πŸ” Detecting DApp Usage β€” Issue No. 20

πŸ—ž News

The development team behind Augur-- the decentralized Ethereum based prediction market that launched 3 months ago-- announced a roadmap to version 2 of the platform. The upgrade contains a host of interesting improvements, including integration of the dollar-pegged DAI token, migration of the native REP token to the improved ERC-777 standard (which is backwards compatible with ERC-20), and host of changes aimed at making the platform easier to use. Link.

The planned upgrade for one of Ethereum's most high-profile DApps comes at a time when there is increased scrutiny on actual usage of smart contract backed applications. An example: Anthony Pompliano recently tweeted his concern that crypto assets remain overvalued, noting the top four DApps had only 6,000 daily active users combined. Pompliano is hardly the first to point out the seemingly low daily usage of DApps, but he is a high profile voice who is typically very positive, so many took note of this out of character, decidedly negative tweet. Link.

One of the most common responses to these criticisms is that gauging the health of Web 3.0 applications using on-chain daily activity is misguided. Because each on-chain action requires a transaction fee, we can expect a lower velocity of usage, but greater value associated with each action. Ryan Sean Adams made this argument in a concise manner in response to Pompliano, pointing out that the Maker project has $59 Million in collateralized loans locked in it's DApp, despite having low "active users." Link.

This may be one of those cases where both arguments are correct. These two things can be true at the same time:

  1. DApp usage is still extremely low. The UX is still terrible, most people barely understand what crypto is, let alone DApps, and as a result only a handful of passionate early adopters are actually using them. That a high profile project like Augur has only 100 liquid markets, for example, shows there is much work left to do.
  2. Daily on-chain activity is not a particularly useful metric for DApps. If we're building a new decentralized financial stack, we shouldn't expect usage numbers like Facebook or Instagram! Most of us don't log on to our 401K accounts 10x a day. While it's obviously early days, it's also impressive how much value has been staked in systems like Augur, Maker, and others despite the usability and scalability challenges.

🎧Podcasts

Above, I mentioned Ryan Sean Adams' take on DApp usage; I also enjoyed his interview on Venture Stores, alongside Dan Zuller. Both guests laid out well grounded, no-nonsense takes on the crypto landscape. Both gave probabilistic views on the future and provided analysis free of the tribal arguments many in crypto are wont to make. It's a refreshing listen. Link.

πŸ“Š Statistics

$1.1 Million. The amount staked on the Augur prediction market at the time of this writing. The platform raced past $1 Million in the week after launch, but has stagnated in the months since. Link.