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Polkadot’s First Quarter: Surge in User Engagement but Decline in Revenue

Polkadot sees increase in user activity

Despite a surge in user engagement, Polkadot’s Q1 reveals a significant downturn in revenue, underscoring the volatility in blockchain economics.

Key takeaways:

  • Polkadot's user base expanded significantly in Q1, with notable increases in both new and returning addresses.
  • Parachains such as Moonbeam and Nodle showed strong growth in active users, reflecting a robust demand for Polkadot’s offerings.
  • Despite increased activity, Polkadot faced a sharp decline in revenue, highlighting the challenge of translating user growth into financial gains.

The first quarter of the year marked a notable period for Polkadot, characterized by a robust increase in user engagement on its network. According to Messari’s latest report, both the Relay Chain and its parachains experienced a surge in demand, reaching new highs in user activity. The Relay Chain, which serves as the central backbone of the Polkadot network ensuring coordination and security, witnessed significant growth in its user base. 

During this quarter, the number of returning addresses on the Relay Chain rose to 8,200, marking a 9% increase quarter over quarter (QoQ). Additionally, there were 3,100 new addresses created, which represents a 23% rise from the previous quarter’s 2,500 new addresses.

Parachain activity and individual successes

The growth extended beyond the Relay Chain to its parachains—individual blockchains that operate parallel to the main network and are linked to it. Messari’s report highlights that parachain active addresses reached an all-time high of 514,000 during the quarter, indicating a 48% increase QoQ. Notable parachains such as Moonbeam, Nodle, Astar, and Bifrost also saw considerable upticks in user demand. Moonbeam led with 217,000 monthly active addresses, up 110% QoQ, while Nodle doubled its figure to 54,000. 

Astar and Bifrost Finance recorded more modest increases, with active addresses at 26,000 and 10,000 respectively.

Despite these positive trends in user activity, Polkadot's financial performance told a different story. The network's revenue from transaction fees saw a dramatic drop, totaling just $241,000 between January and March, which represents a 91% decrease from the $2.8 million recorded in the last quarter of 2023. This stark contrast in revenue performance, despite the uptick in network activity, highlights the challenges faced by Polkadot in monetizing its growing user base. The report detailed: 

“In Q1 2024, revenue metrics fell significantly on a QoQ basis. Revenue (USD) was $241,000 (-91% QoQ), and Revenue (DOT) was 28,800 (-92% QoQ).”