DappRadar’s Dapp Industry Report for February 2024
This February, the dapp industry reached a new all-time high with 6.7 million daily Unique Active Wallets, alongside Bitcoin’s price soaring past its all-time high. This indicates a market on the cusp of a new bull run.
This February Dapp Industry Report provides an overview of the key developments and emerging trends poised to dominate during the upcoming phase. Through this concise analysis, we aim to shed light on the transformative shifts shaping the future of the digital asset ecosystem.
Key Takeaways
- Daily Unique Active Wallets (dUAW) have reached a new all-time high of 6.7 million. NFT dapps witnessed a 24% surge, nearing 1 million in dUAW. Meanwhile, on-chain gaming continues to lead, maintaining a dominant 28% share in the dapp industry.
- The Total Value Locked (TVL) in the DeFi sector has increased by 45% reaching $159 billion, the highest since May 2022.
- NFT trading volume decreased to $1.3 billion, but the sales count saw an increase and reached 5.23 million .
- Blur leads NFT trading volumes with a 50% market share, but accounts for only 4% of sales.
- Magic Eden overtakes OpenSea in trading volume, but with half of OpenSea’s trader count.
- $148 million in crypto assets were lost due to hackers exploiting smart contracts and duping investors.
Table of Contents
- Dapp industry overview
- Gaming dapps the top UAW performers
- DeFi’s TVL reaches $159 billion, Ethereum holds 74% share
- NFT trading decreased to $1.3 billion
- Magic Eden overtakes OpenSea in trading volumee
- Blockchain gaming leads the Web3 industry
- $148 million lost due to exploits and hacks
- Closing words
1. Dapp industry overview
In the second month of 2024, the dapp sector has recorded a promising outset, characterized by a significant milestone of 6.7 million daily Unique Active Wallets (UAW). This represents an 18% growth compared to the previous month and a new all-time high, indicating a robust continuation of growth momentum. Anticipated events such as the Bitcoin halving, the Ethereum Dencun upgrade, and the onset of what appears to be the start of the bull run, all contribute to the industry’s thriving state.
In examining the performance of specific segments within the industry, gaming leads with 1.9 million daily UAW, reflecting a 20% increase from the previous month. The DeFi segment demonstrates a steady performance, sustaining its 1 million daily UAW from the previous reporting period.
The NFT sector has witnessed significant growth, with a 24% increase in daily UAW, nearing the 1 million mark. Similarly, the social dapp category has continued its uptrend with 1 million daily UAW, up by 12%—primarily fueled by platforms such as CARV and Galxe.
Regarding blockchain network performance, Near emerges as the frontrunner in terms of Unique Active Wallets, followed closely by SKALE and zkSync Era, highlighting the competitive landscape among blockchain infrastructures as it seems that the newest one are gaining traction.
For enthusiasts and analysts seeking a more granular understanding of blockchain performance, our detailed chain rankings offer thorough insights, covering a wide array of metrics to gauge the health and trends of the dapp industry.
2. Gaming dapps the top UAW performers
This section focuses on the leading dapps for February 2024, ranked by Unique Active Wallets (UAW). This analysis provides a snapshot of the current market leaders and offers insights into the evolving landscape and potential shifts in prominence as the year unfolds.
A key highlight from this month’s rankings is the unwavering leadership of shopping platform KAI-CHING in the Web3 domain, closely shadowed by the racing game motoDEX. A remarkable trend is the significant representation of gaming in the top echelons, with four of the top dapps either directly being games or having strong ties to the gaming sector. This underscores the gaming industry’s prevalent influence within the Web3 ecosystem.
The month has also witnessed a surge in the popularity of DeFi dapps and exchanges. This uptick is attributed to the rising prices of cryptocurrencies and tokens, and a growing eagerness among users to engage in trading activities. The reasons behind the burgeoning interest in DeFi and its implications for the market will be explored in greater detail in the subsequent section.
3. DeFi’s TVL reaches $159 billion, Ethereum holds 74% share
The year 2024 has witnessed a remarkable start, especially within the DeFi sphere, evidenced by its Total Value Locked (TVL) reaching $159 billion by the end of February. This figure signifies a 45% increase from the previous month.
