CryptoSlate Report:
Author:
Dapp Radar
Translation by: Felix, PANews
The dapp industry exhibited remarkable performance in the second quarter of 2024. Since the beginning of the year, it has witnessed a series of positive developments, maintaining a bullish trend with no signs of slowing down. However, this bullish sentiment is reflected more in fundamental metrics and user engagement rather than token prices, as Bitcoin has dropped by 12% since the end of Q1 2024. This article focuses not on token prices but on analyzing broader prospects to understand user behaviors and trends within the ecosystem.
Key Points:
Compared to the previous quarter, dapp usage increased by 40%, reaching 10 million daily active unique wallets (dUAWs).
The social sector excelled in Web3, with dUAWs surging by 66% to 1.9 million.
DeFi’s Total Value Locked (TVL) decreased by 4% from the previous quarter to $168 billion.
Linea stood out in DeFi with a TVL of $1.1 billion, marking a 420% growth.
NFTs experienced their best quarter since Q1 2023, with transaction volumes soaring from $149 million to $4 billion.
In terms of transaction volume and market share, OpenSea ranks third but leads with a 12% market share in the NFT market.
Despite overall positive market performance, losses due to vulnerabilities and hacks totaled $430 million, a 5% increase from the previous quarter.
1. Dapp:
Record High Adoption Rates
Q2 2024 proved exceptional for dapps, setting a record high for daily active unique wallets (UAWs). There are now 10 million UAWs connecting and interacting with dapps daily, a 40% increase from the previous quarter.
Each dapp category experienced significant growth, driving overall bullish sentiment. The social sector saw the most notable growth, increasing by 66% since last quarter, averaging nearly 2 million UAWs daily. This surge is largely driven by current excitement around Web3 participation, with popular dapps such as fantasy.top and UXLINK garnering significant attention and usage.
Blockchain gaming continues to dominate dapps, despite a slight 2% decrease in its share compared to the previous quarter, similar to DeFi. In contrast, NFTs and the social sector have increased their market share, becoming the primary trends in Q2 2024.
Overall, the sentiment this quarter remains bullish, setting a positive tone for deeper exploration into specific blockchain verticals.
2. DeFi:
TVL Slightly Declines to $168 Billion
In Q2 2024, DeFi’s TVL saw a decline from $175 billion in Q1 to $168 billion by the end of Q2.
Ethereum continues to lead in the DeFi space, with a Q2 2024 TVL of $120 billion, a 9% increase from Q1. Solana’s TVL dropped by 10% to $9.6 billion, primarily due to meme coin performance in the previous quarter overshadowing this quarter. However, meme coin hype has since subsided.
Tron experienced a more significant decline with a 17% drop in TVL to $8 billion, largely due to regulatory concerns. Similarly, Arbitrum’s TVL decreased by 9% to $4 billion, facing fierce competition from other Layer2 networks and alternative Layer1 solutions.
In contrast, Base demonstrated outstanding performance, with a 44% increase in TVL to $1.9 billion. The chain’s innovative approach, strong community support, and strategic partnerships played a critical role in its development. Linea also showed remarkable growth, with its TVL skyrocketing by 420% to $1 billion, driven by innovative DeFi applications, strategic alliances, and airdrop mining. Linea is one of the few L2s without a native token.
Raydium and Uniswap V3 saw the highest UAW increases among the most used DeFi dapps this quarter, primarily due to their use in meme coin trading. This trend underscores the predominant focus of most users on meme coin trading this quarter.
3. NFT:
Best Performing Quarter Since Early 2023
The NFT market maintained a bullish trend in Q2 2024, with a $4 billion transaction volume, a 3.7% increase, and a 28% increase in transaction count to 14.9 million.
Market Landscape of NFTs
In terms of the overall NFT market, Blur continues to dominate with a 31% market share, although this ratio decreased by 50% from the previous quarter. Magic Eden follows closely, achieving success with BTC Ordinals, increasing its dominance from 17% to 22%. In terms of transaction volume and market share, OpenSea ranks third but leads with a 12% market share in transaction volume in the NFT market.
Top NFT Collections by Transaction Volume
The top five NFT collections by transaction volume remained largely unchanged from the previous quarter, except for Runestone and fantasy.top, both of which achieved incredible success and popularity in Q2 2024.
4. Security Insights: Vulnerabilities and Hacks
Vulnerabilities and hacker attacks in the Web3 industry remain a significant concern. In Q2 2024, losses due to security vulnerabilities amounted to $430 million, a 5% increase from the previous quarter.
Ethereum and BNB Chain were the most affected, each accounting for approximately 28% of total security incidents. Solana was involved in about 8% of 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 financial losses. The “other” category accounted for 36% of total incidents, causing losses that represented about 15% of the total. Flash loan attacks and rug pulls each accounted for about 13%, with losses from each incident accounting for about 1% of total losses. Phishing accounted for only 3% of incidents, with losses representing about 0.4% of total losses. This distribution highlights that while access control issues may not be as frequent, their financial impact is far more severe.
Top Five Hacker Attacks and Vulnerabilities
DMM Bitcoin Hack: The centralized Japanese crypto exchange DMM Bitcoin lost $305 million in a theft on May 31.
Gala Games Incident: Hackers exploited access control vulnerabilities in the GALA token contract, minting 5 billion GALA tokens and selling 592 million at an ETH price of $218 million, causing a 20% price drop.
Lykke Exchange Vulnerability: The Swiss centralized crypto exchange Lykke suspended withdrawals after suffering over $22 million in losses due to a security vulnerability.
Sonne Finance Vulnerability: Sonne Finance protocol on the OP chain suffered multiple flash loan attacks, resulting in approximately $20 million in losses.
Holograph Hack: The NFT protocol Holograph was hit by a $14.4 million hack, where a former developer exploited a smart contract vulnerability to mint 1 billion HLG tokens.
It is clear 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 future incidents.
5. Conclusion
The bullish trend in the Web3 industry continues to thrive, with significant increases in daily active unique wallets and NFT transaction volumes, while innovations in DeFi and other areas remain noteworthy. The rise of L2 solutions will undoubtedly continue, with more blockchains being launched to enhance scalability and reduce transaction costs.
As a critical component 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, offering alternatives 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, although this growth may not be sustainable. To ensure long-term retention of users post-airdrop, focus must be on delivering smooth user experiences, robust roadmaps, and strong development teams.
Despite ongoing security challenges, driven by continued enthusiasm and further development potential, momentum in the Web3 industry remains strong.
For further reading:
June Crypto Market Report: The end of the high-rate dollar environment is imminent, with BTC likely to start a fall rally.
