Web3 Users Surge by 40%, Reaching Historic High in Q2

In the second quarter of 2024, Web3 user engagement hit an all-time high, with approximately 10 million daily unique active wallets (dUAW), marking a 40% increase from Q1.

According to a July 4 report by blockchain analytics platform DappRadar, the unprecedented growth spanned various sectors of the decentralized application (DApp) industry, leading to an overall bullish trend.

Social dApps and NFTs Growth Marks Q2

The social sector had the highest increase, clocking in a 66% rise in dUAW. This rise was driven by applications like Fantasy.top and UXLINK. The blockchain gaming sector also saw an uptick in users, although its market share slightly declined.

Decentralized exchanges (DEXs) such as Uniswap and Raydium registered substantial increases in user activity. Uniswap’s dUAW was up by 80%, and Raydium’s was up by 134%, owing to an influx of meme coin traders.

NFT marketplaces enjoyed their highest usage since Q1 2023, with $4 billion in trading volume across over 14.9 million individual trades. Magic Eden’s market share grew from 17% to 22%, while Blur’s dominance dropped to 31%.

Despite the rising user numbers, the total value of crypto locked in DeFi applications fell by $7 billion. Notably, a 4% decline from the previous quarter. Tron and Arbitrum experienced major losses in TVL, dropping by 17% and 9%, respectively.

However, Ethereum layer-2 solutions Linea and Base bucked the trend, with Linea’s TVL surging by 420% and Base’s by 44%.

Meanwhile, DappRadar cautioned that the dramatic growth in dUAW might not be sustainable. They attributed part of the increase to “airdrop farming,” where users engage in activities to earn airdropped tokens.

The Blast and zkSync airdrops in June contributed to this spike. The report emphasized the need for superior user experiences, solid development roadmaps, and strong teams for continued growth.

Security Still a Major Concern

Meanwhile, the report highlighted that security remains a significant concern for the Web3 industry. Q2 2024 saw $430 million in losses due to security breaches, a 5% increase from the previous quarter.

Ethereum and BNB Chain were the most affected, each accounting for about 28% of the incidents, while Solana was involved in 8% of the cases. The remaining incidents were spread across various chains, including Polygon and Arbitrum.

Although access control issues represented only 23% of incidents, they accounted for 75% of the total funds lost. Other incident types, including flash loan attacks and rug pulls, each constituted about 13% of the incidents but caused only about 1% of the total losses. On the other hand, phishing attacks, comprising 3% of incidents, resulted in approximately 0.4% of the total financial damage.