Dapp activity up 77% this quarter as BTC hits new all-time high
In the first quarter of 2024 bitcoin reached new all-time highs, the NFT market saw its best performance since Q1 2023, and the TVL of the DeFi sector approached record levels. With the market in a bullish phase, let’s examine the key events and trends of Q1 2024.
Key Takeaways
- In Q1 2024 the dapp industry saw an increase of 77% in its usage, in comparison to the previous quarter, reaching 7 million daily Unique Active Wallets.
- The Social sector outshines others in the Web3 industry this quarter, recording a 324% surge in dUAW to 1.2 million, despite blockchain gaming and DeFi leading in usage.
- DeFi saw a 70% rise in TVL to $175 billion, driven by bullish market trends, including bitcoin’s record high and Ethereum’s price increase to $4,070.
- Solana shines in the DeFi space, surging to second in TVL with a 165% increase, while its token SOL jumped 73%.
- The NFT sector recorded a 50% surge in trading volume to $3.9 billion and a 13% rise in sales to 11.6 million, marking its strongest quarter since Q1 2023.
- While the market shows overall positivity, losses to exploits and hacks totaled $407 million, down 32% from the last quarter, but up 9% year-over-year.
Table of Contents
- A bullish first quarter of 2024 for Web3
- The resurgence of DeFi
- NFTs: most vivid quarter since early 2023
- Blockchain gaming’s performance
- Security insights – exploits and hacks
- Closing words
1. A bullish first quarter of 2024 for Web3
Q1 2024 has seen remarkable growth within the Web3 ecosystem, evidenced by an average of 7 million daily Unique Active Wallets (dUAW), a significant 77% increase from the previous quarter.
Blockchain gaming, while still commanding the largest share of the industry’s activities, has seen a slight decline in its dominance since the year’s end. Furthermore, the DeFi and NFT sector followed the same trajectory of gaming, continuing to be pivotal areas of growth. The DeFi sector had an average of 1.3 million dUAW and the NFT sector had reached almost 1 million dUAW.
An interesting development this quarter is the 9% increase in the dominance of the Social sector. This uptick is largely attributed to social dapps engaging users with quests and potential airdrop rewards, keeping the community active and interested. We’ve also introduced Quests on our platform, where actions can earn users XP and tokens. For more details on this, please refer to our announcement.
Overall, the market sentiment this quarter is decidedly bullish, setting a positive tone for deeper exploration into the specific blockchain verticals in the subsequent sections.
2. The resurgence of DeFi
This quarter, the DeFi sector experienced serious growth, with the Total Value Locked (TVL) growing 70% to $175 billion. This growth has been largely fueled by the bullish market sentiment, which is also underscored by Bitcoin (BTC) reaching a new all-time high and Ethereum’s price climbing to $4,070, missing its all-time high by 18%.
The broader crypto token market has also seen significant gains, with notable increases across various token prices. A standout performer has been Solana, which now ranks second in TVL with a remarkable 165% increase from the previous quarter. Solana’s token, SOL, rose by 73%, signaling a robust recovery and highlighting the network’s resilience and growing user engagement.
Newly launched chains in the past six months, such as Base and Blast, have also entered the rankings, generating considerable excitement within the community. This interest has been amplified by the airdrop narrative, which remains a potent tool for engaging and expanding communities around new blockchain projects.
Layer-2 (L2) networks have seen a surge in usage, particularly following Ethereum’s Dencun upgrade, which significantly reduced gas fees. This has made transactions more accessible to users, contributing to an increase in activity across these platforms.
In exploring the top DeFi dapps by daily unique active wallets, two Solana-based dapps, Jupiter Exchange and Raydium, have emerged as the leaders this quarter. This reaffirms Solana’s comeback and its increasing significance in the DeFi ecosystem, marking a notable shift in user preference and platform utilization.
3. NFTs: most vivid quarter since early 2023
This quarter marked a significant surge in the NFT market, mirroring the broader market’s momentum. By the close of Q1 2024, the NFT sector hit a trading volume of $3.9 billion, up 50% since Q4 2023. In addition, the market noted 11.6 million NFT sales, a 13% increase. This means that Q1 2024 has been the best performing quarter since Q1 2023.
