A new report claims that Ethereum-based Decentralized Applications (dapps) are not being used productively.
While the industry of crypto has rightly been excited about the development of dapps, Ernst & Young reports that 83 percent of applications on Ethereum’s network are “not in the most productive uses.”
The report was given by EY’s head of innovation Paul Broady at the Fintech Forum on May 31, an event hosted by the United States’ Securities & Exchange Commission (SEC).
Fintech Forum was organized by the SEC’s Strategic Hub for Innovation and Financial Technology, coming at a bizarre time for the regulatory body who is under fire for their continued delay in approving bitcoin exchange-traded funds (ETFs).
Decentralized applications have been highlighted as an important development for the industry of crypto. Not only do they utilize network features for popular currencies such as Ethereum and TRON, but they provide an avenue for coin usage beyond exchange speculation. In addition, dapps draw development interest in a similar manner to the Apple and Android store, allowing creators the flexibility of creating unique products.
However, Brody claims that the vast majority of Ethereum dapps, and likely all crypto applications, are not productive. Instead, he chastised the industry and recommended developers “go back to first principles.” Brody stressed the importance of designing technology to bring about solutions, likely criticizing the abundance of gambling and other game-based dapps that have come to dominate Ethereum’s platform.
Brody called unproductive applications a “money chasing” attempt on the digital landscape, before diving into a broader criticism of the development process. According to the EY executive, the purpose of capital markets is to match investors with entrepreneurs who will create productivity. Dapps, in their current standard, are not living up to a worthwhile valuation, leading Brody to say the industry is “not doing very well.”
Reports from blockchain analytics company DApp.com provided the data to support Brody, noting that only 14 percent of Ethereum applications were used on cryptocurrency exchanges. The vast majority of dapps fell under the category of gambling (44 percent) or gaming (13 percent), leading to a market oversaturated on entertainment and in need of more productive uses.
Brody gave examples for Ethereum dapp developers to focus on. He emphasized the importance of distributed computing, real estate and inventing new business models. Given the power of crypto and blockchain, Brody explained that developers were missing the innovation provided through fractionalization, which could lead to what he called a “lasting legacy that is positive.”
Ethereum has witnessed a general erosion in dapp market share despite controlling nearly 100 percent of the industry just a year ago. TRON and EOS have continued to build substantial dapp adoption, with the former recording a new all-time high user volume earlier in the month.
EOS, which ranked number one–again–in China’s state-sponsored blockchain ratings, has led the industry in new dapp growth.