State of Flow Q4 2024

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Key Insights

  • Flow launched EVM equivalence via Flow EVM. This was a part of the Crescendo upgrade in September, which introduced several technological upgrades including the upgraded Cadence 1.0 programming language
  • TVL (USD) grew 91.6% QoQ to $37.7 million as the introduction of EVM equivalence led to an expansion of Flow’s DeFi ecosystem.
  • NBA Top Shot and NFL All Day remained Flow’s most active applications. Average daily NFT trading volume (USD) increased 26.7% to $122,380, while All Day averaged $39,600, a 68.7% QoQ increase.
  • FLOW’s token price increased 19.5% QoQ to $0.70, though its market cap rank fell from 77th to 89th.
  • Average daily active addresses (DAAs) increased 47.8% QoQ to 27,440, while average daily transactions increased 11.9% to 251,100.

Primer

Flow (FLOW) is a Layer-1 network that was founded in 2018 by Dapper Labs and its co-founders, Roham Gharegozlu, Dieter Shirley, and Mikhael Naayem. Flow launched in May 2020 and was designed for “a new generation of games, apps, and the digital assets that power them.” Flow was one of the first networks to implement account abstractions and user experience enhancements that made it easier for developers to onboard consumers. Today, Flow’s top applications include those based on world-class brands, such as NBA Top Shot and NFL All Day.

On Flow, developers use “Cadence,” Flow’s novel programming language. Flow’s most recent development came via a network upgrade called “Crescendo.” In September 2024, Flow introduced Cadence 1.0 with the Crescendo upgrade, bringing EVM equivalence to Flow via a separate Flow EVM environment. Now, developers can use Solidity to build on Flow EVM with block times of 800 milliseconds. Furthermore, developers can tap into existing tools and liquidity across the EVM, while users experience sub-cent transaction fees.

Flow has played a significant role in onboarding consumers into crypto by pioneering the ERC-721 token standard via CryptoKitties in 2017 and putting NFT collectibles into the mainstream via NBA Top Shot in 2021. Today, Flow continues to innovate and be a foundational part of the industry’s effort to bring new users into the space. For a full primer on Flow, refer to our Initiation of Coverage.

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Key Metrics

Financial Analysis

FLOW is the native token of Flow that is used (i) as the primary medium of exchange on Flow and (ii) for staking to facilitate various staking-related functions. FLOW’s price increased 19.5% to $0.70 in Q4 2024, with the highest point in the quarter being $1.22 on Dec. 4, 2024. FLOW’s market cap increased a similar 21% QoQ to $1.08 billion, with the slight discrepancy being due to a 1.2% increase in circulating supply up to 1.55 billion. Despite the QoQ increase in price, FLOW’s circulating market cap rank fell from 77th to 89th.

Project-related catalysts that may have impacted investor behavior and FLOW’s Q4’24 price movements include the Crescendo upgrade, which introduced EVM equivalence and drove an increase in DeFi activity. Additionally, the Flow Community Rewards pre-season offered up to a 15% boost on FLOW tokens that were locked for the pre-season’s one-month duration. Upon the pre-season’s conclusion on Sept. 30, 2024, $17.4 million worth of FLOW tokens, or 30 million FLOW, had been locked.

FLOW is used to settle network transaction fees on Flow. The total transaction fee for any transaction on Flow comprises a variable “execution fee” plus a fixed “inclusion fee,” which is then multiplied by a “surge factor.” Network transaction fees are negligible on Flow, with quarterly fees (USD) reaching only $1,317 in Q4’24. Still, that was an increase of 138.2% QoQ as quarterly fees (FLOW) reached 1,689.

Network Analysis

Flow’s average daily active addresses (DAAs) increased 47.8% QoQ to 27,440, while average daily transactions (txs) increased 11.9% QoQ to 251,100. The ratio of transactions to active addresses (txs/DAAs) decreased 24.3% QoQ to 9.2, suggesting activity is being distributed more evenly across users; conversely, an increasing ratio suggests a rise in “power users.”

These trends could have been driven by two major factors. First, the Crescendo upgrade introduced EVM equivalence and drove an increase in activity. Second, the seasonal nature of Flow’s top applications, NBA Top Shot, and NFL All Day. Both applications experience increases in activity during their regular seasons that overlap in Q4 of every year. These factors likely contributed to the increase in DAAs and transactions on Flow.

FLOW’s initial token supply was 1.25 billion upon Flow’s “Mainnet v1” launch in October 2020. However, the total token supply experiences inflation once per epoch (approximately once a week) due to inflationary staking rewards distributed to Flow’s validator nodes and delegators. Inflation over an annual period is equivalent to 5% of FLOW’s total token supply.

As explained in our Initiation of Coverage, combined weekly staking rewards comprise all network transaction fees, with any remaining amount being minted as inflationary staking rewards.

  • Stakers, including validator nodes that have self-staked, receive 92% of weekly staking rewards proportional to their stake.
  • Validator nodes also receive 8% of weekly staking rewards as commission.

