August 2024 Chains Report: Insights on Layer 1, Bitcoin Layer 2, and Ethereum Layer 2 Trends
Author: Stella L ([email protected])
Data Source: Footprint Analytics Chains Research Page
August saw significant turbulence in the cryptocurrency market, with Bitcoin and Ether both facing sharp declines. Layer 1 blockchains experienced a market-wide downturn, though Tron stood out with strong growth. In the Bitcoin Layer 2 space, there was impressive expansion, as TVL surged across scaling solutions. Meanwhile, Ethereum Layer 2 networks continued to evolve, with notable developments like Sony’s entry into the ecosystem. Despite challenges in DeFi and market cap declines, innovation in both Bitcoin and Ethereum Layer 2s remains a focal point for future growth.
Data for this report was obtained from Footprint Analytics’ Chains Research Page, an easy-to-use dashboard containing the most vital stats and metrics to understand the public chain industry, updated in real-time.
Monthly Market Overview
August was a challenging month for Bitcoin and Ether, both experiencing sharp declines. The Bank of Japan’s decision to raise its key interest rate at the end of July sent shockwaves through global markets, including cryptocurrencies. Strategies like short volatility and FX carry trades saw significant losses, contributing to the sharp drop in cryptocurrency valuations during the first week of August. Bitcoin and Ether both hit their monthly lows on August 7.
Selling pressure persisted, driven by multiple factors, including government interventions and activity from the Mt. Gox estate. However, these influences gradually waned as the month progressed.
Ethereum is also navigating a pivotal shift, introducing uncertainty among investors. The blockchain is focusing on scaling by offloading more transactions to Layer 2 networks, where activity has surged. Major players like Sony have entered the space with projects like Soneium, capitalizing on Ethereum’s evolving ecosystem. However, this migration of activity to Layer 2s has resulted in lower fee revenue for Ethereum, potentially impacting the value of Ether.
Toward the end of August, attention increasingly focused on the intersection of blockchain technology and digital privacy, following the arrest of Telegram founder Pavel Durov in France. While U.S. Fed Chair Powell hinted at a potential rate reduction, market sentiment remained predominantly negative throughout the month.
Layer 1
By the end of August, the total market cap of blockchain cryptocurrencies fell by 12.1% compared to July, settling at $1.74 trillion. The market continued to be dominated by Bitcoin, Ethereum, BNB Chain, and Solana, which held market shares of 67.2%, 17.4%, 4.5%, and 3.6%, respectively. Notably, Bitcoin’s market share grew by 2.4%, while Ethereum’s declined by 2.3%.
Bitcoin closed the month at $59,017, a 8.7% drop. Ether followed a steeper downward trajectory, finishing at $2,516, a sharp 21.4% decrease.
Among the top 15 chains by market cap, Tron was the only one to experience growth in both token price and market cap in August, with TRON’s price increasing by 23.1% and its market cap by 22.7%. In contrast, other top chains followed a downward trend.
Tron stood out amid market volatility by capitalizing on Meme hype, which sparked a surge in on-chain activity. The launch of SunPump, the first Meme fair launch platform on Tron, significantly boosted user engagement.
BNB Chain also introduced new policies and incentives to encourage Meme-related activity on-chain, with Simon’s Cat, TOkenFi, and FLOKI leading the trading volume in the past 30 days.
In addition to these trends, several major financial institutions expanded their blockchain portfolios this month. Leading asset manager Franklin Templeton expanded its blockchain fund to include Avalanche, while Grayscale Investments launched an Avalanche Trust and a new Sui fund.
By the end of August, the total TVL in the DeFi sector stood at $64.0 billion, marking a 16.8% decline from July.
Among the top 15 chains by TVL, Sui was the only one to register growth, with a 41.8% increase over the month. NAVI Protocol, Sui’s largest DeFi project, which exclusively operates on the chain, offers lending and liquid staking products. Its TVL surged by 72.0%, growing from $136.1 million on August 1 to $234.1 million by the end of the month.
