Polygon Rivals Ethereum in User Base
In 2023, Polygon, a layer-2 scaling network, came close to matching Ethereum’s user base, according to blockchain analytics firm Flipside. Polygon acquired 15.24 million users, just 160,000 wallets short of Ethereum’s 15.4 million.
Polygon Leads User Acquisition in First Half of 2023
During the first half of 2023, Polygon led the race in user acquisition but was later overtaken by Ethereum. However, it maintained its lead throughout the latter part of the year. Flipside defines an “acquired” user as someone who engaged in at least two transactions on a specific blockchain, with at least one occurring in 2023.
Top Blockchains for User Acquisition
Polygon achieved a significant milestone with 2.8 million acquired users, accounting for over 40% of the total number in 2023. Ethereum took the top spot for the entire year, while Bitcoin ranked third with 10.65 million acquired users. Solana and Arbitrum rounded out the top five rankings.
The aggregated data from eight tracked blockchains showed a total of 62 million acquired users. User acquisition peaked in May but gradually declined afterward.
Connection Between User Growth and Silicon Valley Bank Collapse
Flipside suggested a connection between the surge in acquired users starting in March and the collapse of Silicon Valley Bank. The event potentially eroded confidence in centralized entities and prompted a shift towards decentralized custody alternatives.
Trends Predicted for 2024
Flipside predicted a decline in NFT-related activities and a shift towards decentralized finance (DeFi) activities in 2023. It anticipated that DeFi activities would continue to dominate in 2024, surpassing the prominence of NFT trading. The prediction also highlighted the emergence of new DeFi applications like the Ethereum restaking protocol Eigenlayer.
User behavior in 2024 is expected to involve increased interaction with multiple blockchain networks, although most users will likely stick to engaging with a single chain. There is also a growing trend of user interaction with Layer 2 networks in the coming year.
Hot Take: The Rise of Polygon and Changing User Behavior
Polygon’s rapid growth in user acquisition highlights the increasing popularity of layer-2 scaling solutions. As more users seek faster and cheaper transactions, layer-2 networks like Polygon provide an attractive alternative to Ethereum. Additionally, the collapse of Silicon Valley Bank appears to have influenced user behavior, leading to a shift towards decentralized custody options. Looking ahead, DeFi activities are predicted to dominate in 2024, with DEX trading and yield farming as prominent applications. The rise of Layer 2 networks and increased interaction with multiple blockchains signify a changing landscape in the crypto industry.
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