XRPL Weekly Traction Report: An In-depth Analysis of On-Chain Activity

This report marks the inaugural instalment in a series of weekly updates analysing the XRP Ledger's (XRPL) traction based on detailed on-chain activity. As this series progresses, feedback from readers regarding data collection and analysis for future iterations is welcomed. The focus remains on straightforward metrics that facilitate easy comparison and interpretation, allowing readers to draw their own conclusions.

1. Unique Users: The Core Indicator of Network Health

Before examining the data, it is essential to establish key concepts and methodologies:

• Unique Active Wallets (UAW): A critical metric for assessing blockchain traction, representing the number of wallets initiating at least one outgoing transaction during the observed period, including XRP transfers and token-related activities.

• Total Transactions: This figure encompasses all transaction types on the network, without adjustments for automated activities or other factors.

• Users with dApps Interaction: This metric indicates the number of wallets engaging with decentralised applications (dApps) on XRPL, identified by transactions with a Source Tag.

The data presents as follows:

Analysis:

1. Wallet Activity: The 4.43% increase in Unique Active Wallets suggests growing interest in the XRPL ecosystem, potentially attributable to new users joining the network or increased activity among existing users.

2. Transaction Volume: Despite the increase in active wallets, a 10.38% decrease in total transactions is observed. This divergence could indicate:

   • A shift towards holding rather than trading
   • A decrease in automated trading activity
   • Changes in dApp usage patterns

3. dApp Engagement: Only 9.29% of active wallets (4,343 out of 46,762) interacted with dApps. This relatively low percentage suggests significant potential for growth in dApp adoption within the XRPL ecosystem.

4. Ecosystem Growth Challenges: The decrease in dApp interactions (-6.16%) despite the increase in active wallets indicates that new or reactivated wallets are not necessarily engaging with the broader XRPL ecosystem. This highlights potential challenges in onboarding or user education.

A deeper examination of dApp usage patterns reveals:

Interpretation:

1. Single dApp Dominance: 86.53% of dApp users interact with only one application. This high concentration suggests:

   • Users may find a single dApp that meets their needs and adhere to it
   • There could be a lack of interoperability or awareness about other dApps
   • The learning curve for using multiple dApps might be steep for some users

2. Multi-dApp Usage Growth: While the numbers are small, the significant growth in users interacting with 3 or more dApps (+78.00% and +185.71%) is noteworthy. This could indicate:

   • A small but growing segment of advanced users exploring the full potential of the XRPL ecosystem
   • Increased interoperability or cross-promotion between dApps
   • The emergence of more diverse and complementary dApp offerings

3. Ecosystem Maturity: The decline in single and dual dApp usage coupled with the growth in multi-dApp usage might suggest a maturing ecosystem where users are becoming more sophisticated and exploratory in their interactions.

4. Opportunity for Growth: The low overall numbers of multi-dApp users represent a significant opportunity for ecosystem expansion. Strategies to capitalise on this could include:

   • Improved user education about the diverse dApp offerings
   • Enhanced interoperability between dApps to create a more seamless user experience
   • Incentive programmes to encourage users to explore multiple dApps

2. dApp Overview: Key Components of the XRPL Ecosystem

This section examines the performance of individual dApps within the XRPL ecosystem. Key points to note:

• dApp Definition: In the context of XRPL, a dApp (decentralised application) refers to any application built specifically to interact with the blockchain ecosystem. While true decentralised apps cannot be created on XRPL due to the lack of smart contracts, the term has become interchangeable in this context.

• Identification: XRPL dApps are identified by a unique Source Tag present in every transaction generated by the corresponding service.

• Inclusion Criteria: This analysis focuses on dApps with more than 100 weekly Unique Active Wallets (UAW). Those with fewer users or unidentified Source Tags are grouped under "Other".

The performance of key dApps in the XRPL ecosystem is as follows:

Analysis:

1. Stability Leaders: XPMarket and Bidds demonstrate remarkable stability with minimal fluctuations in their user base (-0.51% and -0.56% respectively). This consistency suggests:

   • A loyal and satisfied user base
   • Reliable and consistently valuable services
   • Effective user retention strategies

2. Growth Leader: DexFi stands out with an impressive 121.82% growth in UAW. This substantial increase could be attributed to:

   • Launch of new features or services
   • Successful user acquisition campaigns
   • Positive word-of-mouth in the XRPL community

3. Challenges: XRP Cafe experienced a significant drop in UAW (-27.57%). This decline might be due to:

   • Conclusion of a specific promotion or event
   • Industry's general lack of interest in NFT segment

4. Ecosystem Dynamics: The varied performance across dApps highlights the dynamic nature of the XRPL ecosystem. Users seem quick to explore new offerings (as seen with DexFi) while also showing loyalty to established platforms (like XPMarket).

