Web3 takes a giant leap forward as user numbers hit 10 million

The second quarter of the year witnessed a significant increase in unique daily active wallets (dUAW) in the Web3 space, setting a new record. However, analytics firm DappRadar has raised concerns that this growth might be influenced by temporary factors, such as airdrops.

A report released on July 4 by DappRadar, a blockchain analytics platform, revealed that the number of daily active users engaging with Web3 applications hit an all-time high in Q2. The daily unique active wallets (dUAW) averaged around 10 million throughout the quarter, marking a 40% rise from Q1 figures.

The report noted that “[e]ach sector of the DApp [decentralized application] industry has experienced notable growth, contributing to an overall bullish trajectory.”

Social and Gaming Sectors Drive Growth

The social sector recorded the highest percentage increase, with a surge of over 66% in dUAW, largely due to the popularity of apps like Fantasy.top and UXLINK. The blockchain gaming industry also saw a rise in user activity, although its share of the market slightly decreased when compared to other sectors.

NFT Marketplaces Reach New Heights

Non-fungible token (NFT) marketplaces experienced their highest levels of activity since Q1 2023, with trading volumes hitting $4 billion. During the quarter, over 14.9 million individual NFT trades were executed. Notably, NFT marketplace Magic Eden increased its market share from 17% to 22%, while Blur, the market leader, saw its dominance diminish, dropping to a 31% share.

Decentralized Exchanges See User Surge

Decentralized exchanges like Uniswap and Raydium also saw substantial growth in user numbers, spurred by the surge in memecoin trading. Uniswap’s user base expanded by 80%, while Raydium saw an impressive 134% increase.

Decline in Total Value Locked in DeFi

Despite the growth in user activity, the total value of cryptocurrency locked in decentralized finance (DeFi) applications fell by $7 billion, representing a 4% decline from the previous quarter. Tron and Arbitrum were particularly impacted, with their total value locked (TVL) dropping by 17% and 9%, respectively.

On the other hand, Ethereum layer-2 solutions, Linea and Base, bucked the trend. Linea’s TVL soared by 420%, while Base saw a 44% increase.

Concerns Over Sustainability of Growth

DappRadar has cautioned that the remarkable growth in dUAW during Q2 might not be sustainable. The report suggests that much of this increase could be attributed to “airdrop farming,” where users engage in specific activities with the hope of receiving token rewards through airdrops. This trend was particularly noticeable following the Blast and zkSync airdrops in June.

The report emphasized that for the growth in dUAW to be maintained, there needs to be a focus on “delivering a superior user experience, robust roadmaps, and strong development teams.

Source: https://cointelegraph.com/news/web3-users-all-time-high-10-million-q2-dappradar