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Determining the extent to which DeFi, NFTs appeal to Ethereum, Binance whales

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Source: Unsplash

Over the past few weeks, the commotion surrounding DeFi and NFTs has dropped in volume as the price action of major crypto assets is taking center stage. In the background, activity is still prominent but one key observation is the fact that many speculators club the narrative of DeFi, NFTs as one. While DeFi or various dApps have some sort of functionality, NFTs are just valued collectibles.

With Ethereum and Binance Smart chain leading the DeFi and NFT market, we analyzed market data to understand if investors are equally invested in DeFi and NFTs or does one holds precedence over the other.

DeFi Whales galore on Ethereum, not so much on BSC

Breaking down data from the Q3 2021, it was observed that despite massive interest in NFTs and blockchain gaming, the DeFi space registered over 590,000 daily unique active whales, reaching $178 billion in collective TVL. Between both Ethereum and Binance Smart Chain, whales were observed to thrive more on the former network, with the average Uniswap transaction size reaching $52,900. PancakeSwap did not manage above $1000.

Source: DappRadar

Right now, whale concentration can be observed the most on ETH protocols in spite of the fact that tx fees or gas fees are generally higher than BSC. With higher liquidity volumes, ETH DEXs reduced latency, enabling a better price execution, minimizing price slippage.

Source: Coingecko

However, according to the recent 24-hour trading volume, PancakeSwap was currently edging out Uniswap by a narrow 1.3% in market share by volume. While consistent whale activity might not be evident on PancakeSwap and BSC, it is possibly the platform where regular traders are finding their ground, and for them, cheaper gas fees are a huge plus.

So are NFTs involvedĀ 

Source: DappRadar

After identifying the presence of whales in Ethereum and Binance, data was established in terms of wallets that interacted with at least one DeFi protocol and had one NFT token. According to the chart above, in October 2021, 83% of the users in both Ethereum and Binance Smart chain only interacted with DeFi, whereas a minor 17% were involved in both NFTs and DeFi.

Therefore, while the interest in NFTs and games is largely vocalized and marketed, the numbers continue to favor functionality of protocols and NFTs may lose traction going forward.

Is that the entire truth?

To be honest, it isn’t fair to disregard NFTs right off the bat, as they do attain some form of utility where they are bringing a new class of investors in. NFTs are almost bringing in a form of exclusivity as investors can have a collection that is completely distinctive from another.

Does it have actual realized value? Probably not, but NFTs which are tied to a recognized individual will attract the attention of the masses, for example, a Cristiano Ronaldo NFT will be sold for millions, just because of the brand value the name brings. Hence, the marketability factor of NFTs is definitely present. Although it remains very minute in the larger industry and it has a long road ahead.

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Biraajmaan covers market trends of major cryptocurrencies. As a graduate in engineering, his interests lie in Blockchain technology. With over a year as a journalist, his articles focus on US and UK markets.