There is a common misconception between active users and on-chain active users. The latter represents wallet interactions within a gaming project’s smart contract(s), i.e; every time a user signs a wallet request. These interactions can include:

Staking
Token trading
The deposit or withdrawal of tokens
Interacting with game contracts on-chain e.g. sending characters to battle

It is possible for one player to own multiple wallets and NFTs to expand their on-chain footprint. This often happens where there are gameplay incentives, and thus the data might become inflated. Here is a simple example using a game that requires players to own one NFT and sign a wallet request before being allowed to start playing:

Player 1 owns one NFT and plays the game daily using his/her personal wallet. Every day they sign in, accept the wallet request, and start playing.
Player 2 owns ten NFTs and holds them in ten separate wallets. Every day they sign in, accept the wallet request for each individual wallet, and start playing.

In this scenario, the on-chain data would suggest that there are eleven daily active players when in fact, there are only two. You can imagine how this gets more complicated when you factor in multiple daily wallet interactions for different activities, such as token trading, token withdrawals, NFT renting, or bot accounts.

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