- Coronavirus fears likely sparked ETH selloffs.
- On March 12, ETH users flocked to finance dapps in record numbers, raising gas prices.
- The gas prices resulted in extremely low usage for other dapps.
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DeFi dapp usage went way up at the end of last week, with some logging record numbers. At the same time, gaming dapps went way down. And those two phenomena were connected, according to a report released Friday.
On March 12, the price of ETH dropped by nearly half, to below $100 (it currently sits at around $115), after Covid-19 wreaked pandemonium across most markets. DappRadar reported that the price drop has created wild swings in decentralized application usage.
The DappRadar Report
Here's what DappRadar reported:
The coronavirus selloff of 2020 has drastically lowered the price of ETH, which has affected owners of MakerDAO's DAI stablecoin. DAI is meant to be something of a hedge against ETH volatility. However, extreme volatility can shake even DAI.
To get DAI, users lock up ETH as collateral and get a smaller amount of DAI in return. If the value of ETH falls below the value of the DAI they received, users must recapitalize to keep their DAI. A 44% drop in ETH prices, as happened on March 12, was enough to send many back to MakerDAO to secure their investments.
MakerDAO wasn't alone in seeing big spikes. According to DappRadar, its 1,458 unique wallets was a 243% increase over the 30-day average. Kyber Network (up 70%), dYdX (up 133%), and 1inch (up 77%) also logged record usage.
Uniswap, with 1,693 unique wallets, had its second-biggest day ever. But, Uniswap Exchange Protocol inventor Hayden Adams told Decrypt, that feels like an understatement. He pointed out that during one 24-hour period, Uniswap did $53 million in volume, which was 5 times higher than it had ever done before. He believes it might be the most volume for a decentralized exchange in Ethereum's history.
All that financial dapp activity drove up gas prices, said DappRadar. On March 12, ETH Gas Station, a site for tracking gas rates, tweeted, "Be advised that gas prices are extremely high right now." Indeed, it posted recommended gas prices at 97 Gwei (then $0.29) compared to the current rate of around 2 Gwei (less than 1 cent).
⚠️ Be advised that gas prices are extremely high right now ⚠️ pic.twitter.com/eLmMerH3iG
— ETHGasStation (@ETHGasStation) March 12, 2020
Perhaps unsurprisingly, those gas prices correlated to lower use of non-finance dapps, with gaming apps in particular hard-hit. In Ethereum-based games, players must make in-game moves via smart contracts. Those moves can add up. MyCrypto Heroes and 0x Universe saw their activity drop 44% and 87%, respectively. User statistics have since gone back up as gas and ETH prices have stabilized.
Well, mostly stabilized. ETH's value in dollar terms has dropped nearly 10% in the last 24 hours, indicating the ripple effects of Covid-19 on the Ethereum ecosystem aren't over.