereum generated 180 billion dollars in transactions, but BSC had an impressive 700 billion. An incredible 400 billion were generated by a single Dapp in BSC called Venus a Dapp very similar to Aave.
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BSC started in 2021 with a very impressive record. It now is the second blockchain by TVL with 12.8 billion dollars locked in it.
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It seems that BSC is becoming the biggest competitor to Ethereum. As newer projects like Cardano, Tezos, and Polkadot launch this year, the competition will heat up in the blockchain.
Conclusion
The Dapp market has evolved considerably since it began in 2016. It is close to having 100 billion dollars in value locked on Dapps. Many of these applications are no older than a year, showing how impressive this industry is growing.
The biggest trend is the NFP sector, but DeFi remains the most Dapp category in the blockchain. The second biggest news in the Dapp economy is the growth of BSC and how it is competing with Ethereum.\
The crypto economy keeps growing and changing. Here are the Best Exchanges to Buy (Trade) Altcoins: The Ultimate Checklist for 2021. The time is now to begin your crypto journey, it is still early in the technology curve.
