Despite the impressive rise in cryptocurrency prices in 2024, the number of on-chain users across most relevant blockchains did not grow significantly. This issue was highlighted in a recent report by Flipside, a blockchain growth platform, which emphasized the need for networks to offer both quantity and quality on-chain activity to attract users and convert them into valuable contributors.
Coinbase’s Layer-2 Network Takes Off One notable exception to this trend was the layer-2 network launched by Coinbase, which experienced exponential growth in user count throughout the year. According to the report, the number of monthly acquired users on this network increased by 56 times from January to October 2024.
However, other popular networks like Bitcoin and some Ethereum-based layer-2 chains struggled to maintain their growth or even attract new users during this period. While Bitcoin did see an increase in its acquired users, this growth was relatively modest compared to the surge seen on Coinbase’s network.
Ethereum Emerges as a Strong Contender Ethereum also showed signs of resilience in the face of competition from newer networks. Despite facing stiff competition from layer-2 solutions like Arbitrum and Optimism, Ethereum managed to maintain its lead in terms of both quantity and quality of on-chain activity.
In fact, the number of DeFi-related super users on Ethereum was significantly higher than its competitors, indicating strong adoption rates for decentralized finance applications. Institutional Interest Drives Growth The report attributed much of this growth to increasing institutional interest in cryptocurrencies.
Key developments like Grayscale listing several new cryptocurrencies as “assets under consideration” likely played a role in driving up demand for these assets. However, it remains unclear whether these gains can be sustained without continued investment in user education and onboarding initiatives.
Conclusion Overall, while there were some bright spots in terms of user growth on specific networks like Coinbase’s layer-2 solution, the broader trend towards stagnating user numbers suggests that the industry still has work to do when it comes to attracting mainstream adoption. As we head into 2025 and beyond, addressing these challenges will become increasingly important if cryptocurrencies are to realize their full potential.
Source
