Author: Stella L (stella@footprint.network)

Data Source: Footprint Analytics Public Chain Research Page

In August, the cryptocurrency market experienced significant volatility, with both Bitcoin and Ethereum suffering notable declines. While Layer 1 blockchains generally faced market downturns, Tron showed strong growth against the trend. In the Bitcoin Layer 2 space, there was remarkable development momentum, with the TVL of various scaling solutions experiencing substantial increases. Meanwhile, the Ethereum Layer 2 network faced significant pressure but continued to evolve, with the entry of heavyweight players such as Sony becoming a highlight of the ecosystem. Despite the market value contraction, the innovation of Bitcoin and Ethereum Layer 2 remains a key factor for future growth.

This report's data is sourced from the Public Chain Research Page of Footprint Analytics. The page provides an easy-to-use dashboard containing the most crucial statistical data and indicators in the public chain field, and is updated in real time.

Market Overview

In August, both Bitcoin and Ethereum experienced significant declines. The unexpected announcement of a rate hike by the Bank of Japan at the end of July triggered a chain reaction across various markets. Strategies such as short-term volatility and forex arbitrage trades saw significant declines in returns, leading to a sharp drop in cryptocurrency values in the first week of August. Both Bitcoin and Ethereum reached their lowest points of the month on August 7th.

Data Source: Bitcoin and Ethereum Price Trends

The continuous selling pressure persisted throughout the month, with various government actions and lingering issues from Mt. Gox exacerbating this trend, although the impact of these factors gradually weakened.

Meanwhile, Ethereum is undergoing a significant transformation, which has caused uncertainty among some investors. The blockchain plans to achieve scalability by moving more transactions to Layer 2 networks. This year, activity on the Ethereum Layer 2 network has significantly increased, with giants like Sony launching projects such as Soneium in this ecosystem. However, the shift of activity to Layer 2 has led to a decrease in Ethereum transaction fee revenue, which may affect the value of Ether.

At the end of the month, after Telegram founder Pavel Durov was arrested in France, the market's focus increasingly turned to the relationship between blockchain technology and digital privacy. Despite Federal Reserve Chairman Powell's apparent "hint" at a possible rate cut later in the month, overall market sentiment remained predominantly negative throughout the month.

Layer 1

As of the end of August, the total market value of blockchain cryptocurrencies had decreased by 12.1% compared to the end of July, settling at $17.4 trillion. The market is still led by Bitcoin, Ethereum, BNB, and Solana, with market shares of 67.2%, 17.4%, 4.5%, and 3.6% respectively. Of particular note, Bitcoin's market share has grown by 2.4% in absolute terms, while Ethereum's market share has decreased by 2.3%.

Data Source: Market Share of Public Chain Tokens in August 2024

Bitcoin closed at $59,017, with a decline of 8.7%. Ethereum's decline was more pronounced, closing at $2,516, with a substantial decline of 21.4%.

Among the top 15 chains by market value, Tron was the only chain to achieve both token price and market value growth this month, with TRON's price rising by 23.1% and its market value increasing by 22.7%. In contrast, other chains showed a downward trend.

Data Source: Token Prices and Market Values of Public Chains at the End of August 2024

Tron stood out in the market volatility, benefiting from seizing the Meme trend, which triggered a significant increase in on-chain activity. The launch of the first Meme fair launch platform SunPump on Tron significantly increased user engagement.

BNB Chain has also introduced new policies and incentives to promote on-chain Meme-related activities, with Simon’s Cat, TOkenFi, and FLOKI leading in trading volume over the past 30 days.

Data Source: Popular Memecoins on BNB Chain

Additionally, several major financial institutions expanded their blockchain investment portfolios this month. Leading asset management company Franklin Templeton expanded its blockchain fund to include Avalanche. Meanwhile, Grayscale Investments launched the Avalanche Trust and a new Sui fund.

As of the end of August, the total TVL in the DeFi sector was $640 billion, a decrease of 16.8% from the end of July.

Data Source: Public Chain TVL at the End of August 2024

Among the top 15 chains by TVL, Sui was the only chain to achieve growth, with a monthly growth rate of 41.8%. The largest DeFi project on Sui, NAVI Protocol, offers lending and liquidity staking products. Its TVL surged by 72.0%, increasing from $140 million on August 1st to $230 million at the end of August.

Although Polygon's TVL decreased by 1.3% from July, the prediction market Polymarket attracted significant attention. Influenced by the U.S. election cycle, Polymarket's monthly trading volume increased by 22.2% to $470 million, with a sharp increase of 46.1% in the number of traders to 83,000. Polymarket's TVL grew by 19.6% in August, reaching $110 million, ranking third on the Polygon chain, behind only AAVE and Uniswap. However, 78.0% of Polymarket's total trading volume is election-related, raising questions about whether it can sustain this growth after the U.S. election.

Data Source: Polymarket Dashboard

Meanwhile, the arrest of Telegram founder Pavel Durov in France directly impacted TON. In August, TON's TVL plummeted by 53.1% as institutional investors exited to avoid potential risks.

Bitcoin Layer 2

As of August 31st, the TVL of Bitcoin Layer 2 (including sidechains) reached $1.09 billion, a 5.8x increase since January 1, 2024, and an astonishing 18.7x increase since January 1, 2023.

Bitlayer leads in this area, accounting for 32.7% of the total TVL, followed by Core at 16.3%, Rootstock at 14.6%, and Merlin at 12.0%.

