The cryptocurrency sector witnessed an astonishing rise in value throughout 2024, with many coins reaching historical highs. However, this meteoric price surge did not translate into a corresponding growth in on-chain user engagement across most blockchain networks. According to a detailed analysis by Flipside, a blockchain growth firm, the figures reveal a surprising disconnect that could hinder the sector’s overall potential. While investors looked to capitalize on rising prices, the lack of engaging and diverse on-chain activities presents a challenge for sustainability and growth in user bases.
A notable exception to the trend of stagnation was Base, a layer-2 solution introduced by Coinbase. The report outlines an impressive increase in Base’s user base, with a staggering 56-fold rise in acquired users throughout the year. The month of October 2024 proved to be a pivotal point for the platform, amassing an astounding 13.7 million new users—making up nearly 70% of all new on-chain users in the crypto ecosystem for that month. This highlights Base’s success in not only attracting users but also engaging them deeply within the decentralized finance (DeFi) space, as evidenced by the 15.1 million super users actively participating in transactions.
While Base experienced unprecedented growth, other significant chains struggled to keep pace. Bitcoin and Ethereum, both prominent players in the digital asset market, experienced relatively stagnant user growth. In fact, Bitcoin managed to garner only 935,900 new users monthly—even with its price surpassing the milestone of $100,000 and the beginning of Bitcoin ETF trading in the U.S. In stark contrast, Ethereum displayed more robust user growth, with an average of 1.56 million new users joining each month. However, the performance of its layer-2 solutions, Arbitrum and Optimism, fell short, indicating a tendency for users to remain within the core Ethereum ecosystem rather than migrating to these derivative solutions.
Flipside’s report suggests that the variables driving user engagement are not solely linked to price performance; institutional adoption seems to play a vital role. The recognition from significant players like Grayscale, which expanded its investment universe, has fostered increased trust and interest in the crypto space. However, Bitcoin’s user engagement metrics during the post-election rally reveal a concerning trend—while high volatility spurs trading, it does not necessarily lead to a more substantial and lasting user onboarding. The speculative behaviors observed among Bitcoin users signal a fragile foundation, one that relies extensively on market sentiment instead of long-term engagement.
Going forward, the crypto sector must prioritize fostering genuine on-chain activities that not only attract users but also convert them into consistent contributors. If platforms like Base can demonstrate a model for success in user engagement, it could serve as a blueprint for other networks, prompting them to innovate their offerings and emphasize the quality of user interactions. As institutional buy-in continues reshaping the landscape, the industry’s greatest challenge will be to cultivate an ecosystem that values sustainability over mere price speculation—making user engagement the new gold standard in evaluating blockchain networks.