Metaverse has generated a lot of buzz in the past year – with many large companies experimenting with leading ‘metaverses’ such as The Sandbox and Decentraland. Sceptics abound too – people were questioning whether these virtual worlds are as illusory as Mark Zuckerberg’s avatar-driven brave new world.
Recently, news began circulating that Decentraland’s “DAU” (Daily Active User) count is less than 1000, likewise for The Sandbox. This seems quite embarrassing for the platforms each valued at over US$1 billion.
The numbers came from DappRadar, a site which tracks and estimates the usage and frequency of key decentralised apps.
Following the news, Decentraland Foundation released another set of statistics which stated that the current number of DAUs in Decentraland is actually around 8,000. Not great either, but far less pathetic compared to the DappRadar numbers.
Why is there such a big discrepancy? We should first take a look at the methodology of these numbers – we are probably not comparing apples to apples.
What does DappRadar consider as “DAU” or UAW?
DappRadar defines DAU (or more specifically, UAW – unique active wallets over 24h) as the number of unique wallet address interactions with a smart contract.
This is an indicator for the number of unique wallet addresses completing a transaction (e.g. making a purchase) on the metaverse – NFTs, real estate, accessories for your avatar or any other in-app purchases.
This does not take into account other metrics like the number of people who just log in for social interactions or an event. Multiple events are usually held on the metaverse like product launches, concerts, seminars, gaming, or even just roaming around and meeting friends.
Why is UAW not DAU?
- Meta-transactions allow users to interact with smart contracts without paying extra fees. An example of this would be purchasing a Wearable from the Decentraland Marketplace. Users only pay the cost of the Wearable without having to pay transaction fees. This means that not one of Decentraland’s 6k+ Wearable transactions in the month of September was counted by DappRadar;
- According to Decentraland, DappRadar was only tracking about 13 of the over 3000 smart contracts users can interact with;
- Visitors come to explore, meet friends, attend events, and much more. These visits don’t necessarily involve any kind of transaction; if a user enters as a guest, there may be no linked wallet data that external parties could even track.
As established above, UAW (as per DappRadar) is perhaps not a concrete metric to measure the success (or otherwise) of a metaverse.
But what would be a better metric?
The Decentraland report, contrary to DappRadar, defines an ‘active user’ as someone who enters Decentraland and moves out of the initial parcel they entered the world into. When calculating this number, the foundation does not count bot accounts or users that use script blockers such as Ghostery.
Which metrics should we trust as the best proxy to measure a metaverse? Here are some of our thoughts:
- Time spent in the metaverse: the metaverse is still growing (albeit more slowly nowadays) and people are slowly becoming more and more aware of this. The time spent should be used to gauge the level of user engagement with the platform.
- Social interactions: this is a key metric as the metaverse serves as a marketplace as well as a social place where people attend events and interact. This, in our opinion, is probably the most important metric in addition to meta-transactions and ad revenues for a particular metaverse company to hook its success on. The question is – what exactly counts as social transactions?
- Adoption by businesses: forming partnerships and collaborations with potential brands, businesses and organisations will be a major contributor to the revenue of the metaverse. If businesses are willing to continue to adopt, and stay, on the metaverse – something must be right.
- Frequency of user log-ins: a major chunk of users on Decentraland are repeat visitors spending time on the platform regularly. This is similar to time spent as mentioned above – but it measures another dimension of the user stickiness.
- Trends of new sign-ups onto the metaverse: an increase in the number of sign-ups onto the metaverse indicates an increase in interest and gaining popularity of the metaverse, which can lead to an increase in revenue down the line.
If you look at Decentraland’s DAU numbers over the past year, you will indeed see a decline in overall numbers since the early metaverse hype, but that was to be expected as the metaverse is still very much in its early days and has much growing and developing to do.
On comparing both the reports (<1000 vs ~8000 DAU) and the rationale behind the numbers, it is clear that a majority of the users on the metaverse are coming for social interactions rather than for purchases.
Therefore, the companies in this space should tweak and use metrics accordingly – metrics that can measure social interactions and frequency, in addition to smart contract interactions as opposed to just smart contract interactions on their own.
Making a purchase/completing a transaction on the metaverse remains only one of many reasons why people may log on to the metaverse, so pegging the measure of success for a metaverse to only this aspect is missing the big picture.
Regardless, 8000 is still a very small number – there is a long way to go for Decentraland, and of course Meta, the company, as well.