4. On-Chain Usage & Metrics
On-Chain Usage & Metrics
What to Evaluate
On-chain activity reflects real user adoption and product utility. It’s one of the clearest signals that a project is more than just hype.
Rather than focusing on vanity metrics (like total wallet count), prioritize metrics that show actual usage of the product, protocol, or network.
🔍 Key Metrics to Analyze:
1. Unique Active Wallets (UAW)
How many wallets are interacting with the protocol regularly?
Look for weekly/monthly activity, not just lifetime totals.
Avoid overvaluing projects with lots of one-time airdrop hunters.
Scoring:
✅ Active users trending up = healthy ecosystem
❌ Wallet activity spiked only during airdrop campaign = weak usage
🛠️ Tools:
2. On-Chain Volume & Fees
Are people transacting value or just claiming tokens?
Are users paying fees to use the protocol (and are they sustainable)?
Fee generation is a strong indicator of demand + potential revenue.
Example: A DEX with high daily fees vs. an L2 chain with lots of bridge claims but no usage.
Scoring:
✅ High recurring volume or fee-based utility = strong
❌ High volume from spam or one-off actions = low
🛠️ Tools:
3. Retention & Repeat Usage
Are the same users coming back?
Is there a clear use case that encourages retention, or is it all just hype/missions?
Bonus: Check if top wallets are real users or insiders.
Scoring:
✅ Repeat usage from varied wallets = high score
❌ One-time or incentive-driven usage = low score
🛠️ Tools:
Protocol dashboards
Custom Dune dashboards
4. Contract Activity
Is the smart contract base seeing steady calls?
Has contract deployment flatlined since launch?
Are new features or modules being used?
Scoring:
✅ Active contracts with usage spikes = good
❌ Dusty contracts + no interaction = bad
🛠️ Tools:
5. Network Dependence
Is the project a core part of a chain’s ecosystem?
Does it show up in multiple apps, or is it isolated?
Example: Is it just a yield farm on an L2, or is it powering core infrastructure?
Scoring:
✅ Deep integration across ecosystems = high
❌ One app with no reuse = low
Summary of Scoring
Score higher if:
Real, daily users
Sustainable volume and on-chain demand
Protocol is used, not just claimed
Score lower if:
All metrics tied to incentives
No sticky users
Volume = noise
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