Data Source: Bitcoin Ecosystem Public Chain TVL

Looking at individual DeFi projects on a single chain, the top 10 projects account for 64.6% of the total TVL, with Avalon Finance (Bitlayer), Pell Network (Core), and MoneyOnChain (Rootstock) leading with 16.7%, 7.2%, and 6.6% respectively.

Data Source: Bitcoin Ecosystem Public Chain TVL

When considering the multi-chain TVL of projects, Pell Network operates on seven chains, leading with a market share of 22.9%, while Avalon Finance operates on three chains, closely following with a market share of 22.8%. The top 10 projects collectively hold 77.5% of the total market share.

Data Source: Bitcoin DeFi Project TVL (Multi-Chain Summary)

Ethereum Layer 2

As mentioned earlier, Ethereum faced several challenges in August, and its Layer 2 network was no exception.

Arbitrum One, Optimism, and Base continue to dominate the TVL market share, holding 50.2%, 20.0%, and 8.2% shares respectively, with little change in TVL compared to the previous month.

DeGate saw a significant increase in TVL by 20.6%, Scroll increased by 7.4%, and Taiko rose by 7.1%. However, Blast decreased by 18.8%, and zkSync decreased by 8.8%.

Data Source: August 2024 Ethereum Layer 2 Overview - Rollups (Bridge-related Metrics)

Overall, user activity on Ethereum Layer 2 remains subdued, indicating the need for a new round of innovation and more attractive applications to re-engage users. Against the backdrop of strong performance in Bitcoin Layer 2 this year, the Ethereum Layer 2 ecosystem may need a new narrative and stronger user participation to regain momentum.

This month, Soneium became a hot topic. On August 23, Sony Blockchain Solutions Labs, a joint initiative by Sony Group and Startale Labs, announced the launch of Soneium, a new Layer 2 network based on Ethereum. The network will utilize Optimism's OP Stack technology to combine Web3 innovation with consumer applications across gaming, entertainment, and finance.

Soneium

In the week following the announcement, Soneium made rapid progress, including the launch of the "Minato" testnet, the initiation of the "Soneium Spark" program for developers, and a partnership with Transak to provide global fiat on-ramp services. With industry giants like Sony continuing to enter the blockchain space, there is growing optimism about bringing more users into the Web3 ecosystem.

Blockchain Games

In August, a total of 1,492 games were active on various blockchain networks, a decrease of 5.45% from July. BNB Chain, Polygon, and Ethereum led the market with 20.2%, 17.4%, and 17.0% market shares respectively.

Ronin, opBNB, Nebula (SKALE subnet), and NEAR showed outstanding performance in terms of DAUs, averaging 1.34 million, 691,000, 349,000, and 321,000 respectively. As of the end of August, these chains held 28.0%, 23.8%, 8.8%, and 6.6% of the DAU market share.

Data Source: Daily Active Users (DAU) of Blockchain Games on Various Public Chains

During August, Ronin's DAU market share continued to decline, dropping from 38.1% on August 1 to 28.0% on August 31. Despite this, Ronin's average DAU in August was still nearly twice that of opBNB, which followed closely behind. This downward trend was mainly caused by the performance of the game Lumiterra, with its DAUs decreasing from 600,000 at the beginning of the month to 150,000 by the end of the month.

Additionally, on August 6, Ronin's cross-chain bridge was temporarily suspended due to a white-hat hacker attack, which exposed a critical misconfiguration in the cross-chain bridge upgrade proposal. Approximately $12 million worth of cryptocurrency was transferred. Although the issue was quickly resolved, and all funds were recovered, this event had a certain impact on the activity in the Ronin ecosystem.

In contrast, opBNB's DAU share increased from 17.5% in August to 23.8%. As of August 31, its market share almost doubled from 13.1% on July 1. The game SERAPH: In The Darkness, which launched on opBNB in mid-July, garnered significant attention, with its DAUs increasing from 187,000 on August 1 to 515,000 by the end of the month.

Nebula also saw an increase in market share, rising from 7.6% to 8.8%. As a SKALE subnet adopting a "Zero Gas Fee" model, Nebula's growth was driven by games such as Yomi Block Puzzle, moteDEX, and Haven’s Compass.

Funding Situation

In August, there were a total of 12 funding events in the public chain sector, amounting to $118 million, a 20.1% increase from July. It is worth noting that four of these funding events did not disclose specific amounts.

August 2024 Public Chain Funding Events (Data Source: crypto-fundraising.info)

The increase in total funding this month was mainly due to a significant funding event. While the largest funding round in July was a $15 million Series A for Caldera, August saw a substantial increase in overall data due to Story Protocol's $80 million Series B funding.

PIP Labs, a core contributor to Story Protocol, secured this funding with support from venture capital giant Andreessen Horowitz (a16z). Story Protocol aims to revolutionize intellectual property (IP) management by transforming IP into modular, programmable "IP Legos." These assets can be authorized, managed, and monetized through smart contracts on the blockchain. Story Protocol empowers creators to embed licensing and royalty terms directly into their intellectual property, thereby gaining greater control over their data. The mainnet for this project is expected to launch later this year, generating high expectations.

Story Protocol

In addition to Story Protocol, three Layer 1 blockchains, including Quai Network, U2U Network, and Particle Network, secured new funding in August. In the realm of Layer 2, multiple projects successfully raised funds, including Ark and Nexio for Bitcoin Layer 2, Essential, Corn, and Reddio for Ethereum Layer 2, Soon for Solana Layer 2, and other Layer 2 projects such as Rivalz Network and Lync.

An emerging trend worth noting is the increasing attention on Move Stack. Two Layer 2 blockchains, Nexio and Lync, which are supported by Move Stack, completed a new round of funding this month.

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