The dapp industry performed exceptionally well in the second quarter of 2024. Since the beginning of this year, there have been a series of positive developments, and it is 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. Since the end of the first quarter of 2024, Bitcoin has dropped by 12%. This article focuses not on token prices, but on analyzing the 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 a daily unique active wallet (dUAW) reaching 10 million.
The social sector has performed well in Web3, with dUAW surging by 66% to reach 1.9 million.
DeFi’s Total Value Locked (TVL) has decreased by 4% compared to the previous quarter, reaching $168 billion.
Linea has excelled in the DeFi sector, with a TVL of $1.1 billion, representing a growth of 420%.
NFT had its 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 dominance, OpenSea ranks third, but leads the NFT market in terms of trading volume with a market share of 12%.
Although the overall market performance is positive, losses from vulnerabilities and hacker attacks totaled $430 million, a 5% increase from the previous quarter.
1. Record-high dapp usage
The second quarter of 2024 was an extraordinary quarter for dapps, with the number of daily unique active wallets (UAW) reaching a record high. Now there are 10 million UAWs connecting and interacting with dapps every day, a 40% increase compared to the previous quarter.
Every track of dapps has experienced significant growth, driving the overall bullish trend. The social sector has shown the most significant growth, increasing by 66% since the last quarter, with nearly 2 million UAWs on average every day. This surge is largely driven by the current excitement about Web3 participation, where popular dapps like fantasy.top and UXLINK have attracted a lot of attention and usage.
Blockchain games continue to dominate dapps, despite their share decreasing slightly (2%) compared to the previous quarter, similar to DeFi. In contrast, NFT 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 drops to $168 billion
In the second quarter of 2024, DeFi’s TVL experienced a 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, a 9% increase from 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 experienced a more significant decline, with its TVL dropping by 17% to $8 billion, mainly due to regulatory concerns. Similarly, Arbitrum’s TVL also decreased by 9% to $4 billion. Arbitrum is facing fierce competition from other Layer 2 networks and alternative Layer 1 solutions.
In contrast, Base has performed exceptionally well, with its TVL increasing by 44% 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 shown remarkable 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 token.
Regarding the most commonly used DeFi dapps, Raydium and Uniswap V3 had the highest increase in UAW. This increase is mainly due to their usage in meme coin trading, which is a major trend this quarter, with most users actively trading meme coins.
3. NFT: The best quarter since early 2023
The NFT market maintained a bullish trend in the second quarter of 2024. NFT trading volume reached $4 billion, a 3.7% increase, and the number of NFT transactions grew by 28% to 14.9 million.
NFT market landscape
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, and its dominance has increased from 17% to 22%. In terms of trading volume and dominance, OpenSea ranks third, but leads the NFT market in terms of trading volume with a market share of 12%.
Top NFT collections by trading volume
The top five NFT collections by trading volume remained largely 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 continue to be a significant concern. In the second quarter of 2024, losses from security vulnerabilities amounted to $430 million, a 5% increase from the previous quarter.
Ethereum and BNB Chain were most affected, accounting for around 28% of all security incidents each. Solana was involved in approximately 8% of incidents, while the remaining 36% occurred on other chains, including Polygon and Arbitrum.
While 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 total 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 incidents, causing approximately 0.4% of the total losses. This distribution highlights that while access control issues may not be as frequent, their financial impact is much greater.
Top five hacker attacks and vulnerabilities
DMM Bitcoin Hack: Japanese centralized cryptocurrency exchange DMM Bitcoin lost $305 million in a theft on May 31.
Gala Games Incident: Hackers exploited an access control vulnerability in the GALA token contract, minting 50 billion GALA tokens and selling 5.92 billion of them at an ETH price of $21.8 million, causing a 20% price drop.
Lykke Exchange Vulnerability: Swiss centralized cryptocurrency exchange Lykke suspended withdrawals after suffering losses of over $22 million in 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 $14.4 million hacker attack, as a former developer exploited a smart contract vulnerability to mint 10 billion HLG tokens.
It is certain that the Web3 industry must adopt strong security practices across various blockchain platforms. This includes addressing access control vulnerabilities, monitoring various threats, and educating users about security practices to mitigate the risk of future incidents.
5. Conclusion
The bullish trend in the Web3 industry continues to thrive, with significant growth in the number of independent active wallets, NFT trading volume, and notable innovations in DeFi and other sectors. The rise of L2 solutions is undoubtedly set to 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, SocialFi will become increasingly important.
The current trend of airdrop mining has led to a surge in UAW, but this growth may not be sustainable. To ensure long-term retention of users after airdrops, a focus on providing a smooth user experience, robust roadmap, and strong development teams is necessary.
Despite ongoing security challenges, driven by continued enthusiasm and the potential for further development, the momentum of the Web3 industry remains strong.
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