Mass Adoption incoming? The Current State of Crypto and Web3 Global Adoption
Crypto and Web3 adoption is on the rise! Examine how many people are using blockchain services, what are the most attractive fields and how far are we from mass adoption.
A new world of financial and other applications is being born right in front of our eyes. Unfortunately, due to technical difficulties and user-unfriendliness, these innovative applications are still used by only a small fraction of people. The majority of crypto and Web3 services are still inaccessible to the common user, but there are steps taken in the right direction. In this article, we will have a look at the state of Crypto and Web3 adoption and figure out when the masses will start to pour in.
TL;DR:
- Features, playing a key role in user adoption are accessibility, affordability, real-life applications, and intuitive experience.
- On-chain data trends show a steadily increasing demand in many aspects including the increase in active addresses, transaction volume, and DEX activity.
- Stablecoins appear to be an evergreen within crypto and Web3 services.
- The rise of Ethereum scaling solutions provided a great opportunity for the acquisition of new users through increased speed and affordability.
What Drives User Adoption?
There are a few key factors when it comes to evaluating user adoption in crypto and Web3.
- Accessibility and affordability: The services have to be easily accessible either from the web or a mobile app. High transaction fees tend to be pretty offputting, so affordability plays a big role in the potential adoption.
- Intuitive user experience: In an ideal case, the experience should be so smooth that users don't even have to know that they are interacting with blockchain. There will be no prior crypto or Web3 knowledge needed.
- Coverage in mainstream media: So far, crypto and Web3 have figurated in the mass media mostly in cases of rapid price actions. Media coverage definitely helps to spread awareness.
- Big brands entering the field: Big brands seem to recognize the rising trend of Web3 and are creating their own initiatives to engage customers. On this topic check out our Big Brands in Web3 post.
- Practical applications: So far, only a limited range of really practical applications have been developed. While this trend seems to be turning, common users still wait for problem solutions, not investment opportunities.
Adoption Trends and Indicators
We shall have a look at some data trends to gain a clearer overlook of the adoption. These focus mainly on the demand side of crypto and Web3 services.
Active Addresses
The overall number of active addresses across all the major blockchains can provide us with an important metric considering the demand for crypto.
We can see that the number of active addresses increases steadily, even despite harsh market conditions and low asset prices.
Transactions
The chart shows the monthly volume of successful transactions across the major blockchains.
Similarly to the number of active addresses, the transaction volume rises steadily not caring about the market conditions. This is definitely a good sign on the demand side and may signify increasing adoption.
Paid Transaction Fees
Related closely to the number of transactions, paid fees do not follow the same trajectory. Due to the recent rise in Ethereum scaling solutions, a lot of the volume has been transferred to sidechains and L2s, where fees are very affordable.
We can see that most transaction fees have been paid on the verge of 2021 and 2022 when the bull run peaked and demand was high. After that period, scaling solutions started to emerge, resulting in fewer transaction fees paid.
Activity on Decentralized Exchanges (DEXs)
Activity on DEXs includes swapping, liquidity provision, generated fees, and so on. DEXs remain a crucial service in DeFi applications and their volume can provide us with valuable market insights.
The noticeable decline after the end of the last bull run seems to be recovering as on-chain activity increases.
Renewed Interest in NFTs
New NFT platforms are emerging despite the later decline in activity and price. Thanks to that, a new wave of users seems to be onboarding.
The number of unique addresses, which are purchasing NFTs seems to be growing again, thanks to new applications and a developing ecosystem. The rise of blockchain gaming also could have a role in this renewed interest.
Demand for Stablecoins
Stablecoins are an all-time favorite application field. They provide safe haven during times of price decline without having to exit crypto. For obvious reasons, the demand for stablecoins stays high and rises steadily.
Future Prospects on Mass Adoption
According to the on-chain data we are definitely seeing a positive trend in increasing adoption. However, this rate of adoption is still showing a linear progression, which unfortunately isn't enough for mass adoption.
In the case of mass adoption of crypto and Web3 services, we would need to see an unbroken exponential increase in market metrics combined with some kind of killer app. The ecosystem is still not mature enough for mass adoption, as it focuses heavily on advanced financial applications (DeFi, trading), or infrastructure problems (blockchain architecture, developer tools, etc.).
We can expect mass adoption when real-life problems will be solved through innovative retail-grade applications with smooth and intuitive interfaces. Right now, crypto and Web3 are more niche-tech interests, which offer a great opportunity for being early adopters.
This post is based on the State of Crypto 2023 report by a16zcrypto.
