Web3 user engagement hit an all-time high in Q2
In the second quarter of 2024, the Web3 space experienced unprecedented user engagement, with daily unique active wallets surging to 10 million, a substantial 40% growth from the first quarter.
A July 4 analysis from blockchain analytics firm DappRadar revealed this surge encompassed diverse areas within the decentralized application (DApp) realm, contributing to a generally optimistic market outlook.
The social application sector witnessed the most significant expansion, with a 66% increase in daily unique active wallets. This boost was primarily fueled by platforms such as Fantasy.top and UXLINK. Likewise, the blockchain gaming industry experienced a rise in participants, albeit with a minor reduction in market presence.
Decentralized exchanges (DEXs), including Uniswap and Raydium, saw notable upticks in user engagement. Uniswap's daily unique active wallets jumped by 80%, while Raydium experienced a 134% surge, largely due to the influx of meme coin enthusiasts.
NFT trading platforms recorded their most substantial activity since Q1 2023, with transactions amounting to $4 billion across roughly 14.9 million individual trades. Magic Eden increased its market share to 22% from 17%, whereas Blur's lead fell to 31%.
Despite the growth in user engagement, the aggregate value of cryptocurrencies held in DeFi platforms witnessed a $7 billion decline, marking a 4% reduction from the preceding quarter. Tron and Arbitrum saw notable decreases in total value locked (TVL), tumbling by 17% and 9%, respectively.
Contrarily, Ethereum's layer-2 solutions, Linea and Base, demonstrated significant growth, with Linea's TVL skyrocketing by 420% and Base's by 44%.
However, DappRadar issued a warning that the sharp increase in daily unique active wallets might not sustain in the long term, attributing some of this growth to "airdrop farming" activities. The report stressed the importance of superior user experience, comprehensive development strategies, and robust teams for sustained expansion.
The June Blast and zkSync airdrops notably contributed to the user activity spike. The analysis underscored the necessity for enhanced user experiences, detailed development paths, and effective teams to maintain growth momentum.
The analysis also pointed out ongoing security challenges within the Web3 ecosystem. The second quarter of 2024 recorded $430 million in losses due to security violations, marking a 5% increase from the previous quarter.
Ethereum and BNB Chain were the most impacted, each contributing to roughly 28% of the breach incidents, while Solana was implicated in 8% of these occurrences. The rest were dispersed across various chains, including Polygon and Arbitrum.
While issues related to access control were only behind 23% of the incidents, they were responsible for 75% of the total misplaced funds. Other types of incidents, like flash loan attacks and rug pulls, accounted for approximately 13% of the breaches but led to merely 1% of the overall financial losses. In contrast, phishing schemes, making up 3% of incidents, were behind about 0.4% of the total financial detriment.
