This Network Had as Many Users as Ethereum in 2023: Flipside Data

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This Network Had as Many Users as Ethereum in 2023: Flipside Data
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Polygon, a layer-2 scaling network, nearly matched Ethereum’s user base in 2023, as reported by blockchain analytics firm Flipside.

Polygon acquired 15.24 million users that year, coming close to Ethereum’s 15.4 million, with a difference of around 160,000 wallets.

Polygon Topped User Acquisition in First Half of 2023

Flipside defines an “acquired” user as someone who engaged in at least two transactions on a specific blockchain, with at least one occurring in 2023. During the first half of 2023, Polygon led the user acquisition race but was later surpassed by Ethereum, maintaining its lead throughout the latter part of the year.

In January, Polygon achieved a remarkable milestone with 2.8 million acquired users, constituting over 40% of the total number for 2023, according to Flipside. Ethereum secured the lead for the entire year, while Bitcoin claimed the third position with 10.65 million acquired users. Solana and Arbitrum completed the top five rankings.

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The aggregated data from the eight tracked blockchains, including Optimism (OP), Avalanche (AVAX), and Base (BASE), revealed a total of 62 million acquired users. Flipside observed that user acquisition peaked in May but gradually declined afterward.

Notably, Flipside suggested a connection between the surge in acquired users starting in March and the collapse of Silicon Valley Bank. The event potentially eroded confidence in centralized entities, prompting a shift towards decentralized custody alternatives.

Base, launched in August, also exhibited a strong start, but its user volume dwindled in the final months of 2023. Flipside speculated that the waning user growth for Base might be attributed to renewed enthusiasm for more established chains towards the end of the year.

Flipside Predicts Trends for 2024

In its predictions for future trends, Flipside observed a decline in NFT-related activities and a shift towards decentralized finance (DeFi) activities during 2023. Anticipating the upcoming cycle, Flipside suggested that DeFi activities would continue to dominate, surpassing the prominence of NFT trading.

Specifically, it highlighted decentralized exchange (DEX) trading and yield farming as ongoing predominant applications while also forecasting the emergence of new DeFi applications like the Ethereum restaking protocol Eigenlayer.

According to Flipside, user behavior in 2024 is expected to involve increased interaction with multiple blockchain networks, although most users will likely stick to engaging with a single chain.

The prediction further emphasized a growing trend of user interaction with Layer 2 networks in the coming year.

Despite being a minority in 2023, users with more than one blockchain predominantly interacted with Layer 2s. Flipside speculated that rising transaction fees during the next crypto market bull run could lead Layer 2 networks to lower their costs for end users competitively, potentially driving increased interest in associated governance tokens.

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