Which dapps actually generate revenue today? by Josef Je

Transcript

coming I think we are on time so I'll just start um hey everybody um my name is Joseph and um I won't bore you with all of this stuff but I'll bore you with something else uh I'll tell you about like what we what we created and why I want to share this with you uh so I'm the founder of Pawn and pawn is a blending protocol essentially what we want to deliver is defi mortgages mortgages back with like any asset fully chain fully non-custodial um and for that we kind of needed data um so the story starts with like uh me basically trying to get a regular mortgage um coming to a bank being like a Crypton native uh you know earning my salary in eth um and then coming to branch office

um and like showing them my contracts showing like all of the stuff about me um and then being GL at because I I didn't make any real money I got upset because well hey I I pay taxes on it right like how they can sell me that I'm not actually uh making any money uh so I started basically faking having a fat income I turned my contract into into fat one I I was the I was the good boy uh it took me almost two years to like build up a credit score and um I went to the bank again uh everything seems fine uh they they committ his form which had like one extra check mark uh which basically said um are you do you own are you trading or are you anyhow exposed to

cryptocurrencies I was like yeah well I just gave you the contracts with the ethereum foundation so the hell I am so I take that and boom that's the end of the story uh about me getting a mortgage and I got upset because well what the hell you know um I did everything right uh yet I work in this industry that's like currently being hated and like that's not really uh getting like um you know the treatment it deserved from like the traditional financial institutions uh so I was like screw it we'll just start our own thing let's focus on the crypto natives let's focus on people who are already in crypto who have their wealth in digital assets and who are here to stay um and that's how that's how we

essentially started and we also wanted to like understand okay that's that's our premise our premise is like this is there is a big enough market of crypto natives um so let's actually look into the data let's look into how deep this this Market actually is so I'm going to talk about how how do we Define the Crypton native economy and we are going to look into uh the fees uh that were paid on the different um like infrastructure chains like l1s l2s and and some dabs uh and then what we can learn from that and this is a too longid read of of the reports that we publish every year we already published three reports um the last one has over 40 pages so if this gots gets you interested then you'll have a ton of reading

afterwards so what is the Crypton native economy um we Define it as the the economic demand which happens transparently on chain so it's essentially the user paid fees it's a transaction fees on layer one layer two blockchains maybe in the future like layer 3es uh and it's also the fees that people pay to the dabs to the protocols uh which are living on these chains so decentralized exchanges um LP fees bridging fees Marketplace fees uh royalties if you will um what's also considered is basically the share on liquid staking but only the fees part not the yield so we about to mention what we didn't cover but like perhaps should

have um so we didn't look into revenues of centralized exchanges which are happening like in their own tracks like in their own bank accounts uh we didn't consider any consulting or like developer payment fees uh we didn't consider uh Dow paid salaries and DOW treasuries even though they definitely could be considered part of the Crypton native economy and like some of these treasuries are um you know of the size of like billions of dollars um and as mentioned we also didn't really take in like any yield from lending or uh the the general like liquid stake in and validations uh we purposefully didn't include Mining and token rewards um and obviously like that that's a big chunk

of the potential Revenue as you could perceive like the the different like agents and players in the ecosystem basically making money just on mining or making money from like uh farming air drops or whatever uh but we just don't think this is this is a sustainable way so if we want to understand the the sustainable part of the economy um we just discounted these and um for the purpose of our report um we don't care there's few limitations worthwhile to mention you can also read this um into more detail in the report itself so all of the numbers that you going to see are denominated in uh US Dollars um bunch of these Protocols are taken a fee in their native currency uh so basically the exchange is considered at the time and price of the transaction um so

that's one of the major limitations because a lot of the lot of the numbers are following the price action uh but we are looking at two parameters one is the fees and the second one is the users so you should kind of be able to abstract um from just the price movement uh in the last report we also excluded some minor categories like gaming prediction markets and insurance uh that's for the lack of data uh and also uh because like the assumption is that these are fairly small now uh there's no other reason it's just not there so let's look into the 2022 numbers so in 2022 uh the fees on l1s um

Range up to uh 5.44 billion 80% of that is just ethereum main net or was just ethereum m Mania uh the the D fees were about the same size which already is an interesting interesting aspect uh so the the fees in dabs were almost um 6 billion and the top 20 dabs um are basically covering 87% of all of those fees um out of which just the nft marketplaces were 43% so you can see what the nft hype actually did to the to the market the other um worthwhile to mention categories dexes there was 32% of the fees the other one yield aggregators liquid staking bit of it bit

of it is is lending but majority was actually nft Market places and the largest chunk of this was openc so openc in like 2022 actually made something over $1.3 billion just in the fees paid to them as a Marketplace which was I mean if you you know if you consider treasuries in some of these Dows that actually is a pretty pretty decent uh return on investment there so 2023 numbers what has changed um and again this is just a too longed read you guys should look into the report uh and like even validate our data uh if if you if you feel something is is off so uh what we what we concluded uh feel free to

disagree is that the 2023 was the year of the bottom so the bottom happened sometime in like September October uh in terms of the user interest and basically the the money being like paid in these onchain Services um um the narratives that picked up the most were liquid staking tokens liquid staking derivatives uh n l2s quite naturally uh and the narratives that faded away were metaverse and nfts um but there is one exception on the nft side uh in the in the last report we also added retrospect on kind of the macro uh dating like from 2020 so there is the there's the overall like macro Trend visible in in the last report so on the layer one side

