How the 2021 Crypto Bull Run Shaped Dapps and What Followed

The 2021 bull run was a period of rising crypto prices, heavy retail attention and large new inflows into blockchain applications. Bitcoin and Ether both reached record highs for that cycle, and the money that entered the market did not stay in tokens alone. Users moved funds into decentralized exchanges, lending markets and new collectible and gaming apps, which made dapps the visible face of the cycle for many newcomers.

It helps to separate three things that often get blended together. The first is the price of the underlying assets, such as ETH or SOL. The second is the activity inside applications, such as swaps, loans, mints and transactions. The third is the capital locked in those apps, usually reported as total value locked. In 2021 all three rose together, which made it look as if dapp adoption and token prices were the same story. They were related but not identical.

This guide covers what changed for dapps during that period, why some models grew faster than others, and what the downturn that followed revealed. Figures for prices, locked value and activity move daily, so any number printed in an older article may be out of date. The sections below explain what to measure and where to check current data.

Rising demand on Ethereum pushed transaction fees, known as gas, to levels that many everyday users found hard to justify for small trades. When a network is crowded, people bid higher fees to get their transactions included sooner, so simple swaps, deposits and withdrawals became expensive during busy periods.

This created a clear opening for other chains. Several networks, including BNB Chain, Solana and Avalanche, attracted developers and users who wanted lower costs and faster confirmation. Dapps such as PancakeSwap on BNB Chain and Jupiter on Solana grew around that demand. Ethereum layer-2 networks also gained users who wanted Ethereum's security model with cheaper transactions.

A practical lesson follows. Low fees make a dapp easier to use, but they do not guarantee that users stay. When comparing dapps, look at which chain the product runs on, what the bridging and wallet steps cost in practice, and whether that chain has had reliability problems. Network outages on fast chains were a real concern during the cycle, and speed only helps when the network is running.

Fee levels change with network load and protocol upgrades, so any specific fee estimate in an older guide is likely stale. Check a current gas estimate in your wallet before you transact.

Decentralized exchanges and lending markets were among the most used dapp categories during the cycle. Automated market makers such as Uniswap let anyone deposit a pair of tokens into a pool and earn a share of trading fees. Liquidity providers take on price risk, because the mix of tokens in the pool changes as prices move, and that effect is often called impermanent loss.

Lending protocols such as Aave and Compound let depositors earn interest while borrowers post collateral. Rates in these markets usually move with how much of the supply is borrowed, so rising demand for loans during a rally can push rates up. Borrowers who use leverage also face liquidation if their collateral falls below the required level, and that mechanism can amplify sharp price drops.

During the bull run, these products showed how much activity could flow through open financial code. They also showed that the depth of a pool or market can change quickly. A protocol with large deposits on paper may have far less usable liquidity once prices move or users withdraw at the same time.

If you use these apps, read the documentation for the pool or market you choose. Note the fee structure, the collateral rules, the liquidation threshold and whether the protocol has been audited. Treat any displayed yield as a variable figure rather than a promise.

The bull run also pushed attention toward non-fungible tokens, online games and social apps built on blockchains. Marketplaces for digital collectibles drew large volumes of trading in some periods, and many games introduced in-game assets that players could own or trade. Some of these projects promoted a model where playing could earn tokens, which tied player income closely to the token price.

That link proved fragile. When token prices fell, the income that players expected often fell with them, and many users left. Projects that depended on constant new buyers for their tokens found it hard to keep their economies stable. Games and collectibles that offered entertainment or a clear use beyond speculation had a better chance of holding players through the downturn, although that outcome was not guaranteed.

For readers, the lesson is to separate the product from the token. Ask what the app does when no one is trading the reward token, whether the in-game or collectible economy has a source of demand beyond new players, and who controls the supply of tokens and assets. These questions apply to any dapp outside finance as well.

The category has not disappeared, but its expectations are more modest than in 2021. Look for documented economics and clear rules before spending time or money on any app whose income depends on a token price.

Many protocols during the cycle used token rewards to attract deposits. These liquidity mining programs paid users in a governance or reward token, often at high rates in the early months. The approach helped bootstrap pools and markets quickly, but it also meant that a large share of the capital was there for the reward rather than the service.

Analysts sometimes call this mercenary capital. When rewards are high, deposits rise. When rewards fall or the token weakens, that money can leave within days. The measured size of the protocol can shrink even though no one has been hacked or failed. Readers should expect that pattern and read a sudden drop in locked value as a signal to check the reasons, not as proof of failure or success.

