Original text: Flipside

Translation: Yuliya, PANews

With the rapid development of the Web3 ecosystem, 2024 has become a milestone year for blockchain user growth. Major blockchain networks have set historical highs in both new user numbers and super user scales, with emerging public chains like Base redefining the possibilities of user growth, while Ethereum and its L2 networks demonstrate the adaptability of a mature ecosystem to the evolving demands of users.

However, a deep analysis of on-chain data indicates significant differences in the quality of user growth. This phenomenon highlights the need to focus not only on quantitative metrics but also on the quality dimension of user engagement when assessing on-chain activities. This report, based on Flipside's real-time data on on-chain crypto users in 2024, comprehensively evaluates the annual development status of the cryptocurrency ecosystem by combining traditional performance metrics with multidimensional actionable indicators, providing a new analytical framework for assessing on-chain user health in 2025.

TL;DR

Beneath the surface of record user growth lies a deeper challenge: how to build ecosystems that create meaningful, lasting engagement rather than fleeting speculative behavior. In short, most blockchains are still in the early stages of converting ordinary users into high-value contributors.

New User Situation:

• Base set a record of 19.4 million new users in October 2024, contributing 13.7 million, nearly eight times that of the second-place Polygon.
• Despite Bitcoin's price breaking $100,000 to set a historical high, its average monthly new users were only 935,900, indicating that speculative activities among existing users are more common than significant new user entries.
• Ethereum averaged 1.56 million new users per month, surpassing Arbitrum and Optimism, with a month-on-month growth of 33.4% in March. Notably, Arbitrum peaked at 3.3 million new users in May.

Super User Performance:

• Base attracted 15.1 million wallets executing over 100 DeFi transactions, 38.4% more than Ethereum's 10.7 million super users.
• Ethereum's 10.9 million DeFi-related super users exceeded the combined totals of Arbitrum and Optimism (6.2 million and 1.8 million, respectively), highlighting Ethereum's advantages in liquidity and convenience.
• Polygon added 1.5 million super users in 2024, recording 867.7 million super user transactions throughout the year, showcasing its success in applications beyond DeFi.

DEX Usage:

• Uniswap expanded its dominance on major public chains, accounting for 91.3% of new user DEX activity on Base, with its market share on Ethereum growing by 27.72% compared to 2023.
• Despite Uniswap's continuous expansion, Trader Joe maintained its leading position on Avalanche with a market share of 61.1%, up 6.1% from 2023.
• Unlike 2023, the top three DEX rankings for newly observed users and super users across chains remain consistent.

New Users

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

This year's on-chain user growth was primarily led by Base, which contributed 13.7 million new users this month—almost eight times that of the second-place Polygon. Overall, it has been an impressive year for on-chain user growth across the industry, with new users showing a continuous upward trend throughout 2024, only experiencing a slight pullback in August.

*Note: "New users" here are defined as users who have conducted at least two transactions on a specific chain, with their second transaction occurring in 2024.

This sustained growth may have been influenced by the increasing institutional recognition of cryptocurrencies, reflected in a series of BTC and ETH ETFs announced earlier this year.

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

Base's Performance

Base started slowly in 2024, but its monthly new user count surged 56 times since January.

Base had only 244,700 new users in January but experienced steady and significant growth throughout the year.

By November, when it peaked, 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, which collectively holds about $130 billion in assets.

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

Bitcoin's Performance

Despite Bitcoin's price reaching a historical high, it has not attracted a large number of new users this year.

In 2024, the number of new users for Bitcoin remained relatively stable, despite the significant appreciation of BTC's 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 indicates that the rise in Bitcoin's price is primarily driven by the enthusiasm and speculative activities of its existing user base, while the effect of BTC's price increase on attracting new users has been mixed.

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

Ethereum and Layer 2 Performance

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

In 2024, Ethereum's growth exceeded that of its two main L2 chains, averaging 1.56 million new users per month, while Arbitrum had 1.2 million and Optimism had 348,800. Excluding December, Ethereum only experienced month-on-month declines in four months, peaking at 1.9 million new users in March—a month-on-month growth of 33.4%.