um the the revenue if you will of the l1s was uh $4.5 billion uh it's roughly 17% drop since 2022 uh it's not a it's not a huge drop uh considering what was happening with the with the market but it's also not really showing that there would be any like major pickup in 2023 uh here we compared ethereum which basically had the total dominance in uh 2022 uh to the other l1s combined uh so you can say that ethereum has lost its like uh major dominance um uh but there is another interesting aspect that I'm going to dive into just in a

few so this is a comparism since 2020 uh you basically see the last bull market 2021 ethereum made roughly like10 billion in uh in just fees uh 2022 the number was dropping likewise with all of the other uh l1s uh where ethereum was actually more stable and in 2023 the numbers basically like even out I mean ethereum still made the most in terms of L ones uh but it's losing the relative dominance um so here you can you can basically see the movement uh of the fees like throughout the year and you can also tell that the user base is pretty much stable so this is all uh this is all based on like the price movements um and the conclusion as well

is that the user base inde is like very stable on ethereum it's also true for Bitcoin here's another very important graph though so even though ethereum snl1 has been losing its like relative dominance in the L1 sector uh these are uh this is a comparism of transaction count on uh the ethereum l2s versus ethereum as a main net so as you see like already in February last year uh there were more transactions on ethereum l2s than on on the main net itself and if you actually uh connect all of these numbers all together then well ethereum is definitely not going anywhere with Bitcoin and um does anyone have a hunch like what happened in November December to bitcoin last year and why the fees basically make made Bitcoin relevant

again any guesses ordinals yeah so well even though like bitcoiners might hate ordinal well actually well if ordinal didn't happen we wouldn't have Bitcoin in a report because it wouldn't matter um but overall Bitcoin definitely shows relatively stable user base over the years so it's definitely also going to stay here uh again another comparism of um active users so like uh monthly active users of ethereum relatively stable despite the major drop in the market uh and the last year also considers the the large movement of people to the l2s so don't see this as like users are going

away they're just migrating to l2s now um another interesting tender here is actually Tron um sorry to you know sorry to break your hearts like if you're if you're from the ethereum crowd but Tron actually shows like significant um uh uptake in uh in users and it's actually the second blockchain in terms of uh user paid fees on the on the Chain um Bitcoin again the most stable user base out there um the the fees basically behave or like follow the follow the price movement 2023 and 2022 numbers would be exactly the same if ordinal didn't happen B&B chain likewise is TR is actually also having like a decent

traction with users it reports like more monthly active users than it but it doesn't have the ENT L2 infrastructure so here is here is just a letter board like these numbers are in millions of dollars uh so it's basically ethereum with $2.4 billion do in user paid fees there is TR there is Bitcoin BNB Avalanche and this is this is kind of the the top five and the rest is um well the the cheap chains if you will but anything beneath salana we don't have to talk about because like those are under order of magnitude lower than anything that you see here um so on dabs uh on dabs there was a bigger drop uh $3.4

billion um if ethereum is the the one L1 blockchain then Unis swap is uh two dexis theum is to L1 blockchains uh definitely had a decent track um uh it's again the the one Dex that rules them all um liquid Saker fees uh it's like a new new industry so uh and that's the one example the one exception where we actually considered like some portion of validator fees um or like validator rewards but just the fee part of it so this is like how much these protocols keep from the validator fees uh any anything fromong with this graph any hunch glad you

asked um Lio is here so uh Lido is basically dominating or has dominated the the liquid staking uh fees um captured by the protocol itself uh lending protocols uh they're basically three worth mentioning AA compound and Venus um uh the other ones are relatively growing like if you consider the the data again back to 2022 um going to slide through this uh nft marketplaces that was a big thing in 2022 especially 2021 it's basically raised to zero right now um you can see the uh you can see the uptick in like 2021 2022 uh two reasons well a the The

Narrative has faded but also uh there was so much competition that it was basically a raise to zero for the fees so fees on these like platforms like dropped to nothing think um but the user base like still is somewhat there it's not as hot as before definitely uh but it's not completely that market definitely uh c u like cool down and now the interesting part and that's why I think like ethereum definitely definitely has a lot to offer uh these are the L2 fees uh since 2021 so you basically see like arbitrum op main net zking Stark net uh they're basically out competing anything that's below top five of the L1

blockchains and this is all etherum um so the L2 Market seems to be actually quite more interesting that whole lot of the alternative El ons out there so I'm already over time I guess so I'll just quickly conclude um so from the numbers that we see now for 2024 seems like 23 was the was the bottom uh there is a huge migration of people to the l2s which I mean every everybody knew we just like wanted to validate it um uh D usage went from hype to core so now we are seeing like uh liquid staking derivatives like l2s um Bridges and these types of things uh user base is stady so the users actually not necessarily follow the price uh there is

already significant amount of users uh the fees though are kind of um following the price and yeah um as as seen with the cases such as like Unis swap Lio uh there's still a huge space and huge like opportunity in the market to like bring a bring up like new Innovative products there um I'll stop here so you can read the 40 pages of the record like uh report special thanks to Victor there's a guy uh there's a guy um uh with the cab who essentially wrote a report and like all of the reports and yeah if you if you are interested in reading all of these reports you can go to pawn. XYZ or Crypton native. pawn. XYZ you can scan

the QR code as well uh and you can read the reports there let us know if you if you agree if you disagree if there's something else that you would like to see we definitely want to dive more into now the like the Bitcoin l2s and like the data that we perhaps like didn't cover but should have um and yeah that's it from my end and don't forget B22