2024 On-chain User Report: Base Drives Ethereum User Growth, DeFi Market Shows "Winner Takes All" Trend

Original Title: 2024 Onchain Users Report

Original Source: Flipside

Original Translation: Yuliya, PANews

With the rapid development of the Web3 ecosystem, 2024 marked a milestone year for blockchain user growth. Major blockchain networks achieved record highs in both new user numbers and the scale of power users. Emerging public chains like Base redefined the possibilities of user growth, while Ethereum and its L2 networks demonstrated the ecosystem's maturity in adapting to evolving user needs.

However, a deep dive into on-chain data reveals significant differences in the quality of user growth. This phenomenon underscores the importance of not only focusing on quantitative metrics when evaluating on-chain activities but also emphasizing the quality dimension of user engagement. Based on Flipside's real-time 2024 onchain crypto user data, this report comprehensively assesses the annual cryptocurrency ecosystem development through a combination of traditional performance metrics and multidimensional actionable metrics. It presents a new analytical framework for the 2025 onchain user health assessment.

TL;DR

Beneath the facade of record user growth lies a deeper challenge: how to build an ecosystem that fosters meaningful, lasting engagement rather than transient speculative behavior. In short, most blockchains are still in the early stages of converting regular users into high-value contributors.

New User Insights:

· In October 2024, Base set a record with 19.4 million new users, with Base contributing 13.7 million, nearly eight times that of the second-place Polygon.

· Despite Bitcoin's price surpassing $100,000 to hit a historic high, its average monthly new users were only 935,900, indicating that existing users' speculative activities are more prevalent than significant new user onboarding.

· Ethereum saw an average of 1.56 million new users per month, surpassing Arbitrum and Optimism, with a 33.4% month-over-month growth in March. It is worth noting that Arbitrum peaked at 3.3 million new users in May.

Power User Performance:

· Base attracted 15.1 million wallets executing 100+ DeFi transactions, 38.4% more than Ethereum's 10.7 million power users.

· Ethereum's 10.9 million DeFi-related power users surpass the sum of Arbitrum and Optimism (which are 6.2 million and 1.8 million, respectively), highlighting Ethereum's advantage in liquidity and convenience.

· Polygon added 1.5 million power users in 2024, with a total of 867.7 million power user transactions throughout the year, showcasing its success in applications beyond DeFi.

DEX Usage:

· Uniswap expanded its dominance on major public chains, capturing 91.3% of the new user DEX activity on Base and increasing its market share on Ethereum by 27.72% compared to 2023.

· Despite Uniswap's continued growth, Trader Joe maintained its leading position on Avalanche, with a market share of 61.1%, a 6.1% increase from 2023.

· Unlike in 2023, the current rankings of the top three DEXs in terms of new users and power users on each chain remain consistent.

New Users

In October 2024, new users reached a monthly high for the year of 19.4 million.

This year's on-chain user growth was primarily driven by Base, which contributed 13.7 million new users this month—nearly eight times more than the second-ranked Polygon. Overall, it has been an impressive year for on-chain user growth in the industry, with a continuous upward trend in new users throughout 2024, experiencing only a slight dip in August.

*Note: Here, "new users" are defined as users who have transacted at least twice on a chain, with their second transaction occurring in 2024.

This sustained growth may have been influenced by the increasing institutional acceptance of cryptocurrency, as evidenced by a series of BTC and ETH ETF announcements earlier in the year.

Other exciting developments in the first half of 2024 may have also fueled this optimism, such as Grayscale adding several new cryptocurrencies to its "considered assets" list, and the Federal Open Market Committee (FOMC) meeting in September 2024, where the Fed cut U.S. rates by 50 basis points—its first rate cut in four years.

Base Performance

Base started off slow in 2024, but its monthly new user count has surged 56x since January.

In January, Base had only 244,700 new users, but experienced steady and significant growth throughout the year. By November's peak, the chain's monthly new user count had increased 56 times compared to January, averaging 4.7 million new users per month in 2024. The chain has greatly benefited from Coinbase's large user base, collectively holding around $130 billion in assets.

Popular DeFi protocols like Aerodrome may have also attracted users from other EVM chains, while Base has successfully garnered attention in meme coin trading and on-chain AI in popular areas through new initiatives like Based Agents.

Bitcoin Performance

Despite hitting an all-time high price, Bitcoin did not attract a significant number of new users this year.

In 2024, Bitcoin's new user count remained relatively stable despite a significant increase in BTC value. Overall, Bitcoin averaged 935,900 new users per month this year, ranking third from the bottom among the seven traditional chains observed in this report.

This suggests that the price increase of Bitcoin was mainly driven by enthusiasm and speculative activities of its existing user base, and the growth in BTC price had varied effects on attracting new users.

In March 2024, the first major price spike of BTC coincided with a 19.2% increase in month-over-month new users, but in November—when BTC reached the long-awaited $100,000 milestone amid sustained price growth—new users actually decreased by 28.5% month-over-month.