Arbitrum and Optimism both started the year with considerable momentum, reaching their peaks in new user growth in April and May 2024, respectively, after which user growth declined for the remainder of the year.

Notably, Arbitrum's 3.3 million new users in May exceeded any single-month peak for Ethereum in 2024. Against this backdrop, Arbitrum's new user growth consistently outpaced Optimism throughout the year, thanks to the success of its Arbitrum One program and the expansion of GameFi and SocialFi integrations. In the first half of 2024, 169 builder grants were approved, along with many behind-the-scenes advancements, and it remains to be seen whether this chain can regain its status as the leading EVM L2 chain globally.

Performance of Newly Launched Chains in 2024

Among the chains launched in 2024, Aleo achieved the highest average new user growth, while Blast gradually faded after setting a single-month record.

In terms of newly launched chains, Aleo achieved the highest new user growth, averaging 175,200 new users per month, while Blast and Aleo had 134,900 and 90,700 new users, respectively. This can be attributed to Blast's sharp decline in user acquisition since July, and Sei's slow start, which, despite its mainnet being launched earlier, only reached a peak of 324,500 month-on-month users in October.

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

Super Users

Base's Performance

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

In addition to gaining the most new users, Base also attracted the largest number of DeFi-related super users, with the number of users executing 100 or more transactions being 38.4% higher than the second-place Ethereum. Following closely are Ethereum's 10.7 million new super users and Polygon's 7 million.

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

Given Base's explosive growth this year, its impressive number of super users may not be surprising. This success is likely attributed to Base surpassing many traditional chains in several trending areas this year, including but not limited to meme coin and NFT trading.

On the other hand, Avalanche and Blast had similar numbers of super 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 super users in 2024, with its non-DeFi related super user activity continuing to stand out.

Polygon has attracted 1.5 million new super users in 2024 so far—almost double that of the second-place Base.

Polygon's super user activity also surpassed all other observed chains, with an average monthly super user transaction volume of 867.7 million this year. In addition to Base's impressive 786.3 million super user transactions, Arbitrum has also performed strongly in 2024, reaching 365.3 million super user transactions.

Polygon's outstanding performance is a continuation of the chain's long-standing dominance in super user activity since 2021. The chain's performance in 2021 still holds the record for super user activity among all observed chains, reaching 1.14 billion transactions.

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

Ethereum's Performance

Ethereum's DeFi-related super user count exceeds the combined totals of Arbitrum and Optimism.

So far in 2024, Ethereum has 10.9 million active super users in the DeFi space, second only to Base. This represents a larger DeFi super user base than the combined totals of Arbitrum and Optimism (6.2 million and 1.8 million, respectively).

Considering that EVM L2s are generally faster and cheaper, this may indicate that many users still find cross-chain asset bridging too inconvenient or risky, or they place greater value on the deeper liquidity and market dominance advantages that Ethereum offers.

Regardless, it is clear that Ethereum's L2s need to find more ways to attract activity, rather than merely emphasizing their on-chain performance advantages relative to the Ethereum mainnet.

DEX Usage

Uniswap's Market Dominance

Uniswap has seen growth in market share across major chains, further strengthening its dominance in the DEX space.

Uniswap ranks first on all observed chains except for Avalanche and Blast. Its largest growth occurred on the Base chain, where Uniswap's user base grew from accounting for 36.8% of total DEX activity to 91.3%—this growth is particularly significant given the exponential increase in users on Base this year.

Similarly, Uniswap has also seen growth on other major chains:

• Relative DEX activity on Ethereum increased by 27.72% compared to 2023.
• On Polygon, it grew by 12.57% (this chain has historically had a broader distribution of DEX activity across its entire user base).

Excluding Uniswap's protocol upgrades, this may reflect the "winner takes all" trend in the DeFi space, disproportionately favoring larger existing players with deeper liquidity and higher brand recognition.

Trader Joe's Leading Position on Avalanche

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

• Uniswap is now the second most popular DEX on Avalanche (barely making the top five in 2023).
• Trader Joe remains the most popular DEX on Avalanche, accounting for 61.1% of all DEX activity.
• Its market share has grown by about 6% since 2023.

