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, for example, has dropped by 12% since the end of the first quarter of 2024. The focus of this article is not token prices, but rather analyzing the broader prospects and understanding user behavior and trends within the ecosystem.
Key Points:
Compared to the previous quarter, the usage of the dApp industry has grown by 40%, reaching 10 million daily unique active wallets (dUAW).
The social sector has performed well in Web3, with a surge of 66% in dUAW, reaching 1.9 million.
DeFi’s total value locked (TVL) has decreased by 4% compared to the previous quarter, amounting to $168 billion.
Linea has made a remarkable breakthrough in the DeFi sector, with a TVL of $1.1 billion, 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 share, OpenSea ranks third but leads the NFT market with a 12% market share.
Despite the overall positive performance of the market, losses caused by 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). Currently, there are 10 million UAW connecting and interacting with dApps every day, representing a 40% increase compared to the previous quarter.
Each category of dApps has experienced significant growth, driving the overall bullish trend. The social sector has shown the most remarkable growth, with a 66% increase since the previous quarter, averaging nearly 2 million UAW per day. This surge is largely driven by the current excitement around Web3 participation, with popular dApps such as fantasy.top and UXLINK attracting a lot of attention and usage.
Blockchain games continue to dominate the dApp space, although their market share has slightly decreased (2%) compared to the previous quarter, similar to DeFi. On the other hand, NFTs and the social sector have increased their market share, becoming the major 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 Declines to $168 Billion
In the second quarter of 2024, DeFi’s total value locked (TVL) has experienced a decline 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, a 9% increase compared to the first quarter. Solana’s TVL has decreased by 10% to $9.6 billion, mainly due to the better performance of meme coins in the previous quarter, which resulted in a larger TVL. However, the popularity of meme coins has since declined.
Tron has experienced a more significant decline, with its TVL dropping by 17% to $8 billion, primarily due to regulatory concerns. Similarly, Arbitrum’s TVL has decreased by 9% to $4 billion. Arbitrum faces 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 key role in its development. Linea has also demonstrated astonishing growth, with a 420% surge 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 UAW. This surge is mainly attributed to their usage in meme coin trading. This has been the major trend of this quarter, with most users actively trading meme coins.
3. NFTs: The Best Quarter Since Early 2023
The NFT market has maintained a bullish trend in the second quarter of 2024. NFT trading volume has reached $4 billion, a 3.7% increase, and the number of NFT transactions has grown by 28%, reaching 14.9 million.
In terms of the overall NFT market, Blur continues to dominate with a market share of 31%, although this ratio has decreased by 50% compared to the previous quarter. Magic Eden closely follows, with a successful launch of BTC Ordinals, increasing its market share from 17% to 22%. In terms of trading volume and market share, OpenSea ranks third but leads the NFT market with a 12% market share.
The top five NFT collections in terms of trading volume remain mostly unchanged from the previous quarter, except for Runestone and fantasy.top. Both of these 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 caused by 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 total security incidents each. 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 staggering 75% of the total funds lost. The “Other” category accounted for 36% of the incidents, causing approximately 15% of the total losses. Flash loan attacks and rug pulls accounted for around 13% each, with each incident causing approximately 1% of the total losses. Phishing accounted for only 3% of the incidents, resulting in approximately 0.4% of the total losses. This distribution highlights that while access control issues may not be as frequent, they have a much greater financial impact.
Top Five Hacker Attacks and Vulnerabilities
DMM Bitcoin Hack: Japanese centralized crypto exchange DMM Bitcoin lost $305 million in a theft on May 31st.
Gala Games Incident: Hackers exploited an access control vulnerability in the GALA token contract, minting 5 billion GALA tokens and selling 592 million of them for approximately $21.8 million worth of ETH, causing a 20% price drop.
Lykke Exchange Vulnerability: Swiss centralized crypto exchange Lykke suspended its withdrawal service after losing over $22 million in a security vulnerability incident.
Sonne Finance Vulnerability: Sonne Finance protocol on the OP chain was hit by a flash loan attack, with the attacker executing multiple attacks totaling approximately $20 million in losses.
Holograph Hack: NFT protocol Holograph suffered a $14.4 million hacker attack due to a former developer exploiting 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 a significant increase in daily unique active wallets (dUAW) and NFT trading volume, as well as 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 essential 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 dUAW, but this growth may not be sustainable. To ensure long-term retention of users after airdrops, a focus on providing smooth user experiences, robust roadmaps, and strong development teams is necessary.
Despite ongoing security challenges, the momentum in the Web3 industry remains strong, driven by continued enthusiasm and further potential for development.