Although Polygon’s TVL saw a slight 1.3% decline from July, the prediction market Polymarket gained significant attention. Driven by anticipation of the upcoming U.S. presidential election, Polymarket’s monthly trading volume increased by 22.2% to $472.9 million, while its number of traders surged by 46.1% to 82.8K. Polymarket’s TVL rose by 19.6% during August, reaching $106.5 million, ranking third on Polygon after AAVE and Uniswap. However, 78.0% of Polymarket’s total trading volume was election-related, raising questions about whether it can sustain this growth post-election.
Meanwhile, the arrest of Telegram founder Pavel Durov in France had a direct impact on TON’s performance. TON’s TVL plummeted by 53.1% in August as institutional investors exited to avoid potential risks.
Bitcoin Layer 2
As of August 31, TVL across Bitcoin Layer 2s and sidechains reached $1.09 billion, marking a 5.8x increase since January 1, 2024, and an impressive 18.7x growth since January 1, 2023.
Bitlayer leads the sector, holding 32.7% of the total TVL, followed by Core at 16.3%, Rootstock at 14.6%, and Merlin Chain at 12.0%.
Looking at individual DeFi projects on single chains, the top 10 accounted for 64.6% of the total TVL, with Avalon Finance (on Bitlayer), Pell Network (on Core), and MoneyOnChain (on Rootstock) leading the way, capturing 16.7%, 7.2%, and 6.6% of the market, respectively.
When considering projects’ TVL across multiple chains, Pell Network, which operates on seven chains, led with a 22.9% market share, while Avalon Finance, spanning three chains, was a close second at 22.8%. The top 10 cross-chain projects collectively held 77.5% of the total market share.
As mentioned earlier, Ethereum faced several challenges in August, and its Layer 2 networks were no exception.
Arbitrum One, Optimism, and Base continued to dominate in terms of TVL market share, holding 50.2%, 20.0%, and 8.2%, respectively, with little change in TVL from the previous month.
DeGate saw a notable 20.6% increase in TVL, Scroll grew by 7.4%, and Taiko rose by 7.1%. However, Blast experienced an 18.8% decline, while zkSync dropped by 8.8%.
Overall, user activity across Ethereum Layer 2s remained subdued, signaling a need for renewed innovation and more compelling applications to re-engage users. With Bitcoin Layer 2s thriving this year, Ethereum’s Layer 2 ecosystem may require fresh narratives and stronger user engagement to regain momentum.
One of the most talked-about developments in the Ethereum ecosystem was the introduction of Soneium. On August 23, Sony Blockchain Solutions Labs — a joint venture between Sony Group and Singapore-based Startale Labs — announced the creation of a new Layer 2 network called Soneium, built on Ethereum and powered by Optimism’s OP Stack technology. Soneium aims to bridge the gap between Web3 innovation and consumer applications in gaming, entertainment, and finance.
Following the announcement, several key initiatives were launched, including the “Minato” testnet, the developer-focused program “Soneium Spark,” and a partnership with Transak for global fiat on-ramp services. With major industry players like Sony entering the blockchain space, there is growing optimism that such developments could bring more mainstream users into the Web3 ecosystem.
For more details on Web3 Gaming, chains funding events, and other chain developments for August 2024, please visit www.footprint.network or click here for more information.
About Footprint Analytics
Footprint Analytics is a comprehensive blockchain data analytics platform that simplifies complex analysis for businesses and projects in the Web3 ecosystem. It offers tailored solutions that eliminate the need for extensive expertise and infrastructure maintenance. The platform provides long-term growth tools designed to help build and manage communities step by step, emphasizing sustainable growth and user loyalty. By combining powerful analytics with community management tools, Footprint Analytics enables projects to leverage blockchain data effectively for decision-making and growth strategies across various sectors including GameFi, NFT, and DeFi.
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