Ethereum continues to assert its dominance in the DeFi landscape, commanding a 74% share of the industry’s TVL. The short-term outlook for Ethereum is particularly bullish due to several key factors:
- Ethereum ETF speculation: Following the introduction of a Bitcoin ETF, the market speculates on the imminent arrival of an Ethereum ETF, signaling a potential shift in investment focus towards Ethereum.
- Dencun upgrade and EIP-4844: Ethereum is on the brink of a significant upgrade scheduled for March/April 2024, incorporating nine Ethereum Improvement Proposals (EIPs). Among these, EIP-4844 (proto-danksharding) stands out for its potential to reduce Layer 2 transaction fees by tenfold, likely enhancing network activity and bolstering Layer 2 token values.
- Uniswap v4 launch: The upcoming Uniswap v4 introduces transformative features like “hooks”, transitioning Uniswap from a protocol to a development platform, further reducing network costs and fostering innovation.
- EigenLayer’s mainnet launch: Scheduled for Q1 2024, Eigenlayer’s launch is set to increase APYs on Ethereum, drawing more attention to the network as it becomes a more attractive option amid shifting investment preferences. Additionally, EigenLayer has flipped Aave V3 and become the second biggest protocol by TVL on Ethereum, only behind LIDO.
Bitcoin’s TVL has seen a 77% increase this month, largely attributed to the increasing popularity of Merlin’s Seal and the launch of Merlin Chain by Bitmap Tech. This Layer-2 solution aims to enhance scalability and foster a robust DeFi ecosystem atop Bitcoin, marking a significant step forward for Bitcoin-based DeFi development. But besides Merlin’s Seal, we’ve also noticed how Stacks has seen adoption and the fact that SatoshiVM was launched.
Therefore, what drives this growth in the DeFi space? The excitement around the ‘airdrop’ narrative is palpable, yet it raises questions about its impact on market valuation. It’s possible to create digital currency virtually from nothing—a concept that astonishes central bankers and traditional financial institutes. Imagine launching a token with a billion units; selling just one unit at one dollar could ostensibly value the market cap at $1 billion. This illustrates a mechanism by which the TVL can escalate without actual capital injection into the ecosystem. Each bull run seems to simplify the process of creating tokens further.
However, it’s clear we’re only at the nascent stages of the current bull market. Traditional indicators of a market peak, such as the Coinbase app topping the charts on Apple’s AppStore, high-profile crypto advertisements during the Super Bowl, or widespread retail fear of missing out (FOMO), have yet to manifest.
Despite these speculative aspects, the core technology and solutions provided by DeFi are truly promising, holding immense potential to transform our financial systems fundamentally. The anticipation for what unfolds next in the DeFi sector is high, as it continues to address and offer groundbreaking solutions to existing financial challenges.
4. NFT trading decreased to $1.3 billion
Since the final month of 2023, the NFT industry has consistently surpassed the $1 billion trading volume threshold, maintaining its position above this mark into February 2024. This month witnessed a trading volume of $1.32 billion, representing a 14% decrease from the previous month. However, the sector saw a slight uptick in activity, with sales counts reaching 5.23 million, a 1.5% increase compared to the last month’s figures.
The observed downturn in trading volume amidst an overall market upswing prompts an analysis of NFT market behavior in relation to broader crypto market cycles. Historically, NFT markets tend to rally following initial surges in bitcoin (BTC) value, which attracts new participants to the crypto space. This sequence typically sees a rise in altcoin values before culminating in a bullish phase for NFTs, which often extends beyond the peak periods of other cryptocurrency assets. This cyclical pattern suggests that while history may not repeat itself exactly, it often echoes previous trends, offering insights into potential future movements.
The anticipation around how the NFT market will navigate these historical patterns remains high. With the foundational cycles of cryptocurrency markets providing a backdrop, the NFT sector’s unique trajectory through these phases highlights its evolving role and potential within the broader digital asset ecosystem.
5. Magic Eden overtakes OpenSea in trading volume
The landscape of NFT marketplaces has undergone significant shifts over the past year. From OpenSea’s erstwhile monopoly to the rise of Blur, which climbed our charts buoyed by the anticipation of the BLUR token airdrop campaign. It’s clear that Blur has been pivotal in igniting the frenzy around the concept of ‘play/farm/trade-to-airdrop,’ a trend that has persisted into 2024.
