Current State of Q1 2022 "NaaS" DeFi Projects on Avalanche

Background

• There was plague of “Node as a Service” (NaaS) projects in DeFi in Q1 2022. They were on many blockchains, but a majority of them were on Avalanche because of its speed and low fees.
• These projects were inspired by the success of $STRONG, which was on Ethereum and did well in 2021.
• The general template for “NaaS” projects was: launch a token (and have Twitter influencers shill it) → buy a project “node” with the token → the “node” returns tokens on a daily basis with X% APR.
• These project were touted as a way to earn “passive income” with many degens bragging about how they are earning $X/day from these projects.
• There were many problems with these projects including but not limited to the following:
  • Lots of failed projects and rugs. Examples: $UNIV, $CORK, $STRZ, $EXLR, $ATM, $PTCL, etc…
  • In most cases, the nodes weren’t even nodes and didn’t do anything other than print tokens. In some cases the nodes were actual AVAX nodes and the project provided RPC endpoints, which I’m guessing were rarely used and were a marketing ploy since the nodes don’t actually generate revenue.
  • Typically, prices of the project tokens would spike in the early days, but decline over time because people are just selling the tokens their nodes generate with no potential buyers left because they’re all already in the project.
• Finally, I personally fell for many of these projects, buying the dream of crypto “passive income”, but instead lost a lot of money on rugs, failed projects, and declining price. I am salty from the experience and it left a bad taste in my mouth on AVAX, DeFi and crypto as a whole, which is why I am revisiting these projects to see where they’re at now.

Purpose: The purpose of this analysis is to see whether any of these projects are still alive and look at user activity.

Methodology:

• “NaaS” projects included in the analysis are projects that launched with fanfare in Q1 2022.
• Avalanche data used in this analysis is from June and July 2022 (due to the current limited availability of data on Flipside).
  • As a result, analysis is limited to projects that are still active, which is probably a minority of them since many projects failed and rugged in January - May 2022.
• “Transaction” is a swap (event_type = ‘Swap’) to/from a “NaaS” project token in the avalanche.core.fact_event_logs table.
• “User” is origin_from_address who have swapped (event_type = ‘Swap’) to/from a “NaaS” project token in the avalanche.core.fact_event_logs table.
• Identified “NaaS” project tokens by getting addresses for the latest token address on dexscreener.com.

Many “NaaS” Projects are still alive, accounting for millions of transactions and hundreds of thousands of users. However, only a few projects account for a majority of activity, with $THOR/$VPND/$POLAR/$FIRE accounting for 90% over user activity.

Daily transactions and users is pretty consistent over the past 2 months, with ~2-3k transactions/day and 1.5-2.5k users/day, which is about 1 transaction per user/day

As excepted due to the structure of most “NaaS” projects where users buy “nodes” in the beginning and those nodes return tokens on a daily basis, most of the token transactions for these “NaaS” project were sells in the past 2 months. “MEAD”, which is the Tavern NFT node project, is a one notable exception.

Overall, ~20% of AVAX users who’ve swapped tokens on a DEX in the past 2 months have done so for a “NaaS” project. That is pretty high considering most of the hype for these projects was in January-April.

While > 90% of swaps on Trader Joe are not for a “NaaS” project, $THOR and $VPND in the top 10 for most swapped tokens.

3 Key Takeaways

1. Of the dozens of “NaaS” projects that launched in January - April 2022, ~4 survived ($THOR/$VPND/$POLAR/$FIRE), which account for 90% of “NaaS” user activity in the past 2 months.
2. While most “NaaS” projects died/rugged, there were still 3m+ transactions, 175k+ users, 2 projects in the top 10 most active on Trader Joe, and 20% of active AVAX users swapped a “NaaS” token.
3. Daily usage has been pretty consistent with no spikes, but 64% of transactions are sells. Tavern ($MEAD) is the one project that’s an exception with most transactions being buys.

Would love to do subsequent analysis on these projects and the failed/rugs when all 2022 AVAX data becomes available on Flipside.