Digging into a16z's "Active Addresses" Statement: User and Usage Growth Stagnant, Short-Term Outlook Not Optimistic
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Digging into a16z's "Active Addresses" Statement: User and Usage Growth Stagnant, Short-Term Outlook Not Optimistic
Combined with recent active wallet data and transaction metrics, this indicates we are truly in a bear market, with user growth and usage stagnating.
Navigating Web3 tides with focused insightsAuthor: Chris
Compiled by: TechFlow
Earlier this month, a16z tweeted that on-chain active addresses had reached an all-time high. Crypto analyst Chris used Celo data on Dune to dig deeper into this claim.
By examining the total number of active wallets across major Ethereum Virtual Machine (EVM) chains and Solana, we can see the chart below aligns with a16z's data over the past two years. We observe growth in active wallets, with a strong surge in May 2023.
The sharp increase in May was primarily driven by Solana’s active wallets, which appears to be an outlier within an overall downward trend. Solana usage peaked in May, but June’s data currently shows a significant decline, suggesting the May spike may not be sustainable.
When focusing solely on EVM chains, the peak in total active wallets becomes much less pronounced.
However, most analyses of active wallets on EVM chains do not account for users who use the same wallet across multiple chains. If I use the same wallet to transact across various EVM chains, without deduplication, I would be counted as 2, 3, 4 or more separate instances.
When we adjust for this, we find that growth across EVM blockchains over the past two years is significantly lower; growth since October 2022 has been relatively flat, with only a 1% increase by May 2023. Compared to the first chart without deduplication, this presents a very different picture.
Moreover, when looking at transaction counts, the situation is entirely different. Transaction trends have been declining over the past year and a half, with Solana accounting for the majority of transaction volume.
If we remove Solana from the chart and examine only EVM chain trends, we find that total transaction counts across all major chains remain flat or slightly declining.
Overall, when analyzing the metrics behind raw growth charts, there’s much more beneath the surface. From June 2021 to May 2023, unduplicated data shows a 146% increase in active wallets, but when deduplicated, the growth rate during the same period drops to just 65%.
Combined with recent active wallet data and transaction metrics, this suggests we are truly in a bear market, with user and usage growth stalling.
While the initial multi-chain chart might be useful in certain contexts, I believe this deduplicated wallet metric is our best way to assess the real number of users within ecosystems and measure future growth of new participants.
This isn’t good news for crypto in the short term, but I firmly believe in crypto’s long-term future and expect billions of wallets to emerge over the next decade.
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Chris
