In 2023, Polygon (MATIC), a layer-2 scaling network, nearly caught up with Ethereum (ETH) in terms of crypto user acquisition. According to data from blockchain analytics firm Flipside, Polygon managed to secure a significant 15.24 million users throughout the year, coming remarkably close to Ethereum’s 15.4 million user count. Flipside defined an “acquired” user as an individual who conducted a minimum of two transactions on a particular blockchain, with at least one of those transactions taking place in 2023.
Polygon Exceeded Ethereum in User Acquisition in First Half
Interestingly, Polygon initially led in user acquisition during the first half of the year but was eventually overtaken by Ethereum, which maintained its lead throughout the second half.
Flipside’s report highlighted Polygon’s robust start to the year, especially in January, where it acquired an impressive 2.8 million users, accounting for more than 40% of its total acquired users for 2023.
“Subsequently, Polygon witnessed a steady decrease in monthly user acquisition throughout the year in relative terms, although it still performed favorably when compared to most other networks,” the report noted.
In the rankings, Bitcoin secured the third position with 10.65 million acquired users, while Solana and Arbitrum rounded out the top five.
In total, the eight monitored blockchains accumulated a remarkable 62 million acquired users, encompassing platforms like Optimism, Avalanche, and Base.
Flipside pointed out that user acquisition reached its zenith in May but began to steadily decrease thereafter.
Interestingly, Flipside highlighted a possible correlation between the surge in acquired users and the collapse of Silicon Valley Bank in March. This event may have eroded confidence in centralized entities, prompting a shift towards decentralized custody solutions as users sought alternatives.
“The surge in acquired users commenced in March, coinciding with the collapse of Silicon Valley Bank, which could have shaken trust in centralized institutions and sparked a rush towards decentralized custody options.”
Base Saw a Decline in User Base after Strong Growth
Regarding Base, which was introduced in August, Flipside noted that it had a promising beginning but witnessed a gradual decline in user activity as 2023 drew to a close.
The decline in Base’s user volume was attributed by the firm to a resurgence of interest in well-established blockchains with vibrant and diverse application ecosystems.
Nevertheless, Flipside remains optimistic about Base’s potential for user growth, particularly in the context of the next cryptocurrency bull run. This optimism is bolstered by Coinbase’s endeavors to serve as a primary entry point for new users entering the cryptocurrency space, which could potentially benefit Base’s user base and adoption.
As reported, Arbitrum, an Ethereum-based layer 2 network, has now garnered an impressive market share of 49.17% among layer 2 networks, significantly surpassing the second-ranking Optimism Mainnet, which holds a 28.85% market share.
Moreover, the network has consistently witnessed an increase in its Total Value Locked (TVL) since at least October of the previous year. The TVL has surged by approximately 50%, climbing from $1.66 billion in October to the current value of $2.51 billion, as indicated by data from the DeFi tracking site DefiLlama.
The forthcoming Ethereum Dencun upgrade, which incorporates changes proposed by Ethereum Improvement Proposal (EIP) 4844, is anticipated to bring about a reduction in transaction costs for rollups. This is expected to be advantageous for layer 2 solutions like Arbitrum, as it will lead to lower gas fees and an enhanced network capacity.
