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Quantifying Adoption - The Daily Gwei #434
Contrary to popular belief, there aren't that many actual crypto users.
According to reports that I’ve seen in the past, it is estimated that there are 100+ million people who hold cryptocurrency in some form. This may sound like a pretty big number given how early we still are, but it’s clear to me that most of these people have never done anything on-chain and simply buy & hold coins on a centralized exchange. Given this, I don’t consider these people to be “crypto users” - they are “crypto speculators”.
The total number of unique addresses on Ethereum - the most popular smart contract network by far - is currently 187 million. Of course, we all know that an individual can have as many addresses as they want so this number is woefully inaccurate if we want to get a decent measure of how many actual individuals have an Ethereum wallet. For this metric, it’s better to look at total users of various apps - and for that, there’s this dashboard on Dune that queries the most popular DeFi apps for how many unique addresses have interacted with them and then totals it all up. As you can see, only 4.3 million addresses have ever interacted with DeFi on Ethereum and it’s most likely that this number is very overstated given that individuals have multiple addresses. Another way to quantify actual active humans is to look at how many ENS names are tied to an address and this number currently stands at around 300,000 - not very much!
Another clear example of what I’m talking about here is Cardano. Think about how many people bought ADA and pumped it up to a $100 billion market cap without Cardano having any smart contract functionality. This meant that there was literally nothing people could do on the network even if they wanted to use it (besides sending ADA around). So quite literally nearly 100% of people who bought ADA had never used Cardano - they were simply buying it based on a story/narrative and the hype surrounding that. And I bet almost all of these people still haven’t used Cardano since it integrated smart contracts - they just don’t care enough to.
So, why aren’t more people using on-chain apps? Well, there are numerous reasons but I think in this context there’s really only 1 - the people buying crypto on a centralized exchange to speculate aren’t interested in actually using on-chain products (or even knowing about them). They may become interested in the future, but really they’re just here for the “quick money” that the mainstream media loves to tell them about. I think this is fine, many of us got started in crypto this way, and I also think that the balance will shift greatly once we make it much easier for people to use these on-chain apps - though we probably need 1-click finance for that!
You may think that this is all bearish for crypto generally but I’d argue the opposite - it’s bullish that we’re still so early in the on-chain adoption cycle. That means there’s plenty of opportunity left for those who actually want to put in the work, there’s lots of exciting stuff left to build, there’s still plenty of people left to onboard, and there’s still lots of industries left to disrupt. Don’t let what I’ve outlined dissuade you from building - let it energize you - because we need builders now more than ever.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.