As of Feb. 24, 2024, FLOW’s total token supply has increased to 1.56 billion, and weekly inflation equates to approximately 1.5 million FLOW per week. As of the same date, 462.2 million FLOW (29.6% of the total token supply) is staked by 469 validator nodes, while 208.3 million FLOW (18.1% of the total token supply) is staked by 45,965 delegators. Validation APY is 11.65%, and delegation APY is 10.72%.

Crescendo Upgrade

Flow’s programming language is dubbed “Cadence,” and was inspired by Libra’s Diem, which aimed to utilize a novel, resource-oriented programming language called “Move.” Thus, Cadence became a resource-oriented programming language, meaning it defines when an onchain asset is of tangible value. When a resource is defined, special rules must be followed, like that a (i) resource can only exist in one place, (ii) it has ownership defined by where it is stored, and (iii) certain onchain actions can only be performed by the owner of the resource.

Smart contract development on Flow has historically been limited to Cadence for developers. However, Flow’s most recent network upgrade introduced an updated version of Cadence. In October 2023, a proposal to achieve EVM equivalence on Flow was introduced. In December 2023, a formal upgrade to Cadence 1.0, dubbed “Crescendo,” was announced. In March 2024, the “Previewnet” to test the Crescendo upgrade went live. Finally, on Sept. 4, 2024, Flow introduced Cadence 1.0 with the Crescendo upgrade, bringing EVM equivalence to Flow via a separate Flow EVM environment.

The Crescendo upgrade introduced (i) cross-chain token transfers between EVM-based networks and Flow, (ii) increased state storage efficiency, (iii) and reduced block times to 800 milliseconds. Additionally, Cadence 1.0 introduced (i) capabilities and entitlements that allow for granular permissions to be set by developers, (ii) updated transaction logic capabilities that enable developers to sponsor gas for users, (iii) custom metadata for improved asset interoperability and information visibility, and (iv) attachments that allow for the alteration of pre-existing assets.

Now, developers can use Solidity to build on Flow EVM, which still uses FLOW to pay network transaction fees. Composability between Flow EVM and Flow is achieved as EVM-based transactions are nested within Cadence-based transactions inside the same block. Specifically, Cadence Owned Accounts (COAs) are smart contract wallets on Flow EVM that allow users (resource owners) on Flow to call and control their Flow EVM address.

Ecosystem Analysis

Consumer

Flow’s ecosystem largely comprises consumer-oriented applications. However, Flow’s top NFT projects do not include traditional profile picture (PFP) projects. Rather, they include Flow’s suite of collectible, sports, and gaming-related applications, which heavily utilize NFTs.

The NFT ecosystem on Flow is the most active sector on the network. Average daily NFT sales on Flow increased 31% QoQ to 10,052 in Q4 2024, while average daily NFT trading volume (USD) increased 26.7% to $122,380.

Flow’s two native NFT marketplaces are Flowverse and Flowty. Mintify is a multi-chain NFT marketplace that went live on Flow EVM on Oct. 1, 2024. Mintify’s SZN4 points program is active, and users on Flow EVM earn XP for buying, bidding, listing, and minting NFTs via Mintify. Flow’s top collectible NFT projects include:

Flow’s most popular applications stem from some of the world’s largest Sport IPs. NFT trading volume on Flow is dominated by NBA Top Shot and NFL All Day, which made up 87.5% of all NFT trading volume in Q4’24 at $9.9 million. Activity on both apps is cyclical. Overall activity trends up during the NBA and NFL seasons which span from September to April, and falls back down when neither league is active in July and August.

  • NBA Top Shot: The most active app on Flow. Top Shot allows users to collect officially licensed NBA collectibles (moments) by purchasing packs or trading the moments. Moments can also be used to compete and play in prediction competitions.
    • In Q4, NBA Top Shot trading volume (USD) increased 25.8% to $6.2 million. Last season’s NBA Championship game was played on June 17, 2024. The new season began on Oct. 24, 2024, which resulted in the highest monthly trading volume since April 2024, at $2.5 million.
  • NFL All Day: Following the same concept, All Day allows users to collect officially licensed NFL collectibles (moments) by purchasing packs or trading the moments. Moments can also be used to compete and play in challenges and tournaments.
    • In Q4, NFL All Day trading volume (USD) increased 68.7% to $3.6 million, starting an uptrend due to the NFL season kicking off on Sept. 5, 2024. The aerage monthly trading volume from September to December was $1.3 million, up 203% from the average of $0.42 million during the offseason from March to July.

Flow’s gaming sector emerged in 2023 with the launches of two initial games, one of which, the Metaverse Football League (MFL), remains the highlight of Flow’s gaming sector.

DeFi

Flow’s total value locked (TVL) increased 91.6% QoQ to $37.7 million. While Flow’s TVL has historically lagged more DeFi-focused networks, that was addressed with Flow’s Crescendo upgrade, which occurred on Sept. 4, 2024, and introduced EVM equivalence via a separate Flow EVM environment.

