Web3 User Engagement Reaches Record High in Q2 2024
In the second quarter of 2024, the Web3 ecosystem witnessed a significant surge in user engagement, with around 10 million daily unique active wallets (dUAW) – a notable 40% increase from the previous quarter. This surge in engagement cut across various sectors, indicating a bullish trend for the decentralized application (DApp) industry.
Social dApps and NFTs Drive Growth in Q2
1. Social dApps experienced a substantial growth, with a 66% increase in dUAW, attributed to platforms like Fantasy.top and UXLINK.
1.1. Fantasy.top and UXLINK fueled the growth in the social sector.
1.2. Blockchain gaming also witnessed increased user activity, although its market share saw a slight dip.
2. Decentralized exchanges (DEXs) like Uniswap and Raydium showed significant upticks in user engagement.
2.1. Uniswap witnessed an 80% spike in dUAW, while Raydium recorded a 134% increase, driven by meme coin traders.
3. NFT marketplaces saw heightened usage, with $4 billion in trading volume and over 14.9 million trades.
3.1. Magic Eden’s market share increased to 22%, while Blur’s dominance fell to 31%.
Decline in Total Value Locked in DeFi
1. Despite the rise in user numbers, the total value locked (TVL) in DeFi applications decreased by $7 billion, marking a 4% decline from the prior quarter.
1.1. Tron and Arbitrum experienced significant drops in TVL, with decreases of 17% and 9%, respectively.
2. Ethereum layer-2 solutions Linea and Base bucked the trend by witnessing surges in TVL.
2.1. Linea’s TVL skyrocketed by 420%, while Base’s TVL surged by 44%.
3. DappRadar cautioned against the sustainability of the rapid growth in dUAW, noting that it could be partly fueled by “airdrop farming” activities.
3.1. The Blast and zkSync airdrops in June contributed to the spike, emphasizing the importance of superior user experiences and robust development for sustained growth.
Continued Concerns on Security
1. Security remains a critical issue in the Web3 industry, with Q2 2024 witnessing $430 million in losses due to security breaches – a 5% increase from the previous quarter.
1.1. Ethereum and BNB Chain were the most affected, each accounting for about 28% of the incidents.
1.2. Solana was involved in 8% of the cases, with incidents also spread across chains like Polygon and Arbitrum.
2. Access control issues, while comprising only 23% of incidents, led to 75% of the total funds lost.
2.1. Flash loan attacks and rug pulls each accounted for about 13% of incidents but caused minimal financial damage.
2.2. Phishing attacks, representing 3% of incidents, resulted in approximately 0.4% of the total financial losses.
Hot Take: Web3 Growth and Security in Review
As the Web3 ecosystem experiences exponential growth in user engagement, fueled by social dApps, NFTs, and decentralized exchanges, there are underlying concerns regarding security and sustainability.
While the industry saw a decline in DeFi TVL and an increase in security breaches, it is imperative for stakeholders to prioritize robust security measures and user-centric development to ensure the long-term success and viability of the Web3 space.
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