Top growth protocols in the past week: why are users driven to these networks and products?

Both newer and well-established protocols marked an uptick in user counts based on specific use cases and expectations. One major category for user inflows is Ethereum-based re-staking. Older protocols like Polygon also show user growth. 

The growth in those protocols is a mix of hype, and organic performance based on revenues. Overall, June 14 was the day for peak activity in selecting 181 protocols, with 588M token holders counted.

The recent trend still does not include the Base blockchain, which is becoming one of the biggest activity hubs. 

Projects grow on hype; some show good user retention

Projects like Ondo go through their usual hype cycle. The addition of users also does not translate into token price growth, as most assets are still sliding or stagnant. 

The leaders, Aerodrome and Ondo, keep posting new user records with an almost constant rate of growth. Shuffle is also at a stable rate of growth, with weekly upticks in users. The growth of Polygon holders is also gradual, as the project is relatively older. Buying MATIC may be required for multiple games and DeFi protocols, so ownership is spreading gradually from organic buyers.

Read: Onchain Summer: What new engagement trend aims to revive crypto enthusiasm?

Smaller projects like Morpho also add users gradually but see a more rapid expansion of fees. COW Protocols is gaining visibility on social media and saw an uptick in users in June. COW Protocol also sees user loyalty with stable monthly activity for most of its apps. 

Source: COW Protocol monthly report, Dune Analytics

Pendle, the re-staking Layer 3 protocol, has grown rapidly since March, doubling its tokenholders. Ether.Fi also added new cohorts of users, breaking to 70.8K token holders. Pendle, along with Aerodrome, has remained a growth protocol for months, displacing networks growing on hype. 

Growth in 2024 hinges on DeFi users. The trend is downward for overall uses, after peaking at 6.9M in March. Since then, each month has seen a small outflow from DeFi, down to 5.4M users in May. Overall in 2024, DeFi wallets have grown from 35M to 59M, though not all may belong to unique users.

Gaming projects reveal growth in May

In addition to DeFi, DappRadar reports reveal gaming is trying to make a comeback. Gaming protocols hit an all-time high on their user count, driven by top gaming platforms like Ronin and Immutable. Games are trying to reinvent their products, promising airdrops or whitelisting as incentives, in place of the previous play-to-earn model.

In May, gaming apps expanded their user count by 7%, while overall apps retained more than 10M monthly active wallets. Gaming managed to grow to 3.13M daily active wallets.

During the recent preview of gaming ecosystems, Polygon remains a legacy chain, but has relatively slower growth. Games reorient themselves to specialized chains, with the strongest growth on Immutable. Solana’s user growth based on apps is also down, as the network reoriented to meme tokens and DeFi.

Also read: Polygon surpasses Ethereum’s traffic, prepares grant program for builders

Overall, most growth comes from the Ethereum ecosystem, which hosts diverse products. In June, the Ethereum ecosystem growth went vertical, mostly based on scalability protocols. Otherwise, the L1 main net still carries around 500K daily users and serves as a settlement layer.

Despite the growth of gaming, some blockchains are underperforming and not taking market share. Avalanche C-Chain has remained stagnant. Booming projects include Near Protocol. Telegram (TON) and Polygon are among the stable performers based on wallet count in the last few months.

Overall, Solana, TRON, and Near Protocol dominate based on the raw number of active wallets. The big contender for the past three months was Arbitrum, which is a late arrival but logs more significant growth. However, most activities focus on a few smart contracts, including stablecoins and MEV bots. Organic user growth and proper engagement are rare in the blockchain space and far surpassed by bot activity and DeFi speed trading. 

Cryptopolitan reporting by Hristina Vasileva