# 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.

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#### 🔍 Key Metrics to Analyze:

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#### 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:

* [DappRadar](https://dappradar.com)
* [Token Terminal](https://tokenterminal.com)
* [Artemis](https://artemis.xyz)

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#### 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:

* [DeFiLlama](https://defillama.com)
* [CryptoFees.info](https://cryptofees.info)
* [Artemis](https://artemis.xyz)

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#### 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:

* [Nansen](https://pro.nansen.ai)
* Protocol dashboards
* Custom Dune dashboards

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#### 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:

* [Etherscan](https://etherscan.io)
* [BscScan](https://bscscan.com)
* [Dune Analytics](https://dune.com)

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#### 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

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### 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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