The DApp industry performed extremely well in the second quarter of 2024. It has witnessed a series of positive developments since the beginning of the year and is experiencing a bullish trend that shows no signs of slowing down. However, this bullish sentiment is reflected in fundamental metrics and user engagement, not the token price. Because Bitcoin has fallen 12% since the end of the first quarter of 2024. The focus of this article is not on token prices, but on analyzing the broader outlook and understanding user behavior and trends within the ecosystem.
Key points:
Usage in the DApp industry grew by 40% compared to the previous quarter, with 10 million daily unique active wallets (dUAW).
The social industry performed well in Web3, with dUAW surging 66% to 1.9 million.
DeFi’s TVL fell 4% from the previous quarter to $168 billion.
Linea has made a splash in the DeFi industry, with TVL reaching $1.1 billion, a growth of 420%.
NFTs had their best quarter since the first quarter of 2023, with transaction volume increasing from $14.9 million to $4 billion.
OpenSea ranks third in terms of transaction volume and dominance, but leads the NFT market in terms of transaction volume with 12% market share.
While the overall market performance was positive, losses from breaches and hacks totaled $430 million, up 5% from the previous quarter.
1. DApp usage reaches record high
Q2 2024 was a phenomenal quarter for DApps, with the number of unique active wallets (UAWs) hitting an all-time high. There are now 10 million UAWs connecting and interacting with DApps every day, a 40% increase compared to the previous quarter.
Source: PANews
Each of the DApp tracks has experienced significant growth, driving overall bullishness. The social industry has seen the most significant growth, growing 66% since last quarter and 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, and others attracting significant attention and usage.
Source: PANews
Blockchain gaming continues to dominate DApps, although its market share dropped slightly from the previous quarter (2%), similar to DeFi. In contrast, the market share of NFT and social industries has increased, becoming the main trend in the second quarter of 2024.
Overall, market sentiment this quarter was bullish, setting a positive tone for subsequent in-depth exploration of specific blockchain verticals.
2. DeFi’s TVL fell slightly to $168 billion
In the second quarter of 2024, DeFi’s TVL declined, from $175 billion in the first quarter to $168 billion at the end of the second quarter.
Source: PANews
Ethereum continues to dominate the DeFi industry, with TVL reaching $120 billion in the second quarter of 2024, a 9% increase from the first quarter. Solana’s TVL fell 10% to $9.6 billion, mainly because the meme coin performed much better last quarter than this quarter and gave it a larger TVL. But the popularity of meme coins has waned these days.
Source: PANews
Tron experienced an even steeper decline, with its TVL falling 17% to $8 billion. This is mainly due to regulatory concerns. Likewise, Arbitrum's TVL fell 9% to $4 billion. Arbitrum is facing stiff competition from other Layer 2 networks and alternative Layer 1 solutions.
In comparison, Base outperformed, with TVL growing 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 impressive growth, with its TVL soaring 420% to $1 billion as user adoption surges driven by innovative DeFi applications, strategic alliances, and airdrop mining. Linea is one of the few Layer2s that doesn’t have a token.
As for the most commonly used DeFi DApps, Raydium and Uniswap V3 saw the largest increases in UAW. This surge is mainly due to its use in meme coin trading. This has been a major trend this quarter, with most users actively trading meme coins.
Source: PANews
3. NFTs: Best quarter since early 2023
The NFT market maintained its bullish trend in the second quarter of 2024. NFT transaction volume reached $4 billion, an increase of 3.7%; the number of NFT transactions increased by 28%, reaching 14.9 million.
Source: PANews
NFT market landscape
Looking at the NFT market as a whole, Blur continues to dominate with 31% of the market, although this rate is down 50% from the previous quarter. Magic Eden followed suit with success with Bitcoin Ordinals, rising its dominance from 17% to 22%. OpenSea ranks third in terms of transaction volume and dominance, but is the leading NFT market in terms of transaction volume with 12% market share.
Source: PANews
The most traded NFT series
The top five NFT families by trading volume this quarter remained largely unchanged from the previous quarter, with the exception of Runestone and Fantasy.top. Both NFT series have experienced incredible success and popularity in the second quarter of 2024.
Source: PANews
4. Security Insights: Vulnerabilities and Hackers
Vulnerabilities and hacks in the Web3 industry remain a cause for concern. Losses due to security breaches reached $430 million in the second quarter of 2024, a 5% increase from the previous quarter.
Source: PANews
Ethereum and BNB Chain were the most affected, each accounting for around 28% of total security incidents. Solana is involved in about 8% of events, with the remaining 36% occurring on other chains, including Polygon and Arbitrum.
Access control issues, while accounting for only 23% of all incidents, result in up to 75% of lost funds. The "other" category accounts for 36% of the total accidents and causes approximately 15% of the total losses. Flash loan attacks and fraudulent loan incidents each accounted for about 13%, and the losses caused by each incident accounted for about 1% of the total losses. Phishing accounts for only 3% of incidents and causes approximately 0.4% of total losses. This distribution highlights that, while access control issues are less frequent, they can be far more financially damaging.
Top 5 Hacks and Vulnerabilities
Source: PANews
DMM Bitcoin Hack: Japanese centralized crypto 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, minted 5 billion GALA tokens, and sold 592 million for $21.8 million in Ethereum, causing the price to drop 20%.
Lykke Exchange Breach: Swiss centralized crypto exchange Lykke has suspended withdrawals after losing over $22 million in a security breach.
Sonne Finance vulnerability: The Sonne Finance protocol on the OP chain was attacked by hackers with flash loans. The attackers attacked multiple times, causing a total loss of approximately US$20 million.
Holograph Hack: NFT protocol Holograph suffered a $14.4 million hack after a former developer exploited a smart contract vulnerability to mint 1 billion $HLG tokens.
It is safe to say that the Web3 industry must adopt strong security practices across different blockchain platforms. This includes addressing access control vulnerabilities, monitoring for threats, and educating users on security practices to reduce the risk of future incidents.
5. Conclusion
The bullish trend in the Web3 industry continues to flourish, with the number of independent active wallets and NFT transaction volume growing significantly, and innovations in DeFi and other industries also attracting attention. The rise of Layer2 solutions will undoubtedly continue, with more and more blockchains being launched to enhance scalable functionality and reduce transaction costs.
As an important part of the Web3 ecosystem, meme coins will continue to become a prominent trend and maintain their significant influence and market share. SocialFi will also play an important role in providing alternatives to existing platforms such as Facebook and Instagram, and will become increasingly important as users seek new social networking experiences in a decentralized world.
The current airdrop mining trend has led to a surge in UAW, but this growth may not be sustainable. In order to ensure long-term user retention after the airdrop, we must focus on providing a smooth user experience, a robust roadmap, and a strong development team.
Despite ongoing security challenges, the Web3 industry's momentum remains strong, driven by continued enthusiasm and the potential for further growth.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: "PANews"
Original author: DappRadar
