In 2024, the cryptocurrency industry witnessed a remarkable surge in coin prices. However, this price increase diverged from user engagement metrics across various blockchain networks. An in-depth study released by the blockchain analytics platform Flipside highlights a critical dilemma: despite soaring prices, the demand for on-chain user interaction is not keeping pace. It underscores an essential requirement for blockchain networks to boost both the volume and quality of their on-chain activities to successfully attract users and convert them into valuable, long-term participants.
One network that defied the trend was Base, a layer-2 solution developed by Coinbase, which achieved impressive growth in its user base throughout the year. Unlike Bitcoin and several Ethereum layer-2 solutions that floundered in user attraction, Base saw its monthly user registrations explode 56 times compared to the previous year. By October 2024, Base accounted for a staggering 13.7 million new users, dominating the landscape amid a total of 19.4 million newly acquired users across the crypto space.
This phenomenal growth also translated into a high number of “super users,” or those engaging in more than 100 decentralized finance (DeFi) transactions. Base attracted an extraordinary 15.1 million super users, a 38.4% increase compared to Ethereum, which managed to draw in 10.7 million of the same category. This performance highlights how specific networks can capitalize on user potential even within a fluctuating crypto market.
Ethereum also demonstrated its staying power, marking an average of 1.56 million newly acquired users per month. This figure surpassed its layer-2 counterparts, Arbitrum and Optimism, reaffirming its status as a vital player in the ecosystem. However, while Ethereum presented strong user engagement, the pressure from chains like Base indicates a competitive landscape where traditional giants must innovate to maintain their standing.
Interesting developments, such as increased institutional acceptance of cryptocurrencies, contributed significantly to Ethereum’s user activity. The proactive stance of asset management firms, such as Grayscale, adopting various new cryptocurrencies as assets under consideration suggests that institutional players are key drivers of this growth.
Contrasting sharply with the success of Base and Ethereum, Bitcoin faced challenges in user growth. Despite breaking the $100,000 barrier and the launch of spot Bitcoin exchange-traded funds (ETFs) in the U.S., monthly user acquisitions barely reached 935,900, marking a decline in post-election interest. During Bitcoin’s meteoric rise in March, there was a 19.2% increase in user acquisitions, yet this momentum failed to sustain itself with a dramatic 28.5% drop following the subsequent rally in November. Such figures point towards a landscape that may be overly reliant on existing users rather than attracting new participants, showcasing a potential area of concern.
As we head deeper into 2024, the crypto sector’s landscape appears more divided than ever. While some networks like Base and Ethereum thrive, others like Bitcoin struggle with user engagement dynamics. Moving forward, the challenge lies in ensuring that blockchain technologies transition their focus from merely attracting attention to fostering substantial, ongoing user involvement that enhances their ecosystem. This will require innovative strategies and concerted efforts from developers and stakeholders across the industry. The crypto world must evolve beyond speculation, embedding sustainable practices that truly engage users at every layer of participation.