5. Market Share: Despite having the most stable user base, XPMarket is not the leader in terms of total UAW. This suggests that while XPMarket has found a loyal niche, there is potential for growth by attracting users from other platforms or bringing new users into the XRPL ecosystem.

A deeper examination of the types of transactions each dApp facilitates reveals:

Interpretation:

1. XPMarket: Demonstrates a well-rounded ecosystem with high activity across various transaction types. It leads in Payment transactions (11,426) among tracked dApps, suggesting its strength in facilitating transfers. XPMarket also shows significant activity in OfferCreate, AMMDeposit, and NFT-related transactions, indicating a diverse platform catering to various user needs.

2. XRP Cafe: Heavily focused on NFT transactions, particularly NFTokenCreateOffer (10,126). This indicates Cafe's sharp focus on NFTs market only.

3. Magnetic: Shows strong activity in Payments (10,008) and AMM-related transactions, particularly AMMDeposit (3,701). This indicates a focus on decentralised exchange functionality.

4. Sologenic: Leads in OfferCreate transactions (5,145), suggesting a focus on trading activities. It also has a balanced mix of other transaction types, indicating a diverse platform.

5. Bidds: Primarily focused on NFT transactions, with high numbers in NFTokenCreateOffer (2,731) and NFTokenAcceptOffer (729). This suggests a specialisation in NFT marketplace functionality.

6. DexFi: Shows a mix of activities with notable numbers in Payments (6,336), NFTokenMint (2,766), and AMM-related transactions. This diverse activity profile aligns with its significant growth in UAW.

7. Other Tags: The high number of transactions, especially in Payments (677,593). It is hard to identify the actual source or purpose of those transactions, as it was not possible to identify the entity responsible for the most of Payments.

Conclusion:

The XRPL ecosystem demonstrates a healthy diversity of dApps catering to various needs, but lacks in the variety of services offered. XPMarket stands out with its well-rounded activity profile and stability in user base, suggesting a mature and reliable platform. The growth of platforms like DexFi and the specialisation of others like XRP Cafe in NFTs indicate a dynamic and evolving ecosystem.

The data suggests opportunities for cross-pollination between dApps. For instance, XPMarket's users might benefit from deeper NFT integration, given the high activity in this area on platforms like XRP Cafe and Bidds. Similarly, other platforms might look to emulate XPMarket's success in facilitating payments and diverse transaction types.

The XRPL ecosystem appears to be in a phase of specialisation and growth, with different platforms carving out niches while also expanding their offerings. This diversity bodes well for the long-term health and adoption of the XRPL, providing users with a wide array of services and use cases.

One of the worrying facts is that there are only 6 dApps who regularly have more than 100 UAW. While there are 18 identified dApps on XRPL, none of those managed to hit >100 threshold, leaving a significant gap between Bidds with 352 users followed by Orchestra Finance with only 87 weekly UAW. It indicates that there are 6 leaders shaping the consumer-focused ecosystem on the ledger (excluding infrastructure providers, like wallets).

3. All Types of Activity: A Comprehensive View of the XRPL Ecosystem

While previous sections focused on specific metrics and dApp activities, it is crucial to examine the overall network activity. This baseline view provides insights into the general health and trends of the XRPL ecosystem.

Comprehensive Analysis:

1. Dominant Transaction Types:

   • OfferCreate and Payment transactions continue to dominate the XRPL ecosystem, accounting for the vast majority of all transactions. Keep in mind, that Payment transactions also correspond to trades via AMM, not just a transfer of XRP/tokens.
   • OfferCreate saw a slight increase (+0.71%), indicating sustained trading activity and liquidity provision on the decentralised exchange.
   • The significant decrease in Payment transactions (-22.67%) is noteworthy and warrants further investigation. It could be due to:
     • A shift in user behaviour towards holding rather than transferring XRP
     • Decreased speculative activity
     • Macro-economic factors influencing the broader crypto market

2. Market Dynamics:

   • The decrease in OfferCancel transactions (-23.49%) coupled with the increase in OfferCreate suggests a more stable and confident market. Traders seem more likely to let their offers stand rather than cancelling them, possibly indicating less price volatility or more strategic trading behaviour.
   • The decrease in TrustSet transactions (-22.58%) could indicate a slowdown in new token issuances or user adoption of new tokens on the XRPL. This is also supported by a decreased in the number of dApp users, as this is the major category of users responsible for token interactions.