NFT Marketplaces Landscape
When we examine the NFT marketplace landscape, Blur continues to lead in trading volume, boasting a 50% market share, followed by Magic Eden, which now holds a 17% share. Notably, in Q4 of 2023, OKX NFT Marketplace was in second place with a trading volume of $1 billion. Now, it has experienced a 53% reduction. This change correlates with shifts in user interest, because interest in Bitcoin Ordinals dropped a bit, and was hugely responsible for the success of the OKX Marketplace.
Additionally, mirroring trends seen across the industry, Solana has made a notable return in the NFT space. Alongside Magic Eden, which has always played an important role in the market for Solana collections, a new marketplace called Tensor has entered our top 5 this quarter. Tensor stands out for having the most NFT sales this quarter and has garnered significant enthusiasm. Its appeal largely comes from the low prices of NFTs and the announcement of a governance token, TNSR, which will enable holders to govern the protocol. The narrative around airdrops continues to attract attention.
Top NFT Collections by Trading Volume
Looking at the top 5 NFT collections by trading volume this quarter, the lineup remains largely unchanged from the last quarter, with the exception of DeGods, which has now taken the place of CryptoPunks, ranking fifth.
Yuga Labs’ NFT collections continue to lead the market, though their rankings have shifted. Remarkably, Pudgy Penguins has overtaken BAYC in total market cap, now approaching nearly half a billion USD. This collection has not only weathered the longest bear market we’ve seen, but also proven to be a profitable investment, particularly with its ventures into the Web2 space.
This quarter’s developments affirm the dynamic and expanding nature of the NFT market, showcasing significant shifts in marketplace dominance, user interests, and the steady ascent of collections that blend the digital and physical realms.
4. Blockchain gaming’s performance
Blockchain gaming remains at the forefront of the Web3 industry, as evidenced by our latest gaming reports. This quarter is no exception. As highlighted in the first chapter, blockchain gaming claims a 30% dominance, attracting around 2.1 million daily unique active wallets this quarter, marking a 59% increase.
To further emphasize this, we’ve delved into the NFT collections that have recorded the highest sales count this quarter, notably those related to gaming NFT collections.
Evidently, the synergy between gaming and NFTs continues to engage audiences, highlighting the sustained momentum and potential of this unique intersection within the digital landscape.
5. Security insights – exploits and hacks
In Q1 2024, the blockchain sector saw mixed outcomes in terms of security. Despite a generally positive market outlook, there was a loss of $407 million to exploits and hacks. This is a 32% decrease from the previous quarter, hinting at some improvements in security measures. Yet, when comparing these figures to Q1 2023, we see a 9% rise in losses, pointing to ongoing security issues. It’s safe to say that security remains an issue, and further education and security measures are required to prevent further damage to the market.
Ethereum experienced the majority of these incidents, with 57% of the total, followed by BNB Chain at 17%, and Arbitrum at 14%. While the remaining other chains make up the remaining 12%. This distribution shows that high-value networks continue to be prime targets for attacks.
A notable security breach involved Ripple co-founder Chris Larsen’s Ripple chain account, which was compromised, leading to a significant loss of 213 million XRP tokens, worth about $112.5 million.
Another major incident occurred in the DeFi sector with the Munchables protocol. It was hacked, resulting in the loss of 17.4K ETH, which is valued at $62.5 million.
Additionally, the exchange sector wasn’t spared as BitForex was implicated in an exit scam, with suspicious outflows estimated at $56.5 million across several blockchains. This highlights the ever-important need for exchange security and user awareness.
These incidents emphasize the continuous need for better security practices and vigilance in the blockchain ecosystem.
For more detailed insights and analysis on these and other security incidents, check the REKT Database.
6. Closing words
Q1 2024 has showcased the adaptability and dynamism of the Web3 industry, with daily unique active wallets reaching new heights. The influx of new users, alongside the launch of innovative dapps and blockchains, signals a robust recovery and the end of the longest bear market we’ve experienced. As we look forward, the excitement builds for what’s next in this ever-evolving space, promising more growth, innovation, and engagement across the Web3 ecosystem.
