Q2 DApp Report: Usage Rate Grows 40% to a Record High, Outstanding Performance in the Social Sector

Original Title: “State of the Dapp Industry Q2 2024”

Author: Dappradar

Compiled by: Felix, PANews

The dapp industry performed exceptionally well in the second quarter of 2024. Since the beginning of this year, it has witnessed a series of positive developments and is experiencing a bullish trend with no signs of slowing down. However, this bullish sentiment is reflected in fundamental metrics 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 outlook to understand user behavior and trends within the ecosystem.

Key Points:

• Compared to the previous quarter, dapp industry usage increased by 40%, with daily unique active wallets (dUAW) reaching 10 million.
• The social sector performed remarkably in Web3, with dUAW surging by 66% to reach 1.9 million.
• DeFi's TVL decreased by 4% from the previous quarter, falling to $168 billion.
• Linea shone in the DeFi space, with a TVL of $1.1 billion, growing by 420%.
• NFTs experienced their best quarter since Q1 2023, with trading volume rising from $14.9 million to $4 billion.
• In terms of trading volume and dominance, OpenSea ranked third but led the NFT market with a 12% market share in trading volume.
• Although the overall market performed positively, losses from vulnerabilities and hacks totaled $430 million, a 5% increase from the previous quarter.

1. Dapp Usage Hits All-Time High

The second quarter of 2024 was an extraordinary quarter for dapps, with the number of unique active wallets (UAW) reaching an all-time high. There are now 10 million UAW connecting and interacting with dapps daily, a 40% increase compared to the previous quarter.

Every track of dapps experienced significant growth, driving the overall bullish sentiment. The growth in the social sector was the most notable, increasing by 66% since the last quarter, with nearly 2 million UAW on average each day. This surge is largely driven by the current excitement around Web3 participation, with popular dapps like fantasy.top and UXLINK attracting significant attention and usage.

Blockchain gaming continues to dominate dapps, although its share has slightly decreased (by 2%) compared to the previous quarter, similar to DeFi. In contrast, the market share of NFTs and the social sector has increased, becoming major trends in Q2 2024.

Overall, the market sentiment this quarter is bullish, setting a positive tone for further exploration of specific blockchain verticals.

2. DeFi's TVL Slightly Drops to $168 Billion

In Q2 2024, DeFi's TVL saw a decline, dropping from $175 billion in Q1 to $168 billion by the end of Q2.

Ethereum continues to dominate the DeFi space, with a TVL of $120 billion in Q2 2024, a 9% increase from Q1. Solana's TVL decreased by 10% to $9.6 billion, primarily because meme coins performed much better in the previous quarter, leading to a larger TVL. However, the hype around meme coins has diminished now.

Tron experienced a more severe decline, with its TVL dropping by 17% to $8 billion, mainly due to regulatory concerns. Similarly, Arbitrum's TVL also fell by 9% to $4 billion. Arbitrum faces fierce competition from other Layer 2 networks and alternative Layer 1 solutions.

In contrast, Base performed outstandingly, with a TVL growth of 44% to $1.9 billion. The chain's innovative approach, strong community support, and strategic partnerships played a key role in its development. Linea also showed remarkable growth, with user adoption surging and 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 token.

As for the most used DeFi dapps, Raydium and Uniswap V3 saw the largest increases in UAW. This surge is primarily due to their usage in meme coin trading. This is a major trend this quarter, with most users actively trading meme coins.

3. NFTs: The Best Quarter Since Early 2023

The NFT market maintained a bullish trend in Q2 2024. NFT trading volume reached $4 billion, a 3.7% increase; the number of NFT transactions grew by 28% to 14.9 million.

NFT Market Landscape

From the overall situation of the NFT market, Blur continues to dominate with a 31% market share, although this ratio has decreased by 50% from the previous quarter. Magic Eden follows closely, gaining success with BTC Ordinals, increasing its dominance from 17% to 22%. In terms of trading volume and dominance, OpenSea ranks third but leads the NFT market with a 12% market share in trading volume.

Top NFT Series by Trading Volume

The top five NFT series by trading volume this quarter remained largely unchanged from the previous quarter, except for Runestone and fantasy.top. Both of these NFT series achieved incredible success and popularity in Q2 2024.

4. Security Insights: Vulnerabilities and Hacks

Vulnerabilities and hacks in the Web3 industry remain a significant concern. In Q2 2024, losses due to security vulnerabilities reached $430 million, a 5% increase from the previous quarter.

Ethereum and BNB Chain were the most affected, each accounting for about 28% of total security incidents. Solana was involved in about 8% of incidents, with the remaining 36% occurring on other chains, including Polygon and Arbitrum.

Access control issues, although accounting for only 23% of all incidents, led to up to 75% of the financial losses. The "other" category accounted for 36% of incidents, causing losses of about 15% of total losses. Flash loan attacks and loan scams each accounted for about 13%, with each incident causing losses of about 1% of total losses. Phishing accounted for only 3% of incidents, causing losses of about 0.4% of total losses. This distribution highlights that while access control issues are less frequent, their financial impact is much greater.

Top Five Hacks and Vulnerabilities

• DMM Bitcoin Hack: Japan's 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, minting 5 billion GALA tokens and selling 592 million for $21.8 million in ETH, causing a 20% price drop.
• Lykke Exchange Vulnerability: Swiss centralized crypto exchange Lykke suspended withdrawals after losing over $22 million in a security breach.
• Sonne Finance Vulnerability: The Sonne Finance protocol on the OP chain suffered a flash loan attack, with attackers causing approximately $20 million in losses over multiple attacks.
• Holograph Hack: The NFT protocol Holograph suffered a hack worth $14.4 million due to a former developer exploiting 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 reduce the risk of future incidents.

5. Conclusion

The bullish trend in the Web3 industry continues to thrive, with significant growth in the number of unique active wallets and NFT trading volume, alongside 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 an important role, providing alternatives to existing platforms like Facebook and Instagram, as users seek new social networking experiences in a decentralized world.

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 post-airdrop, it is crucial to focus on providing a smooth user experience, a robust roadmap, and a strong development team.

Despite ongoing security challenges, the momentum of the Web3 industry remains strong, driven by sustained enthusiasm and the potential for further development.