3. NFT Ecosystem:

   • NFT-related transactions show mixed trends:
     • Decreases in NFTokenCreateOffer (-18.41%), NFTokenMint (-33.42%), and NFTokenAcceptOffer (-35.63%) suggest a cooling off in the NFT market.
     • However, the dramatic increase in NFTokenBurn (+241.77%) is intriguing. This could indicate:
     • A cleanup of unwanted or low-value NFTs
     • The conclusion of temporary NFT campaigns or events
     • A shift in NFT strategies, potentially towards higher-quality, lower-quantity models
   • The increase in NFTokenCancelOffer (+14.57%) amidst decreases in other NFT activities might suggest sellers adjusting their pricing strategies in a changing market.
   • Overall, these trends point to a maturing NFT ecosystem on XRPL, moving past initial enthusiasm and towards more sustainable models.

4. Automated Market Maker (AMM) Activity:

   • AMM-related transactions (AMMDeposit, AMMWithdraw, AMMVote, AMMCreate, AMMBid) show relatively small changes, indicating stable usage of these features.
   • The slight decrease in AMMDeposit (-5.21%) and AMMWithdraw (-3.97%) suggests consistent liquidity in AMM pools.
   • The increase in AMMVote (+19.35%) indicates growing engagement in AMM governance, possibly reflecting users' increased interest in shaping the protocols they use.
   • The decrease in AMMCreate (-24.00%) might suggest that the market has reached a temporary plateau for new AMM pools. This is coupled with a cool down in TrustSet, indicating there are not enough new tokens issued.

5. Account Management and Security:

   • The increase in SetRegularKey (+53.73%) and SignerListSet (+10.42%) transactions suggests growing attention to account security and management.
   • This could be a response to increased awareness about cryptocurrency security best practices or possibly reactions to security incidents in the broader crypto ecosystem. However, this are rather niche features not widely used by XRPL community and likely used by advanced users or developers.
   • The decrease in AccountDelete (-10.71%) might indicate a trend towards longer-term holding and engagement with the XRPL.

6. Minor but Notable Changes:

   • The decrease in Clawback transactions (-50.00%) could indicate less need for transaction reversals, potentially suggesting more accurate or careful transaction practices.
   • The stability in AMMBid transactions, while low in volume, indicates consistent niche usage of these features. However, given the number of pools on XRPL, it is an interesting observation that this feature is significantly underused based on the amount of attention was placed on it.

Conclusion and Future Outlook

The XRPL ecosystem demonstrates a complex and evolving landscape of user behaviours and feature adoption. Key takeaways include:

1. Market Maturation: The decrease in payment and NFT minting activities, coupled with increases in more advanced features like ticket creation and escrow finalisation, suggests a maturing ecosystem. Users appear to be moving beyond basic transactions to more sophisticated interactions with the XRPL.

2. Shifting NFT Landscape: The NFT sector on XRPL seems to be undergoing a significant transformation, with a move away from high-volume minting and trading towards more selective creation and curation, as evidenced by the spike in NFT burning.

3. DeFi Engagement: Stable AMM activity and increased governance participation (through AMMVote) indicate a consistent and engaged DeFi user base on XRPL.

Looking ahead, one might expect:

• Further refinement of the NFT ecosystem
• Increased adoption of advanced XRPL features as users become more sophisticated
• Potential growth in DeFi applications, building on the stable AMM usage

These trends should be monitored over a longer period to distinguish between short-term fluctuations and long-term shifts in the XRPL ecosystem. Feedback from readers on which aspects of this analysis they find most valuable and what additional metrics they'd like to see in future reports would be beneficial for ongoing refinement of these weekly updates.

The next update will continue to track these trends and uncover new insights into the dynamic world of XRPL.