State of the Dapp Industry Q2 2024

Best quarter in the NFT industry since Q1 2023

The performance of the dapp industry in Q2 2024 has been remarkable. Since the beginning of the year, we’ve witnessed a continuous stream of positive developments and are experiencing a bullish trend that shows no signs of slowing down. However, it’s important to note that this bullish sentiment is reflected in the underlying metrics and user engagement, rather than token prices, as BTC has declined by 12% since the end of Q1 2024. Our focus is not on token prices but on analyzing the broader landscape and understanding user behaviors and trends within the ecosystem.

Key Takeaways 

• In Q2 2024 the dapp industry saw an increase of 40% in its usage, in comparison to the previous quarter, reaching 10 million daily Unique Active Wallets.
• The Social sector outshines others in the Web3 industry in Q2 2024, recording a 66% surge in dUAW to 1.9 million.
• DeFi saw a 4% decrease in its TVL from the previous quarter, dropping to $168 billion.
• Linea shines in the DeFi space, having a TVL of $1.1 billion translating into a 420% increase.
• The NFT sector had its best quarter since Q1 2023, with a trading volume of $4 billion from 14.9 million sales.
• OpenSea ranks third in terms of trading volume and dominance, but leads as the most dominant NFT marketplace by sales with 12% marketshare.
• While the market shows overall positivity, losses to exploits and hacks totaled $430 million, up 5% from the last quarter.

Table of Contents 

1. New all-time high in dapp industry usage
2. DeFi’s TVL consolidates at $168 million
3. NFTs – best quarter since early 2023
4. Security insights – exploits and hacks
5. Closing words

1. New all-time high in dapp industry usage

Q2 2024 has been a remarkable quarter for the dapp industry, reaching an all-time high of unique active wallets (UAW). We now have 10 million daily UAWs that connect and interact with dapps, marking a significant 40% increase since the last quarter.

Each sector of the dapp industry has experienced notable growth, contributing to an overall bullish trajectory. The social sector has seen the most substantial increase, growing by 66% since the last quarter and averaging almost 2 million daily UAWs. This surge is largely driven by the current excitement around Web3 engagement, with popular dapps like fantasy.top, UXLINK and our own launch of Quests capturing significant attention and usage.

Blockchain gaming continues to dominate the dapp industry, although its share has slightly decreased by 2% from the last quarter, similar to the DeFi sector. In contrast, the NFT and social sectors have both increased their market dominance, emerging as the leading trends of Q2 2024.

Overall, the market sentiment this quarter is bullish, setting a positive tone for deeper exploration into the specific blockchain verticals in the subsequent sections.

2. DeFi’s TVL consolidates at $168 million

In Q2 2024, the DeFi sector’s total value locked (TVL) saw a decline, dropping from $175 billion in Q1 to $168 billion by the end of Q2.

Ethereum continues to dominate the DeFi landscape with a significant TVL of $120 billion in Q2 2024, marking a 9% increase from Q1. Solana’s TVL decreased by 10%, falling to $9.6 billion, primarily due to the fact that in the previous quarter the memecoins did a lot better than this quarter, and brought its TVL to be bigger, but now it seems that the memecoins hype got cooler.

Tron experienced a sharper decline, with its TVL dropping by 17% to $8 billion, largely due to regulatory concerns. Similarly, Arbitrum‘s TVL saw a 9% decrease, down to $4 billion. Although known for its robust Layer-2 scaling solutions, Arbitrum faced stiff competition from other Layer-2 networks and alternative Layer-1 solutions.

In contrast, Base was a standout performer, with its TVL increasing by 44% to $1.9 billion. The chain’s innovative approach, strong community support, and strategic partnerships played a pivotal role in its growth. Linea demonstrated extraordinary growth as well, with its TVL soaring by 420% to $1 billion, driven by innovative DeFi applications, strategic alliances, and a surge in user adoption propelled by airdrop farming, as is one of the few L2s without their own token. For more detailed insights, please refer to the Linea Q1 report.