Ethereum and Layer 2 Performance

Ethereum's new user growth has overall exceeded its traditional L2s, but Arbitrum also saw impressive single-month growth.

In 2024, Ethereum's growth surpassed its two main L2 chains, averaging 1.56 million new users per month, while Arbitrum saw 1.2 million and Optimism saw 348,800. Excluding December, Ethereum had only four months of month-over-month declines and reached a peak of 1.9 million new users in a single month in March—a 33.4% increase month-over-month.

Both Arbitrum and Optimism started the year off strong, reaching peak new user growth for the year in April and May 2024, respectively, with user growth decreasing in the remaining months of the year.

Notably, Arbitrum saw a surge of 3.3 million new users in May, surpassing any single month peak on Ethereum in 2024. Against this backdrop, Arbitrum has maintained its lead in new user growth over Optimism throughout the year, thanks to the success of its Arbitrum One initiative and expansions into GameFi and SocialFi integration. The chain approved 169 builder grants in the first half of 2024, along with many developments behind the scenes, whether the chain can reclaim its position as the world's leading EVM L2 chain remains to be seen.

Performance of 2024 New Launch Chains

Among the chains launched in 2024, Aleo saw the highest average new user growth, while Blast peaked in a single month and gradually receded.

Regarding the newly launched chains, Aleo achieved the highest new user growth on the month of chain launch, averaging 175,200 new users per month, with Blast and Aleo following at 134,900 and 90,700 new users, respectively. This can be attributed to the sharp decline in user acquisition for Blast since July and the slow start for Sei, which despite its mainnet launch, only hit a peak of 324,500 users in October.

It remains unclear whether these chains can regain momentum in 2025—especially considering Base went through a similar post-launch decline before its surge in 2024. Among the four tracked new chains, Lava's performance so far has been overshadowed by competitors, and while Blast set the record for the highest monthly new user growth for all new launch chains in June, there is still much ground to cover.

Power Users

Base Performance

As of December 2024, Base had the most DeFi-related power users, with 15.1 million wallets executing 100 or more transactions.

In addition to attracting the most new users, Base also drew the largest number of DeFi-related power users, with the number of users conducting 100 or more transactions surpassing second-place Ethereum by 38.4%. Following closely behind are Ethereum with 10.7 million new power users and Polygon with 7 million.

*Note: Here, "power users" are defined as users who have conducted at least 100 transactions on a chain, regardless of wallet creation time or last transaction time.

Given Base's explosive growth this year, its impressive number of power users may not come as a surprise. This success is likely attributed to Base surpassing many traditional chains in several hot areas this year, including but not limited to meme coins and NFT trading.

On the other hand, Avalanche and Blast saw a similar number of power users this year, averaging around 1.3 million, while Optimism performed slightly better with 1.7 million users conducting at least 100 DeFi transactions.

Polygon's Performance

Polygon added the most new power users in 2024, with its non-DeFi-related power user activity continuing to shine.

Polygon has attracted 1.5 million new power users in 2024 to date—almost twice as many as second-place Base.

Polygon's power user activity also surpassed all other observed chains, with an average monthly power user transaction volume of 867.7 million this year. Apart from Base's impressive 786.3 million power user transactions, Arbitrum also showed strong performance in 2024, reaching 365.3 million power user transactions.

Polygon's outstanding performance is a continuation of the chain's multi-year dominance in power user activity since 2021. The chain's performance in 2021 continued to hold the record for power user activity among all observed chains, reaching 1.14 billion transactions.

However, despite having the highest power user activity volume across all observed chains, Polygon ranks third in the number of DeFi-related power user wallets. This indicates that the chain has successfully incentivized high transaction volume through GameFi and other alternative use cases.

Ethereum Performance

Ethereum's DeFi-related power users outnumber the sum of Arbitrum and Optimism.

Year-to-date 2024, Ethereum has 10.9 million active power users in DeFi, second only to Base. This represents a larger DeFi power user base compared to the combined total of Arbitrum and Optimism (6.2 million and 1.8 million respectively).

Considering EVM L2s are typically faster and cheaper, this might suggest many users still find cross-chain bridging of assets too inconvenient or risky, or they value Ethereum's deeper liquidity and dominant market position.

Either way, it's clear Ethereum's L2s need to find more ways to attract activity beyond just emphasizing their on-chain performance advantages relative to the Ethereum mainnet.

DEX Usage

Uniswap Market Dominance

Uniswap has seen its market share increase on major chains, further solidifying its dominance in the DEX space.

With the exception of Avalanche and Blast, Uniswap ranks first on all observed chains. Its most significant growth has been on the Base chain, where Uniswap's user base has grown from holding 36.8% of DEX total activity to 91.3%—a particularly notable increase given Base's exponential user growth this year.

