TheMultichainWorld:FactorFiction?

Ethereum, the first blockchain with smart contract functionality, launched in 2015.

Since then, several other EVM chains have launched like Fantom, BNB & Avalanche, along with scaling networks like Polygon, Optimism and Arbitrum.

There’s no doubt that by early 2023, the multichain world has truly arrived. With a whole universe of L1s, bridges, L2s, and cross-chain Dapps - users now have more choices than ever before!

So, which choices are they making? Are users embracing the possibilities, or largely sticking to their favorite chains?

In this article we’re going to examine these questions by analyzing the cross-chain journeys and behaviours of EVM Externally Owned Addresses (EOAs) aka user wallets.

We’ll go deep into behavior across chains and user choices.

By the end, you’ll understand the overall preferences and behavioral trends of millions of crypto users. Let’s get started!

Firstly, which chains have the most users in general?

The chart below compares daily active users across EVM chains, and shows us some interesting trends unfolding over the past 9 months…..

Query

We can see that BNB chain has consistently seen the most daily users, with Ethereum and Polycon continually vying for second place.

Meanwhile Optimism and Arbitrum have gradually gained users as L2s found their market fit throughout 2022, both hitting >50k DAU by January.

In fact, Optimism and Arbitrum peaked at ~110k and ~610k users respectively in recent months. Impressive!

So that’s the high level. Now we’re going to take a look at the following questions:

• What insights can we gain when we start analyzing EOAs that interact across chains?
• What proportion of total EOA’s go multichain?
• Do clusters of certain EOAs tend to interact on certain chains?
• Are certain chains more popular with EOAs that use multiple chains or are they more isolated (meaning the addresses remain just on a single chain)?
• Do we see similar or different user behavior across chains?
• BNB<> Ethereum
• BNB <> Polygon
• Ethereum <> Polygon
• Ethereum ‍
• BNB
• Polygon
• Ethereum->BNB
• BNB->Ethereum
• BNB->Polygon
• Ethereum->Polygon
• Polygon->BNB
• Arbitrum > Ethereum
• Optimism > Arbitrum
• Ethereum > BNB
• Ethereum <> BNB (~8.5m)
• Polygon <> BNB (~4.7m)
• Ethereum <> Polygo n (~3.5m)

So that's the absolute figures, but what about in relative terms?

If we want to know how this overlap translates into how ‘popular’ a chain is another, taking the % of each chain’s EOAs that have interacted with a given second chain is an interesting question:

Query

The % overlap between any 2 chains is calculated by dividing the no. of active addresses per pairwise overlap by each chain’s total EOA count (the denominator is the chain in the 1st column, numerator is the overlap)

There are a few interesting things to note here.

Predictably, Arbitrum & Optimism have very high overlaps. 47.16% of all EOAs on Optimism have used Arbitrum, and 33.3% of Arbitrum's have used Optimism.

For Ethereum, Polygon, Fantom, Avalanche (1st column), BNB Chain is the most popular second chain with their multichain user base. When it comes to Aribtrum and Optimism though, BNB is less popular.

The EOAs on these L2 rollups are more likely to overlap with Polygon, Ethereum, or each other. BNB Chain is not the top ranked chain in terms of % conversion rate, but instead is 3rd ranked.

These kinds of datapoints could guide competitive strategy. For example, BNB could seek to develop more DAPPs and features that typically appeal to Optimism and Arbitrum users.

Let's summarize what we have learned:

1. For the 7 EVM chains in this study, a large bulk of EOA’s stay on one chain (~94%), but the remaining 6% have gone crosschain
2. Ethereum and BNB have the largest number of EOA’s in total (‘base’ of EOA’s), but they have the smallest proportion of users going cross-chain at 7.21% and 13.83% respectively.
3. Most popular 2-chain journeys in absolute terms are ETH -> BNB, BNB -> ETH, BNB ->Polygon ‍
4. As a % of each 1st chain’s total user count though, the ‘conversion rate’ for each of these specific journeys is relatively low at ~2-4%
5. The journeys with the highest "conversion rates" are between the newer L2 rollups; Optimism ->Arbitrum, Arbiturm -> Optimism ‍
6. For any 2 chain combination, the 2d pairwise matrix shows that BNB Chain has the highest overlap % with the following chains: Ethereum, Polygon, Fantom and Avalanche, However, BNB is not the top ranked chain by overlap % with the Arbitrum and Optimism

It's clear that despite the multichain DeFi and NFT buffet on offer, a large proportion of EOAs remain on one chain.

This could be because they do indeed stick with the one chain, or that actual users tend to create multiple wallets for different chains. One of the struggles of on-chain analysis is that we can typically only track the wallet itself, not the human behind it.

However, with improvements in wallet UX and "smart accounts", we should start to see an increase the portion of wallets that go cross-chain as the need for multiple wallets diminishes.

By analyzing these metrics ecosystems, protocols and organizations can better evaluate opportunities and threats.

Ecosystems can make educated guesses on the segments that may be lacking, and DAPPs can plan their multichain expansion strategically. For example, a lending DAPP on Ethereum considering a multichain launch can evaluate the total addressable market on other chains - and which ones they should prioritise. A low overlap could be an argument in favour of expansion.

The next part of this series will fill in the missing pieces. We're going to analyze cross-chain EOA behaviors in terms of which DAPPs they interact with on different chains, and also user behavior while bridging!

Stay tuned.

David C is a Senior Data Analyst at BNB, give him a follow on Twitter