The Nansen report on the crypto industry

The Nansen report shows how the huge growth of the crypto, DeFi and NFT sector in 2021 had a slight decline in 2022, with some exceptions.

Crypto sector in decline in 2022, according to Nansen report

2021 was an explosive year for the cryptocurrency world, characterized by some innovative and disruptive themes. This is at least what emerges from the report on the blockchain market made by analyst firm Nansen in January 2022.

The statement accompanying the report reads:

“Ethereum is no longer the only smart contract platform with real-world usage, as cryptocurrencies definitely multi-chain in 2021. DeFi has continued to bring capital into cryptocurrencies, but NFTs have also brought people in”. 

In 2022, the research firm expects NFTs and DeFi to continue in their growth that may actually change the shape of the blockchain world.

We also see Ethereum steadily declining in users to the benefit of more sustainable, cheaper and scalable blockchains such as BNB Smart Chain, Avalanche and Polygon. 

But the new Nansen report on the first quarter of the year, focused mainly on L1 blockchains, showed some small signs of weakness, especially in BNB Smart Chain and Polygon, while Avalanche outperformed the market.

But this could also be physiological, according to experts, after a year of real boom for this type of blockchain, which were very popular for DeFi and dApp developers in 2021.

Polygon’s performance

Starting with Polygon, its scalability and its much lower fees compared to competitors such as Ethereum allowed the L2 blockchain to have a gain of almost 1000% in 2021. 

But as evidenced by the report in the first quarter of 2022, this activity seems to have come to an unexpected halt. 

Despite this, though, due in part to a downturn in the market in general, the average transaction volume in Q1 2022 remained broadly stable.

Notably, Q1 2022 saw a massive gas spike on Polygon, a sign of growing activity. 

The spike in gas activity was caused by the Sunflower Farm blockchain game. In January, the game’s pace of growth led to congestion on the Polygon network, sending gas prices soaring. 

At its peak, the total daily gas paid by users on the Polygon network on 5 January 2022 was almost 800% higher than the total daily gas paid on 30 December 2021.

BNB Smart Chain activity

On-chain activity on BNB Chain also declined slightly, in line with the overall trend for the quarter. 

According to Nansen’s data, BNB Smart Chain still remains the industry leader, although after peaking in the last quarter of 2021, daily transaction volume declined slightly in early 2022. 

BNB remains the most active blockchain by number of transactions in 2022, even compared to Ethereum. In fact, the ratio is around 3-6 times that of Ethereum, with a peak of 8 million transactions in early January. 

Avalanche holds its own

Avalanche, on the other hand, is bucking the trend and continues to grow at an impressive rate in the first quarter of 2022. Avalanche’s daily transaction volume has continued to grow almost uninterruptedly since July 2021 and currently stands at over 600,000. 

The daily new address data also shows steady and continuous growth with 79,200 addresses per day, 278,000 addresses per week and 593,000 new addresses per month. 

More than half a million unique addresses use Avalanche. Nansen’s experts point out that this figure is over 5 times the number of monthly addresses on Ethereum’s most popular L2 Arbitrum.