Regarding the most used DeFi dapps, Raydium and Uniswap V3 saw the largest increases in their unique active wallets (UAW). This surge is primarily due to their use in memecoins transactions, which have been the major trend this quarter, with most users actively trading memecoins.

3. NFTs – best quarter since early 2023

The NFT market has maintained its bullish trajectory in Q2 2024. In our previous quarterly report, we labelled Q1 2024 asone of the best quarters since Q1 2023, but Q2 2024 has surpassed those achievements. We recorded $4 billion in NFT trading volume, marking a 3.7% increase, and saw a 28% increase in NFT sales count, reaching 14.9 million.

NFT marketplace landscape

Examining the NFT marketplace landscape, Blur continues to be the dominant force with 31% market dominance, although this is a decrease of 50% from the last quarter. Magic Eden follows in second place, experiencing incredible success with BTC Ordinals and increasing its dominance from 17% to 22%. OpenSea ranks third in terms of trading volume and dominance, but leads as the most dominant NFT marketplace by sales with 12% marketshare.

Top NFT collections by trading volume

The top 5 NFT collections by trading volume this quarter remain largely unchanged from the previous quarter, with the notable exceptions by Runestone and fantasy.top. Both of these collections have enjoyed incredible success and popularity in Q2 2024.

4. Security insights – exploits and hacks

Exploits and hacks in the Web3 industry continue to be a significant concern. In Q2 2024, the industry saw losses amounting to $430 million due to security breaches, reflecting a 5% increase since the last quarter. 

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

Access control issues, though comprising only 23% of incidents, resulted in a substantial 75% of total funds lost, highlighting their severe financial impact. The ‘Other’ category represented 36% of incidents, causing about 15% of total losses. Flash loan attacks and rug pulls each made up about 13% of incidents, with each leading to approximately 1% of total funds lost. Phishing, accounting for just 3% of incidents, resulted in around 0.4% of total losses. This distribution underscores that while access control issues are less frequent, they are significantly more damaging financially.

Top 5 hacks and exploits

• DMM Bitcoin Hack: DMM Bitcoin, a centralized cryptocurrency exchange in Japan, lost $305 million in the largest blockchain theft since December 2022.

• Gala Games Incident: A hacker 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 Breach: Lykke, a centralized cryptocurrency exchange in Switzerland, halted withdrawals after losing over $22 million in a security breach.

• Sonne Finance Exploit: Sonne Finance on Optimism was exploited through a known attack on Compound v2 forks, resulting in a $20 million loss.

• Holograph Hack: Holograph, an NFT protocol, suffered a $14.4 million hack when 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 robust security practices across different blockchain platforms. This includes addressing access control vulnerabilities, monitoring for a wide range of threats, and educating users on safe practices to mitigate the risk of future incidents. Educate yourself about scams, and protect your wallet: 

• https://dappradar.com/blog/scam-prevention-web3-user-safety-guide 
• https://dappradar.com/blog/how-to-prevent-scammers-from-draining-your-wallet 

5. Closing words

The bullish trajectory in the Web3 industry continues to thrive, with significant growth in unique active wallets, NFT trading volume, and notable innovations across DeFi and other sectors. The rise of Layer 2 (L2) solutions will undoubtedly persist, with an increasing number of chains being launched to enhance scalability and reduce transaction costs.

Memecoins, as an integral part of the Web3 ecosystem, will continue to be a prominent trend, maintaining their significant influence and market presence. SocialFi will also play a crucial role, offering alternatives to established platforms like Facebook and Instagram, and becoming increasingly important as users seek new social networking experiences within the decentralized space.

The current trend of airdrop farming has led to a surge in unique active wallets (UAW), yet this increase may not be sustainable in the short term. To ensure long-term retention of users post-airdrop, it is essential to focus on delivering a superior user experience, robust roadmaps, and strong development teams.

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