Question in detail:

How sticky are the users on Flow?

Create a detailed analysis comparing user retention on Flow vs. other L1 chains like Ethereum and Solana. How often do users who make a transaction come back and make another transaction one month later? How do monthly active users compare between chains?

Bonus: add a section of your analysis comparing retention specifically with regard to NFT purchases. How often do users who purchase an NFT come back and make another purchase one month later?

Overview of analysis:

This dashboard divided into the following parts:

• The Comparison of Flow and other chains on executed transactions
• The NFT purchase retention on various chains
• The trade activity by swappers on various chains

Methodology:

The data provided by Flipside has been used to handle this analysis. To handle this investigation the following steps have been passed as below:

• The selected Layer one chains
  • Flow, Ethereum and Algorand
• Used Metrics:
  • User distribution by count of transactions
  • User distribution by retention period→ To find out this metric, the average time difference between the two transactions executed by users underestimated.
  • User distribution by count of active weeks→ Determine the count of active weeks by users since 2022 on various chains.
  • Monthly active users→ users made at least one transaction over that month
• Aspects of analysis:
  • Transactions→ Use transaction tables of various chains
  • NFT purchase→ Use NFT tables across various chains
  • Swap activity→ Swap tables on various chains
• Conclusion: By aggregating the outcomes of the previous parts and deep dive into the retention of users, draw a conclusion about the users retention on Flow and other Layer 1 chains.

About blockchains:

Flow Dapper protocol is a new blockchain for the next generation of applications, games and digital assets. It is a fast, secure and convenient protocol for blockchain developers. FlowDepper is designed to expand scalability without the need for sharding and process transactions quickly and at low cost, which is perfect for decentralized applications (Dapps) such as NFT markets and blockchain games. Flow uses a Proof-of-Stake (POS) consensus algorithm, which requires validators or approvers of transactions to stake a certain number of FLOW tokens in order to participate in the network.

Ethereum is a platform based on blockchain technology, which was created to remove middlemen from various things such as financial services, social networks and even computer games. Ethereum is a decentralized network, no government body oversees it and it is not controlled by any person or intermediary. The decentralization of the Ethereum network has made this blockchain resistant to events such as hacking, network failure due to equipment failure, etc.

Algorand is a decentralized network designed to solve the triple problem of blockchain (speed, security and centralization). Algorand uses a Proof of Stake (PoS) based consensus mechanism. Algorand is able to host decentralized applications due to its support for smart contracts. Algorand allows developers to use the Algorand Standard Asset Protocol (ASA) to create new tokens or even transfer existing tokens to the network's ecosystem.

Users retention:

One of the most important characteristics related to the success of blockchain is the consistency of usage by users. For this purpose, the user retention of FLOW blockchain has been estimated and compared with other L1 blockchains like Ethereum and Algorand.

The retention is controversial topic on blockchains and could be defined from various aspects. The time difference between two transactions on various chains is the most popular criteria. Also, the consistency of users on each chain has been determined through calculating the number of active weeks across different chains.

Part 1: Comparison of Flow and other chains on transactions

Findings:

First of all the transactions executed on various chains have been compared by users tendency to return and made another one:

• Users on Flow blockchain mostly made 5-10 transactions and this group of users is dominated the Flow.
• The dominant group of users by count of transactions on Ethereum have made just 1 transactions by over 52% of users as can be seen.
• On Algorand the group of users made 1-5 transactions has the highest share with over 57% of users.
• The average time between two transactions on Flow (less than 5 days) is lower than Ethereum and Algorand.

Part 2: Comparison of Flow and other chains on NFT purchase

Part 3: Comparison of Flow and other chains on Swap activity

Findings:

• Most of the times, users made their second transactions within the first 24 hour of first transaction and this number is high specially for blockchains with lower transaction fee like Flow or Algorand.
• Flow has the most sticky users compared to Ethereum and Algorand by considering the count of active weeks. As can be seen, the Flow users are active for 1-3 months since start of 2022.
• The monthly active users shown that the active users on Flow increased dramatically on November, 2022.

Findings:

Lets find out the behavior of NFT purchasers from retention point of view:

• On Flow NFT ecosystem, the purchasers executed more NFT purchases (transactions) compared to Ethereum and the main reason of it is because of the less transaction fee and also NFTs on Ethereum are expensive than Flow and Algorand chains.
• On Flow and Algorand, purchasers interacted with NFT ecosystem more than Ethereum network by considering the count of weeks that these users were active.
• The average time difference between two NFT purchases (about 7 days) on Flow is less than Ethereum and higher than Algorand blockchains.
• The monthly active users on NFT ecosystem of blockchains reveals that the count of active wallets decreased since start of 2022 and the largest drop belong to Ethereum NFT ecosystem.

Findings:

In this part, the swap activity of users on various chains has been evaluated from the retention point of view and the outcomes are as below:

• Users made large count of swaps on Algorand compared to Flow and Ethereum as can be seen.
• Most of the swappers on Flow have been activated between 1 week to 1 month since start of 2022 and from this point of view Flow has more active swappers in comparison with Ethereum and Algorand.
• Among selected blockchains, the Flow network has the lowest retention period by less than 3 days compared against other chains. Also, the distribution of swappers by retention period demonstrated that the Flow swappers made their second swap within the first 24 hour.
• The monthly active swappers on blockchains reveals that the Ethereum has the highest number of active swappers and the count of active swappers on chains follow the decreasing pattern.

Conclusion:

By aggregating the outcomes of the previous parts, the following consequences could be drawn as conclusion:

• The users on Flow are more sticky compared to other selected blockchains like Ethereum and Algorand networks.
• The transactions speed and the lowest paid transaction fee are two of the main reasons of the superiority of Flow blockchain against other ones.
• The retention on various activities like NFT purchase and swap represented that the users of Flow blockchain has lowest retention period than Ethereum and Algorand specially from swap activity point of view.
• The active users on each chain has been decreased over time since start of 2022 and the main reason for that is the unfortunate events that happened in the world of crypto currency during the last year.

Useful links:

• Article about retention on blockchains
• Flow from users perspective
• Flow blockchain

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani