Reading user counts and utilization
An active address is not a person, and high utilization is not success — two metrics routinely read as their opposite.
This lesson has had no expert review. It was written for this platform and against the evidence it cites; nobody has gone through it independently.
Learning objectives
- You can say what “active addresses” counts and what does not follow from it.
- You can read a lending market's utilization in both directions.
- You can pair two metrics so the reading narrows.
Check your prior knowledge
Answer these for yourself before reading on. Wherever you hesitate is where this lesson pays off.
- How many addresses can one person control?
- What does it mean when 95 % of deposited capital is lent out?
- Which metric would you put next to a user count?
Core concept
An address is a row, not a person
“Active addresses” counts how many distinct senders made at least one call in the period. One person can run any number of addresses, while a service provider bundles thousands of customers behind one. So the number is neither an upper nor a lower bound on the number of people — it is a count of activity, and only defensible as that.
A rising address count at unchanged volume
If active addresses rise sharply while volume and fees stay flat, two explanations are close at hand: many very small users are joining, or existing activity was spread across more addresses — for instance because a reward is paid per address. Which applies is not decided by the address count but by the distribution of amounts per address.
Utilization is a trade-off, not a measure of success
A lending market's utilization is the share of deposited capital that is lent out. High means: the capital is working, and the depositor rate is correspondingly high. High also means: little is free, and a withdrawal the size of what is free is the point beyond which depositors have to wait. Both sentences are true, and which one counts depends on whether you are looking at return or at availability.
Pair metrics instead of quoting them singly
Each of these metrics alone admits too many explanations. Only the pair narrows it: addresses against fees shows whether the new users pay for anything. Utilization against the deposit rate shows whether the rate curve is where it should be. TVL against volume shows whether the capital is working. A metric quoted on its own is rarely wrong and almost always underdetermined.
Definitions
- Active address
- A sender from which at least one call originated in the period observed.
- Utilization in the glossary
- The share of a lending market's deposited capital currently lent out.
- Underdetermined
- Property of an observation consistent with several incompatible explanations at once.
Model
Active addresses against fees — do the new users pay for anything?
Utilization against free balance and largest depositor — can one decision end availability?
TVL against volume — is the capital working or sitting?
Formulas
Utilization
utilization = borrowed / deposited- borrowed
- Amount currently borrowed
- deposited
- Total amount deposited
Limit: The ratio says nothing about the quality of the collateral behind the borrowed part, and nothing about how fast loans are repaid. Two markets with identical utilization can behave entirely differently under stress.
Worked example
Two markets at 92 % utilization
- Market A — deposited
- USD 400m
- Market A — largest depositor
- 4 % of deposits
- Market B — deposited
- USD 400m
- Market B — largest depositor
- 31 % of deposits
In both cases 8 % is free, that is USD 32m. In A the largest depositor, at USD 16m, is smaller than the free balance. In B the largest depositor holds USD 124m — nearly four times what is free.
The same utilization, two different situations: in B a single decision can end availability for everyone else.
Reading: Utilization was computed correctly in both cases and was still the wrong number in B for the question “can I get out”. The fitting pairing here is: free balance against largest depositor.
Retrieval
Exercise on real data
Check which of the metrics named here this platform actually serves and which are treated as concepts.
Metric catalog →Application
A report contains the sentence: “User numbers rose by 60 %.” Rewrite it so it is defensible.
Related case studies
Institutional reading
- Bank
- Which metric in your reporting is read as a user count although it counts addresses?
- Asset management
- From what utilization would you carry a position as restricted in availability?
Metrics in this lesson
Key takeaways
- Active addresses count activity, not people or customers.
- High utilization means a high rate and a small free balance — both at once.
- A metric quoted on its own is almost always underdetermined; only the pair narrows it.
Evidence
- EVD-2026-0008
DeFiLlama — DeFiLlama yields endpoint (/pools)