As the first major DEX natively built on Avalanche, Trader Joe has made numerous efforts to maintain and expand its leading position:

• Launched Auto-Pools in April, allowing LPs to automatically rebalance positions and compound rewards.
• Enabled liquid staking for various Avalanche assets.
• Actively expanded to new chains like Arbitrum and BNB Chain, demonstrating the viability of its unique liquidity book (LB) model.

DEX Usage Trend Analysis

The DEX preferences of super users and newly acquired users are converging, but trading activity is more evenly distributed among super users:

• Unlike in 2023, the top three DEXs used on each observed chain are the same for both super users and newly acquired users.
• The trading activity of super users is more evenly distributed across multiple DEXs.
• This may reflect their familiarity with a broader range of DeFi protocols and a willingness to seek more favorable opportunities outside of mainstream protocols like Uniswap.

Outlook for 2025: Opportunities and Challenges in Web3

On-chain data shows that Web3 user growth continued to rise in 2024, with both traditional chains and new competitors facing pressure to differentiate themselves and provide attractive use cases for both new and existing users. Additionally, the data clearly indicates that rising prices of native tokens on public chains do not necessarily lead to more diverse on-chain activities, and emerging DeFi protocols face significant challenges when competing against established projects.

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

• Base as a Model for Ecosystem Expansion

Base achieved unprecedented user growth in 2024, setting a benchmark for onboarding and activating new users, which may serve as a reference for other new public chains seeking to gain momentum. Base's success in meme coin trading and on-chain AI indicates that innovative application scenarios in emerging fields will continue to drive growth in 2025.

However, how to convert these activities into higher user quality through sustained and diverse user engagement remains a key challenge.

• Ethereum's Growing User Base is an Opportunity for L2s

Despite the performance advantages of L2 networks, Ethereum's growing user base and liquidity advantages further reinforce its position as the foundational layer of the Web3 economy. Chains like Optimism may need to improve their strategies to remain competitive and persuade Ethereum's increasingly large base of ordinary users to enter their on-chain ecosystems.

• Success Requires Differentiation or Economies of Scale

Uniswap's growing dominance indicates that most major DeFi markets exhibit a "winner takes all" trend. Nevertheless, public chains like Avalanche and Polygon are proving that targeted innovations, such as Trader Joe's Auto-Pools or Polygon's GameFi initiatives, can carve out substantial market segments.

In 2025, protocols focused on developing differentiated on-chain products that go beyond "basic" DeFi activities will be key to gaining more market attention.

• As new users enter, chains will shift focus from quantity to quality

Ecosystem builders that can find ways to incentivize users to engage in multiple activities beyond trading (such as governance and staking) will be more conducive to sustainable growth. As wallet growth accelerates, chains prioritizing high-quality engagement will see long-term healthy development of their ecosystems.

Summary

Overall, as the number of wallets across chains and overall transaction volumes increase this year, user quality has declined. Given the recent record highs in user activity and token valuations, this reflects that the industry has attracted a large influx of new users—who currently participate only occasionally but are likely to be guided to explore the various different use cases that Web3 offers.

(Trends in user quality across public chains)

Key findings include:

Base's Performance

• Base is one of the biggest success stories in user growth for 2024.
• Therefore, the chain's lower user quality score does not negate its overall performance. Instead, it highlights that its large new user base is currently engaged in a narrow range of on-chain activities—while also emphasizing the potential to guide these users toward deeper and more diverse on-chain activities.

Ethereum's Performance

• Ethereum experienced the most significant decline in user quality prior to the launch of multiple SEC-approved ETH ETFs.
• This suggests that institutional buying may trigger wallet growth, but without more incentives and convenient entry points (such as protocol governance), it does not necessarily lead to broader and deeper on-chain activities.

Blast's Performance

• Blast's user base exhibited broad and deep engagement at launch, reflecting the chain's ability to incentivize various gamified on-chain activities.
• Although Blast's user growth significantly declined in Q4 2024, its remaining users remain active in multiple areas, indicating that the chain has the potential to surpass its initial hype and achieve greater success.

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