Some designs tried to make incentives more durable. Curve, for example, uses a vote-escrow system in which holders lock CRV to receive a larger share of rewards and to vote on how emissions are directed. Convex Finance sits on top of that model, boosting rewards for Curve liquidity providers and letting CVX lockers vote on emissions. The model still depends on the value of the tokens involved, but it ties rewards to longer commitments.

When reviewing any incentive program, ask how much of the yield comes from trading fees or borrowing income and how much comes from new token issuance. Yield funded by fees is generally easier to understand than yield paid by printing more tokens.

The downturn that followed the bull run exposed weaknesses across crypto. In 2022 several major events hit confidence, including the collapse of the Terra ecosystem and its LUNA token in May, and the failure of the FTX exchange later that year. Leverage unwinds, falling prices and withdrawals stressed many platforms at the same time.

For dapps, the effect was uneven. Locked value fell across much of the sector as prices dropped and users reduced positions. Protocols that depended heavily on token rewards saw sharper declines in deposits. Some lending markets had to manage bad debt or emergency parameter changes when collateral values moved faster than their liquidation systems could handle.

What survived tended to share a few traits. They had simpler products, conservative collateral rules, clear governance and a steady stream of users who needed the service regardless of price. Many also kept running through the downturn, which allowed them to build a track record that new users could check.

The downturn did not prove that dapps were useless. It showed that a protocol's design, risk controls and dependence on incentives matter as much as its brand or its token price. When you read about any dapp's performance in a cycle, ask how it behaved during the stressed months, not only during the rally.

Staking was one of the areas that changed most after the bull run. Liquid staking protocols let holders stake a token and receive a transferable receipt that can be used elsewhere in DeFi. Lido and Rocket Pool serve Ethereum stakers, while Jito Liquid Staking, Marinade and BlazeStake issue liquid staking tokens on Solana. Lido's stETH and similar receipts have been used across lending and trading markets.

This model gave users a way to earn staking rewards while keeping capital active. It also created new concentration questions. When one protocol holds a large share of staked assets, its governance decisions and technical issues can affect many users and other apps that rely on its tokens. Readers should consider how much of the market a single provider controls and how its governance works.

Rocket Pool takes a more distributed approach by allowing node operators to run validators with a smaller stake, which some users see as a decentralization advantage. Each design balances convenience, fees, decentralization and risk differently. None is free of smart contract or slashing risk.

Before using a liquid staking token, check the exchange rate mechanism, the unstaking period, whether the token can trade below its underlying value and what the protocol's audit and incident history shows. Staking rewards are variable and depend on network conditions, so treat any headline rate as a snapshot.

Since prices and locked value change constantly, the most useful approach is to check a set of metrics over time rather than a single figure. The table below lists common measures, what each can tell you and the main limits of each.

Metric	What it can show	Limit to watch
Total value locked	Capital deposited in the protocol	Often priced in tokens, so it moves with token prices
Active users or addresses	How many accounts used the app	One person can control many addresses
Protocol fees	Revenue the app earns from users	Fee settings can be changed by governance
Token emissions	New tokens paid as rewards	High emissions can hide weak real demand
Audit and incident history	How the code has been reviewed and tested	An audit does not guarantee safety
Governance and admin controls	Who can change key settings	Settings may be changed quickly

Use several of these together. A protocol with rising fees, steady users and limited emissions tells a different story from one with high deposits that depend on rewards. Check the official documentation for definitions, because each public tracker may calculate figures in a slightly different way.

Keep a dated note of what you found. Revisit it after a few months to see whether usage held up when rewards or prices changed.

The bull run showed how quickly new users arrive when prices rise. It also brought a surge in scams, fake websites and phishing messages that copy the names of popular dapps. Defensive habits matter more in busy periods.

Start with access. Bookmark the official address of any dapp you use, and type it yourself rather than clicking a link in a message or a search ad. Be careful with support accounts that contact you first, since legitimate teams will not ask for your seed phrase or private keys.

Next, manage approvals. Many dapps request permission to spend tokens from your wallet. Review these permissions in your wallet settings and revoke those you no longer need. Limiting approvals reduces the damage if a site is compromised.

For storage, a hardware wallet or a dedicated wallet for active dapp use can separate long-term holdings from everyday activity. Test with a small transaction before sending a large amount, and confirm the network, the address and the amount on your device's screen.

Finally, keep expectations realistic. Crypto trading involves substantial risk, and past performance in a bull run does not predict future results. Only use money you can afford to lose, and check the rules that apply where you live before you use any financial dapp.