Likewise, Uniswap has seen growth on other major chains:

· Relative DEX activity on Ethereum increased by 27.72% from 2023

· Increased by 12.57% on Polygon (a chain historically with a more evenly distributed DEX activity across its user base)

Excluding considerations of Uniswap's protocol upgrades, this trend may reflect a "winner takes all" dynamic in the DeFi space, disproportionately favoring large incumbents with deeper liquidity and higher brand recognition.

Trader Joe's Leading Position on Avalanche

Despite Uniswap's rise in the rankings, Trader Joe has furthered its lead on Avalanche:

· Uniswap is now the second most popular DEX on Avalanche (barely cracking the top five in 2023)

· Trader Joe remains the most popular DEX on Avalanche, capturing 61.1% of all DEX activity

· Market share has increased by approximately 6% since 2023

As the first major DEX native to Avalanche, Trader Joe has made significant efforts to maintain and expand its leading position:

· Introduced Auto-Pools in April, making it easier for LPs to auto-rebalance positions and earn compounding rewards

· Enabled liquidity staking for various Avalanche assets

· Actively expanded to new chains like Arbitrum and BNB Chain, showcasing the feasibility of its unique Liquidity Backbone (LB) model

DEX Usage Trends Analysis

DEX preferences of power users and newcomers are converging, but transaction activity is less concentrated among power users:

· In contrast to 2023, the top three DEXs by observed chain all use the same DEXs among power users and newcomers

· Power users' transaction activity is more evenly distributed across multiple DEXs

· This may reflect their familiarity with a broader range of DeFi protocols and a willingness to look beyond mainstream protocols like Uniswap for more favorable opportunities

Outlook for 2025: Opportunities and Challenges of Web3

On-chain data shows that in 2024, Web3 user growth continued to rise, putting pressure on both traditional chains and new contenders to differentiate themselves and offer compelling usage scenarios for both new and existing users. Furthermore, data indicates that the rising prices of native tokens on public chains do not necessarily translate to a more diverse range of on-chain activities, and emerging DeFi protocols have faced significant challenges in challenging established incumbents.

Here are some key trends to watch for as we enter 2025:

· Base as a Pattern of Ecosystem Expansion: In 2024, Base achieved unprecedented user growth, setting a benchmark for new user onboarding and activation, which may serve as a reference for other new blockchains seeking development momentum. Base's success in Meme coin trading and on-chain AI demonstrates that innovative use cases in emerging fields will continue to drive growth in 2025.

However, converting these activities into higher user quality through persistent and diversified user engagement remains a key challenge.

· Ethereum's Growing User Base is an L2 Opportunity: Despite the performance advantages of L2 networks, Ethereum's continuously growing user base and liquidity further reinforce its position as the foundation of the Web3 economy. Chains like Optimism may improve their strategies to remain competitive and convince Ethereum's growing base of mainstream users to enter their on-chain ecosystem.

· Success Requires Differentiation or Economies of Scale: Uniswap's growing dominance indicates a "winner-takes-all" trend in most major DeFi markets. Nevertheless, chains like Avalanche and Polygon are proving that targeted innovations, such as Trader Joe's auto pools or Polygon's GameFi initiatives, can tap into sizable market niches.

In 2025, protocols focusing on developing differentiated on-chain products beyond "basic" DeFi activities will be key to garnering more market attention.

· With the influx of new users, chains will shift from quantity to quality: Ecosystem builders who can incentivize users to sustainably and equitably participate in various activities beyond transactions (such as governance and staking) will be better positioned for sustainable growth. As wallet growth accelerates, chains prioritizing high-quality engagement will witness long-term ecosystem health.

Summary

Overall, as the number of wallets on various chains and overall transaction volume increase this year, user quality has declined. Given the recent surge in user activity and token valuations reaching all-time highs, this reflects an influx of a large number of new users into the industry — users who are currently only participating occasionally but are highly likely to be introduced to the various use cases Web3 offers.

(Public Chain User Quality Trends)

Main findings include:

Performance of Base

· Base's performance in user growth was one of the biggest success stories of 2024.

· Therefore, the chain's lower user quality score is not a negation of Base's overall performance. Instead, it highlights the narrow scope of on-chain activities that its large new user base is currently engaged in—while also underscoring the potential for guiding these users towards more in-depth, multifaceted on-chain activities.

Performance of Ethereum

· Ethereum saw the largest decrease in user quality right before the launch of multiple SEC-approved ETH ETFs.

· This indicates that institutional buy-in may trigger wallet growth, but without further incentivization measures and convenient entries (such as protocol governance), it may not necessarily lead to broader, more in-depth on-chain activities.

Performance of Blast

· Blast's user base exhibited broad and in-depth participation at launch, reflecting the chain's ability to incentivize various gamified on-chain activities.

· While Blast's user growth saw a significant decline in the fourth quarter of 2024, its remaining users remain active in multiple aspects, indicating that the chain has the potential to surpass its initial hype and achieve greater accomplishments.

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