The metric known as “Daily Active Addresses” in the crypto space is often misunderstood and confused with “Daily Active Users,” leading to misinformation. Experts advise against relying on “DAA” for analyzing user activity for fundamental assessments, pointing to recent data that underscores this issue.
Commonly mistaken as “daily active users,” Daily Active Addresses (DAA) actually tracks the number of unique crypto wallet addresses that engage in at least one transaction per day. While initially appearing valuable for fundamental analyses due to the significance of users in any ecosystem, it is crucial to note that “addresses” do not equate to “users.” This disparity becomes especially evident in chains like Solana (SOL) and Base (ETH) that are susceptible to bot manipulation.
In these bot-dominated networks, a single user could control numerous addresses, artificially inflating the count of daily active addresses. This inflation can be either malicious, aiming to deceive about a network’s value, or profit-driven, exploiting mechanisms like Maximum Extractable Value (MEV). Such practices have sparked criticisms like “MEV is theft,” highlighting the adverse impact on genuine users and developers in chains like Solana.
Solana’s structure facilitates bot operators’ exploits, leading to high transaction failure rates and the prevalence of economic attacks like “Sandwich Attacks.” Additionally, the platform has been accused of adopting a “fake it until you make it” approach, exemplified by instances of inflating metrics through fake accounts and projects.
Moreover, a significant portion of Solana traders does not meet the criteria of “quality users,” with over 80% engaging in trades with minimal volume on decentralized exchanges. This trend extends to other networks like Near Protocol (NEAR) and Ethereum’s Base, raising doubts about the reliability of Daily Active Addresses as an insightful metric.
Industry experts caution against putting excessive trust in daily active user reports in the crypto sphere, as metrics like Daily Active Addresses are vulnerable to manipulation and may not accurately reflect a blockchain’s user base or underlying value. As the crypto industry continues to evolve rapidly, it is essential for traders and investors to approach metrics critically and incorporate a healthy level of skepticism into their analyses.