a16z: Separating the Signal from the Noise: Estimating 30–60 Million Real Active Users in Crypto
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a16z: Separating the Signal from the Noise: Estimating 30–60 Million Real Active Users in Crypto
This number represents only 14% to 27% of the 220 million monthly active addresses we measured in September.
Navigating Web3 tides with focused insightsAuthors: Daren Matsuoka & Eddy Lazzarin
Translation: TechFlow
While writing our 2024 State of Crypto Report, our team spent significant time assessing the size of the crypto industry. As the sector matures and more applications go live, we wanted to understand how many people are actually using cryptocurrency. This is a complex question because the most obvious and easily quantifiable metric—active addresses—is highly susceptible to manipulation. Here's our thinking.
In traditional software, the concept of a "user" is straightforward. Of course, there are many ways to measure user quality—in fact, an entire field of growth analytics is dedicated to this—but at the most basic level, users can be counted as “daily active users” (DAUs), “monthly active users” (MAUs), and so on.
In crypto, however, the situation is far more complicated. This is because user identities on blockchains are pseudonymous. It’s easy for one person to create and manage what’s known as a sybil—a set of distinct identities called “public addresses.” (There are many perfectly legitimate reasons to do this, such as for privacy, security, or other purposes.) Thus, it’s difficult to determine how many addresses one person might be using. (The reverse is also true, since multiple people can share a single address via multisig wallets, aggregate accounts, and various account abstraction protocols.)
Until recently, the most popular blockchains had very limited capacity, resulting in high transaction fees. This naturally created a barrier that discouraged people from creating and using hundreds or thousands of addresses, since doing so was expensive. But recently, with the emergence of L2 rollups and new high-throughput L1s, crypto infrastructure has become much more scalable, driving transaction costs on many blockchains close to zero.
In traditional internet applications, isn't the cost of creating multiple identities also nearly zero? That’s largely true—for example, someone can easily create and use multiple email addresses. But the key difference is that in crypto, such behavior is strongly incentivized.
The crypto industry has long rewarded early users of protocols with tokens. Today, new protocols often launch their tokens through “airdrops”—distribution events that provide token incentives to a predefined set of addresses. These address lists are typically derived retrospectively from historical on-chain transaction data. Some individuals may attempt to game the system by creating multiple distinct identities and conducting transactions across them. In the industry, this strategy is known as “airdrop farming.”
Given these behaviors, it’s clear that the 220 million unique monthly active addresses we measured in September 2024 do not directly equate to 220 million people or users. (Note: addresses active across multiple EVM chains are only counted once in the 220 million total.)
So what is the actual number of active users? Is it 10 million, 50 million, or 100 million? This is exactly what we aim to explore. Below is our methodology.
Method 1: Filtering Active Addresses
One approach we’ve taken is filtering out addresses suspected of being controlled by bots or involved in sybil attacks. Through on-chain analysis and forensic techniques, we’ve explored several methods to achieve this:
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Filter out addresses receiving funds from distribution contracts—smart contracts whose sole purpose is to receive funds and automatically distribute them to multiple different addresses. While there may be some false positives, this pattern indicates that the recipient addresses all originate from a common source and are thus somewhat linked.
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Filter out addresses with near-zero balances at both the beginning and end of a given period. For instance, if you’re identifying genuine monthly active users in September 2024, you could exclude addresses with near-zero balances on both September 1 and September 30. This criterion suggests temporary usage. While bots and sybil actors may attempt to “clean up” balances after operations, real users typically retain some balance in their wallets to cover future transaction fees.
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Analyze the distribution of addresses conducting one, two, three, four, five, or more transactions within a specific timeframe. Addresses with only one or two transactions during the period are, at best, low-quality users and, at worst, bots or sybil actors. This method works best when applied over longer aggregation periods.
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Filter out addresses conducting a large number of transactions within an extremely short timeframe. Human users interacting with wallet or application interfaces can only reasonably process a limited number of transactions within a given time window, whereas bots can operate at much higher frequencies.
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From an optimistic standpoint, consider including addresses associated with identity protocols that usually require some setup cost. For example, addresses linked to ENS names, Farcaster IDs, or other connected social identities are more likely to belong to actual human users.
Method 2: Inferring from Wallet Users
Another way to estimate the number of monthly active users is to look at off-chain data sources, with wallet users being the most obvious starting point.
In February 2024, the popular crypto wallet MetaMask reported reaching 30 million monthly active users. They define a monthly active user as “anyone who loads the MetaMask extension page or opens the mobile app at least once within any rolling 30-day period.”
If we want to estimate how many of these users actually conduct transactions, the next step is determining what proportion of MetaMask users ultimately perform a transaction. According to 2019 data, MetaMask reported that on any given day, approximately 30% of active users confirm an on-chain transaction. (This remains the most recent available estimate.) Applying this ratio to monthly active users (MAU), roughly 9 million users conduct transactions each month via MetaMask wallet products.
Next, we need to estimate MetaMask’s overall market share across all blockchain wallets. While there is no direct, precise public data, we can make reasonable inferences based on available information. For example, we can fairly accurately estimate MetaMask’s market share in the mobile wallet segment using data from mobile analytics firm Sensor Tower. (Due to commercial service agreements, we cannot disclose specific figures here.)
Once we estimate MetaMask’s market share, we can simply extrapolate from the previously derived figure of 9 million monthly active transacting users to arrive at an estimate of total crypto users. We can then compare this result with the findings from Method 1 to see if they fall within a similar range.
To further refine our estimate, we can analyze data from other wallet and infrastructure providers willing to share their proprietary data and cross-validate it against the above.
Other Considerations
It’s important to note that some users operate and transact across multiple addresses and wallets. While this is unlikely to significantly inflate the total count (unlike bots and sybil attacks, since the number of wallets a single person can reasonably use is limited), further deduplication based on reasonable assumptions may still be worthwhile.
On the other hand, there are cases where a single address corresponds to multiple users, such as exchange omnibus accounts. Incidentally, this becomes even more complex with the rise of account abstraction protocols and smart contract wallets. These factors were not included in our analysis.
Estimated Result: 30 Million to 60 Million Genuine Monthly Active Transacting Users
Based on our analysis using multiple methods, we currently estimate there are 30 million to 60 million genuine monthly active crypto users. While this range is broad, it represents the best estimate possible given existing data.
Note that this number accounts for only 14% to 27% of the 220 million monthly active addresses we measured in September. It also represents just 5% to 10% of the 617 million global cryptocurrency holders reported by Crypto.com in June. (Global cryptocurrency holders refer to individuals who own cryptocurrency but don’t necessarily transact on-chain.) This gap highlights the vast potential to convert existing cryptocurrency holders—most of whom are passive investors—into active users. As core infrastructure improves, enabling entirely new and compelling applications and user experiences, dormant crypto holders may re-engage as active on-chain participants.
Accurately measuring the number of active crypto users is undoubtedly challenging, but by applying the methods detailed in this article, we can begin forming a reasonable estimate. This piece reflects our effort to share our thought process and calculation basis. These methodologies will continue to evolve over time, and we’ll keep sharing our updated insights. If you’d like to discuss this topic further or have suggestions that could improve these estimates, we welcome collaboration or feedback: @DarenMatsuoka @eddylazzarin.
See the a16z crypto 2024 State of Crypto Report for more data and insights on the latest industry trends.
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