As we stand in February 2024, Blur commands a staggering 50% of the market share by trading volume within the NFT industry. However, the marketplace scene has welcomed other contenders into the fray. Notably, Magic Eden, although not a new entrant, has solidified its position as the second-largest platform, claiming 14% of the industry’s trading volume, with OKX trailing at 9%.
Despite these shifts in trading volume dominance, OpenSea retains its crown as the NFT marketplace with the highest number of traders, boasting a 23% market share. Yet, Magic Eden is hot on its heels with a 16% dominance, marking a significant competitive landscape.
The surge in Magic Eden’s popularity can be traced back to November 2023, following an announcement from Yuga Labs about launching a new NFT marketplace in collaboration with Magic Eden. This platform pledged to uphold royalty fees on every NFT transaction, ranging from 2.5% to 10% of the sales price, a move that generated considerable buzz upon its launch in late February.
In examining the top NFT collections by trading volume for this month, it’s evident that while Yuga Labs’ NFTs maintain a presence in the top rankings, they face stiff competition. Challengers like Pudgy Penguins are vying for the lead with innovative approaches. Moreover, the changing dynamics of the marketplace have lessened the studio’s influence as a new wave of consumers enters the market, prioritizing affordability and utility in digital assets over the exclusivity once heralded by studio collections.
The NFT marketplace in 2024 diverged significantly from the scene up until mid-2022, particularly regarding royalty enforcement. While royalties remain critical for creators, the question lingers: Is the market ready to embrace them once more?
6. Blockchain gaming leads the Web3 industry
Blockchain gaming continues to capture the largest share of the industry’s activity, a trend that remains consistent this month. As highlighted in the initial overview, blockchain gaming has reached nearly 2 million daily Unique Active Wallets (dUAW), accounting for a 28% dominance in the industry. This period also witnessed remarkable growth in gaming-related tokens, details of which will be further explored in our upcoming monthly gaming report, scheduled for release on 14 March.
This month’s analysis also extends to the most traded NFT collections, particularly those with the highest number of traders. Notably, the top four collections are either directly associated with the gaming sector or incorporate elements of gamification. A prime example is Open Solmap, an innovative approach allowing individuals to own and develop digital plots representing Solana’s transaction history and blockspace.
The impending bull market signals a promising era for blockchain gaming, positioning it as a key driver in the forthcoming phase of industry growth. Gaming’s inherent capacity for engagement and innovation continues to attract significant attention and investment, underscoring its critical role in shaping the future landscape of blockchain technology and digital entertainment.
7. $148 million lost due to exploits and hacks
With the market on an upward trajectory and a new influx of participants entering the Web3 space, security vulnerabilities remain a pressing concern. This month, REKT Database reported losses totaling $148 million due to hacks and exploits, a staggering increase of 261% from the previous month.
Among the incidents that stood out, the Bitforex exchange experienced what appears to be an exit scam. Initially, the platform restricted access after detecting a suspicious outflow of funds amounting to approximately $56.5 million across various blockchains. Users found themselves unable to log in, faced with CloudFlare’s DDoS protection service blockade. The cessation of withdrawal processes and a lack of response to customer support queries further indicated that this was likely an exit scam rather than an external breach, reinforcing the critical principle of ‘your keys, your money.’
In another significant breach, PlayDapp, an Ethereum- and Polygon-based play-to-earn (P2E) gaming platform, fell victim to an exploit through compromised private keys. This then led to a substantial loss of 1.79 billion PLA tokens valued around $32.3 million.
Additionally, the FixedFloat exchange suffered an exploit resulting in the loss of 409 BTC and 1,728 ETH, collectively worth approximately $26.1 million.
As the market gears up for a bull run, with bitcoin (BTC) edging towards a new all-time high, the imperative for user security cannot be overstated. The repeated instances of security breaches underscore the importance of self-custody, epitomized by the adage ‘not your keys, not your money.’
8. Closing words
As we conclude our examination of the dapp industry during the month of February, we stand before a new ATH: we registered 6 million daily UAW, a figure that was highly anticipated. Coupled with the rapid ascent of BTC prices surpassing previous all-time highs, the market is brimming with anticipation for the beginning of a new bull run.
This report has offered a snapshot of the industry’s dynamics over the past month, revealing emerging trends that are likely to dominate discussions in the forthcoming bull run. Though we’ve merely scratched the surface, the insights gathered provide a foresight into the movements and areas of growth that will capture the industry’s focus moving forward.
