Currently, the total number of dapps on the Ethereum Blockchain is approximately 945. This number may seem impressive at first glance, however, if you look deeper into the data, the truth may be of concerning. With a total number of 945 dapps, the total daily users for dapps on the Ethereum Blockchain is only 13,106 and only account for 61,525 transactions or 12% of the total daily transactions on the Ethereum Blockchain.
Taking Bancor as an example, a project that has raised over 100 million USD last year, only has 300 daily users which are unacceptable given its valuation of 92 million. We understand that blockchain is a new technology that will revolutionize industries, yet in an early stage, hurdles and obstacles are inevitable when it comes to acquiring, retaining users. Listed below are the reasons why dapps are in a devastating position:
It shouldn’t be surprising to see scalability to be one of the major thresholds for users to adapt to blockchain applications. Similar to the early stage of the internet, a single transaction on the blockchain or a page request on traditional web could take minutes, sadly people in society has already accustomed to high-speed networks, society as a whole values “SPEED”, and a decentralized applications at this moment do not have the necessary infrastructure or capacity to compete with its centralized competitors/peers.
Product Market Fit
While a lot of Startups or Enterprise has emphasized on the product, meaning that they are trying to build a product that can satisfy the market, however what usually get overlooked is the “Market” itself, what is common in the dapps space is that people are building a product that will meet the future needs of the market, not the current needs.
Perhaps this is also why the few active dapps are mostly exchanges, as it is providing a solution for crypto investors and traders, highlighting the word “investors” and “traders” NOT users.
The market for dapps is still far away from maturity, the infrastructure is not completed (again highlighting on scalability), public knowledge and interest for this market is close to 0. Understanding when to launch your product is essential, especially in this bear market where interest for blockchain and cryptocurrency as a while has waned.
Utility or Investment?
Originally designed to be a crowdfunding tool, Tokens now have a painful period of transition to being a Utility Token, not just from a technical standpoint but a psychology standpoint as well.
Regardless of what token issuers think, generally in the market, most token holders are speculating on the future of the product or investing in the product. They are not necessarily users for your product. Even when the token holders are users, the opportunity cost of using the token is extremely high.
Why trade away the tokens for a service if you know the tokens will have increase in value in the near future? Though this may not apply to most of dapps, but it is something to be concern of.
It is already a well-known fact that dapps are substantially slower when it comes to response time, and requires users to go through with more complex security and password management requirements and also the required knowledge to understand the gas fee to make a transaction.
As mentioned above, people are more accustomed to centralized systems, logging in by just entering their passwords and are not afraid of forgetting their passwords. In a dapp, usually you begin with several unfamiliar extra steps in creating a new user account. New terms such as Public Key, Private Key, Gas limits and etc usually will scare users away. Of course, there’s also a fact that a token transfer can only occur when you have Ether in your wallet ( used as the gas fee ) which in this sense is illogical for the end-user.
The future of blockchain is bright regardless of the challenges we face as pioneers. Eventually, we foresee the blockchain technology adoption will be as seamless as the internet is nowadays but in order for this to happen, we as pioneers should focus on building grounded infrastructure and environment to allow that to happen.