2024 Q2 dApp Report
The dApp industry has performed exceptionally well in the second quarter of 2024. Since the beginning of this year, we have witnessed a series of positive developments and are experiencing a bullish trend with no signs of slowing down. However, this bullish sentiment is reflected in the fundamental indicators and user engagement, rather than token prices. Bitcoin has actually dropped by 12% since the end of the first quarter of 2024. The focus of this article is not token prices, but rather the analysis of broader prospects and understanding user behavior and trends within the ecosystem.
Key Points:
Compared to the previous quarter, dApp usage has grown by 40%, with daily Unique Active Wallets (dUAW) reaching 10 million.
The social sector has performed exceptionally well in Web3, with a 66% increase in dUAW, reaching 1.9 million.
DeFi’s Total Value Locked (TVL) has decreased by 4% compared to the previous quarter, reaching $168 billion.
Linea has made a remarkable impact in the DeFi sector, with a TVL of $1.1 billion, representing a growth of 420%.
NFTs have had their best quarter since the first quarter of 2023, with trading volume increasing from $14.9 million to $4 billion.
In terms of trading volume and market dominance, OpenSea ranks third but leads the NFT market with a market share of 12% in terms of trading volume.
While the overall market performance is positive, losses due to vulnerabilities and hacker attacks have increased by 5% to a total of $430 million compared to the previous quarter.
1. Record High dApp Usage
The second quarter of 2024 has been an extraordinary quarter for dApps, with a record high number of daily Unique Active Wallets (UAW) connecting and interacting with dApps. Now, there are 10 million UAWs connecting and interacting with dApps every day, representing a 40% increase compared to the previous quarter.
Every category of dApps has experienced significant growth, driving the overall bullish trend. The social sector has shown the most significant growth, with a 66% increase since the last quarter, averaging nearly 2 million UAWs per day. This surge is largely driven by the current excitement around Web3 participation, with popular dApps like fantasy.top, UXLINK, attracting a lot of attention and usage.
Blockchain games continue to dominate dApps, despite a slight decrease in their market share (2%) compared to the previous quarter, similar to DeFi. In contrast, NFTs and the social sector have increased their market share, becoming the main trends in the second quarter of 2024.
Overall, the market sentiment this quarter is bullish, setting a positive tone for further exploration of specific blockchain verticals.
2. DeFi TVL Slightly Decreases to $168 Billion
In the second quarter of 2024, DeFi’s Total Value Locked (TVL) experienced a slight decrease from $175 billion in the first quarter to $168 billion at the end of the second quarter.
Ethereum continues to dominate the DeFi space, with a TVL of $120 billion in the second quarter of 2024, representing a 9% increase from the first quarter. Solana’s TVL decreased by 10% to $9.6 billion, primarily due to the better performance of meme coins in the previous quarter, which resulted in a larger TVL. However, the hype around meme coins has declined.
Tron experienced a more significant decline, with its TVL dropping by 17% to $8 billion. This is mainly due to regulatory concerns. Similarly, Arbitrum’s TVL also decreased by 9% to $4 billion. Arbitrum is facing fierce competition from other Layer2 networks and alternative Layer1 solutions.
In contrast, Base has shown outstanding performance, with a 44% increase in TVL to $1.9 billion. The chain’s innovative approach, strong community support, and strategic partnerships have played a crucial role in its development. Linea has also shown remarkable growth, with a 420% increase in TVL to $1 billion, driven by innovative DeFi applications, strategic alliances, and airdrop mining. Linea is one of the few L2s without a native token.
As for the most popular DeFi dApps, Raydium and Uniswap V3 have seen the largest increase in UAWs. This surge is mainly due to their usage in meme coin trading. This is the major trend of this quarter, with most users actively trading meme coins.
3. NFTs: Best Quarter Since Early 2023
The NFT market has maintained its bullish trend in the second quarter of 2024. NFT trading volume reached $4 billion, representing a 3.7% increase, and the number of NFT transactions increased by 28% to 14.9 million.
In terms of the overall NFT market, Blur continues to dominate with a 31% market share, although this ratio has decreased by 50% compared to the previous quarter. Magic Eden follows closely, achieving success with BTC Ordinals, increasing its market share from 17% to 22%. OpenSea ranks third in terms of trading volume and market dominance but leads the NFT market with a 12% market share in terms of trading volume.
The top five NFT collections in terms of trading volume remain relatively unchanged compared to the previous quarter, except for Runestone and fantasy.top. These two NFT collections have achieved incredible success and popularity in the second quarter of 2024.
4. Security Insights: Vulnerabilities and Hacks
Vulnerabilities and hacker attacks in the Web3 industry remain a significant concern. In the second quarter of 2024, losses due to security vulnerabilities amounted to $430 million, a 5% increase compared to the previous quarter.
Ethereum and BNB Chain were the most affected, accounting for approximately 28% of all security incidents. Solana was involved in about 8% of the incidents, while the remaining 36% occurred on other chains, including Polygon and Arbitrum.
Although access control issues accounted for only 23% of all incidents, they resulted in a whopping 75% of the total fund losses. The “Other” category accounted for 36% of the total incidents, causing approximately 15% of the total losses. Flash loan attacks and rug pull events accounted for approximately 13% each, with each event causing around 1% of the total losses. Phishing accounted for only 3% of the incidents, causing approximately 0.4% of the total losses. This distribution highlights the fact that while access control issues may be less frequent, they are much more financially destructive.
Top Five Hacker Attacks and Vulnerabilities
DMM Bitcoin Hack: Japanese centralized cryptocurrency exchange DMM Bitcoin lost $305 million in a theft case on May 31st.
Gala Games Incident: Hackers exploited the access control vulnerability in the GALA token contract, minted 5 billion GALA tokens, and sold 5.92 billion tokens for 21.8 million ETH, causing a 20% price drop.
Lykke Exchange Vulnerability: Swiss centralized cryptocurrency exchange Lykke suspended its withdrawal operations after suffering a loss of over $22 million due to a security vulnerability.
Sonne Finance Vulnerability: Sonne Finance protocol on the OP chain was attacked multiple times by flash loan attacks, resulting in approximately $20 million in losses.
Holograph Hack: NFT protocol Holograph suffered a hacker attack worth $14.4 million, as a former developer exploited a smart contract vulnerability to mint 1 billion HLG tokens.
It is certain that the Web3 industry must adopt robust security practices across different blockchain platforms. This includes addressing access control vulnerabilities, monitoring various threats, and educating users on security practices to mitigate the risk of future incidents.
5. Conclusion
The bullish trend in the Web3 industry continues to thrive, with significant increases in the number of Unique Active Wallets, NFT trading volume, and notable innovations in DeFi and other sectors. The rise of L2 solutions will undoubtedly continue, with more blockchains being launched to enhance scalability and reduce transaction costs.
As an integral part of the Web3 ecosystem, meme coins will continue to be a prominent trend, maintaining their significant influence and market share. SocialFi will also play a crucial role, providing alternative solutions to existing platforms like Facebook and Instagram as users seek new social networking experiences in the decentralized world.
The current trend of airdrop mining has led to a surge in UAWs, but this growth may not be sustainable. To ensure long-term retention of users post-airdrop, a focus on providing a smooth user experience, robust roadmaps, and strong development teams is necessary.
Despite ongoing security challenges, the momentum of the Web3 industry remains strong, driven by continued enthusiasm and the potential for further development.
This article is a collaborative reprint from:
PANews
