Dencun & DeFi Lead to Surge of New Crypto Users — Ethereum & Polygon See 300% Growth in New Users

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KEY TAKEAWAYS

  • Decentralized finance (DeFi) was a significant catalyst for the surge in new users across EVM ecosystems.
  • Both Ethereum and Polygon experienced remarkable increases in their new user base in the first quarter of 2024, with both platforms collectively accounting for roughly 70% of all new user growth observed across six major EVM chains.
  • Coinbase's Layer 2 blockchain, Base, witnessed an exceptional spike in new user registrations, particularly on March 16, 2024, following a jump in the Bitcoin (BTC) price earlier that week.
  • Ethereum's ecosystem was distinguished by its diversity in-app usage among new users.

The new Ethereum (ETH) Dencun upgrade was an essential milestone on the blockchain’s roadmap — significantly improving  Layer 2 (L2) solutions and allowing for more efficient and cost-effective transaction data storage.

This impact has also significantly contributed to renewed interest, supporting a wave of adoption during an already growing bull market as a number of Ethereum Virtual Machine (EVM) chains have witnessed a staggering influx in new users and new user trading activity.

Since the start of 2024, both Ethereum and Polygon (MATIC) have seen an immense surge in the accumulation of new users, with a recent Flipside report suggesting that Ethereum and Polygon’s new user volume grew by 298.3% and 359.7%, respectively.

Meanwhile, Base, a L2 blockchain developed by Coinbase, saw a surge of 243,000 new users on March 16, 2024 alone.

What does other data suggest?

Apart from Ethereum, Polygon, and Base seeing astounding numbers of new users in the first quarter of 2024, Decentralized Finance (DeFi) shows to have been the main driver of new user growth across all six analyzed major EVM chains; Ethereum, Polygon, Arbitrum, Optimism, Avalanche, and Base.

What other key insights did the Flipside report bring forth?

Ethereum & Polygon Attracted the Most New Users

Report highlighting the accumulation of new users on Q1 2024.
Report highlighting the accumulation of new users on Q1 2024. Source: Flipside.

Based on the report, Ethereum and Polygon have attracted the most new users among observed EVM chains in Q1 2024, with Ethereum adding 13.4 million and Polygon 12.3 million new users, accounting for roughly 70% of the year’s new user growth across all chains analyzed.

Arbitrum also saw a surge in new users, gaining 4.7 million since the start of 2024.

Other, newer chains, however, also saw significant gains in the new users department, with Base seeing nearly ten times its usual new user gains on just one single day, March 16, 2024, when the chain gained a total of 243,000 new users, setting a record for most new users on an EVM chain in a single day across all observed chains in the first quarter of 2024.

This was also around the time when BTC was performing fairly well and had managed to hit its all-time high, surpassing $73,000 a few days earlier.

New crypto users report Q1 2024.
New crypto users report Q1 2024. Source: Flipside

The report highlighted:

“In fact, Base has nearly 8x’d its new user base since the start of 2024. This surge in user growth has allowed Base to pass Optimism’s cumulative new user growth, now standing at 1.24MM for Base relative to Optimism’s 1.18MM.

“While this still puts Base far behind the leading EVM chains in terms of overall new user volume, it nonetheless represents impressive growth, particularly since the chain’s activity waned during the final months of 2023.”

DeFi As Main Driver For New User Growth

New user DeFi trade volume.
New user DeFi trade volume. Source: Flipside

In addition, the report published by Flipside further noted that DeFi was a significant catalyst for new user growth across the EVM ecosystem in the early part of 2024.

Ethereum also led the charge here, with a cumulative $12 billion in DeFi trade volume, showcasing a sustained DeFi surge that has not only persisted but steadily increased since the year’s start.

In addition, such an upward trajectory of DeFi activity had contrasted with the previous year’s intermittent volatile swings, indicating a solidifying interest and engagement in DeFi among newcomers to the blockchain space.

Second on the list here was Arbitrum, which saw a gain of $9.5 billion since the start of 2024. The Flipside report has attributed this milestone to new users showing higher activity levels in Arbitrum’s DeFi space as opposed to Polygon’s high new user numbers being attributed to a surge in non-fungible token (NFT) activity.

Ethereum Sees Most Diverse App Usage

Another key finding to highlight was that Ethereum saw the most diverse app usage during the first quarter of 2024 which could have been highlighted by the variety of decentralized applications (dApps) engaged by new users on the Ethereum network.

However, the report also highlighted that Ethereum did not have the most evenly distributed app usage across the six observed chains.

“This distinction goes to Base, where the difference in new user volume between the chain’s #1 and #2 apps was only 16.9%, compared to Ethereum’s ~300%.

“The fact that Base is relatively new likely reduced early protocols’ first mover advantage and consequent network effects, preventing user consolidation around a single app.”

Other Insights: NFT trading activity and Worldcoin

Other insights unveiled by the Flipside report showed that NFT trading activity presented a mixed picture across EчVM chains.

While Ethereum and Base saw steady increases in NFT trading by new users, Polygon experienced a significant decline from early highs, with such variance underscoring the fluctuating interest in NFTs and suggesting that they may not dominate the market narrative in the upcoming cycle as they had done so in the past.

Moreover, the report also emphasized the role of specific applications in directing user activity on various chains. For instance, a significant portion of new users on Optimism were drawn to Worldcoin (WLD), reflecting sustained community interest in specific projects.

“As of March 28, over a fourth of new Optimism users have interacted with Worldcoin. This remarkable statistic, along with Optimism’s low DeFi and NFT trading volume relative to other observed chains, may reflect a potential divergence between Optimism’s ecosystem evolution relative to other EVM chains.”

Popular apps among new users.
Popular apps among new users. Source: Flipside

The Bottom Line

Flipside’s New EVM Users: Q1 Snapchot report highlighted the dynamic evolution within the EVM ecosystem post the Ethereum Dencun upgrade, marking a significant phase of growth and diversification.

It highlights the substantial influx of new users on Ethereum, Polygon, and the surprising surge on Base, underscoring the pivotal role of DeFi as a magnet for new user engagement across all platforms.

Moreover, while Ethereum showcased unparalleled diversity within app engagement, Base emerged as a showcase of equitable app usage among new entrants.

The mixed trends in NFT trading and the singular appeal of specific apps like Worldcoin on Optimism hinted at the nuanced and shifting landscape of user interests and activities.

Collectively, these insights not only reflected the current state of blockchain and crypto adoption but also hinted at evolving trends that stakeholders in the EVM ecosystem could have closely monitored.

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