While activity on Flow EVM was muted upon launch, DeFi protocols began to emerge on Flow EVM testnet while Moralis, Alchemy, Quicknode, Pyth, and Gelato launched support for infrastructure and developer tooling. In Q4’24, Flow’s DeFi ecosystem finally experienced significant growth as its DeFi diversity score (i.e., the number of protocols making up 90% of a network’s TVL) increased 300% from one to three. Flow’s EVM-based DeFi ecosystem has started to emerge.

Notably, in Q4’24, in addition to the launch of pump.flow, the following memecoin launchpads were announced.

  • Printr: An in-development, multi-chain launchpad where tokens can be launched across 69+ networks, including Flow. Printr will be powered by interoperability solutions like Axelar and Squid Router, and is currently open for waitlist registration.
  • FlowFun: An in-development, Flow EVM-native meme and NFT launchpad that went live on testnet in December 2024.

Liquid Staking & Stablecoins

The liquid staking sector on Flow has historically been limited to Increment Finance’s stFLOW token, which has ranged between a TVL of roughly $5 to $10 million throughout Q2 and Q3 2024. However, a new entrant appeared on Sept. 10, 2024, as Ankr launched its liquid staking token, ankrFLOW, on Flow EVM. ankrFLOW grew quickly, reaching a TVL of $3.7 million by the end of Q3. In Q4, liquid staking TVL (USD) on Flow grew 90.1% QoQ to $17.7 million. Both of Flow’s liquid staking protocols experienced significant growth, as Increment’s stFLOW grew 97.9% QoQ to $11.1 million while Ankr’s ankrFLOW grew 78.5% to $6.6 million.

As for stablecoins, in August 2024, Circle announced it would be discontinuing native support for USDC on Flow on Sept. 3, 2024. This was driven by upcoming network changes associated with the Crescendo upgrade. However, various bridges have integrated Flow EVM and allow ETH (WETH on Flow EVM), Circle’s USDC (USDC.e and stgUSDC on Flow EVM), and PayPal’s PYUSD (USDF on Flow EVM) to be bridged to Flow EVM.

Development, Growth, and Community

Flow World Tour Hackathons

Developer activity on Flow followed a general downtrend for most of 2024. Following the Crescendo Upgrade in Q4’24, average weekly core devs decreased 18.9% QoQ to 58 while average weekly commits to Flow’s core repositories fell 26.9% to 412. However, ecosystem development activity picked up in the same period as average weekly ecosystem developers increased 20.9% QoQ to 104 while average weekly commits to ecosystem repositories increased 38.4% to 754

The increase in ecosystem activity was spurred in part by Flow in September 2024 with the launch of a three-month Flow World Tour consisting of four hackathons worldwide:

  • First hackathon: Focused on DeFi and was held in Singapore in September. The hackathon attracted over 250 builders with over 50 applications being for projects built on Flow.
  • Second hackathon: Focused on Sports IP and composability and was held in San Francisco in October.
  • Third hackathon: Focused on social applications and was held in Chiang Mai during the Edge City Lanna Buildathon in November.
  • Fourth hackathon: Held in Bangkok during ETHGlobal in November and focused on gaming applications. The hackathon attracted over 2,000 builders with 99 applications being for projects built on Flow.

The Flow World Tour concluded with the Flow Asia Hackathon, an online hackathon spanning the entire month of December with a prize pool of $10,000.

Flow Rewards

On August 28, 2024, Flow Foundation funded a Flow Community Rewards pre-season, which offered up to a 15% boost on FLOW tokens that were locked for the pre-season’s one-month duration. Upon the pre-season’s conclusion on Sept. 30, 2024, $17.4 million worth of FLOW tokens, or 30 million FLOW, had been locked.

Locked tokens, along with earned token rewards, were linearly unlocked over two months starting on Oct. 1, 2024. Throughout October and November, participants received 4.5 million FLOW tokens worth $2.6 million as of Oct. 1, 2024. Ultimately, the annualized APY of this program was approximately 75%. Notably, these locked positions were represented as Flow Rewards NFTs that could be traded on NFT marketplaces like Flowty.

On Oct. 1, 2024, Flow Rewards Season 1 began. This program introduced boxes, which could be earned by engaging with DeFi protocols, and keys, which could be earned by engaging with consumer applications. Users who locked FLOW during the Flow Community Rewards pre-season received an initial bounty of boxes and keys based on their contributions.

Boxes and keys can be combined and redeemed for points, which became redeemable for in-real-life (IRL) prizes and onchain assets when the rewards store went live in November 2024.

Closing Summary

Flow experienced a resurgence in overall activity in Q4 2024. The Crescendo upgrade introduced EVM equivalence and drove an increase in DeFi activity. TVL (USD) grew 91.6% QoQ to $37.7 million as Flow’s DeFi ecosystem grew more diverse for the first time with the launches of Trado Finance, KittyPunch, and MORE Markets on Flow EVM. Liquid staking TVL (USD) grew 90.1% QoQ to $17.7 million as both of Flow’s liquid staking protocols, Increment and Ankr, experienced significant growth.

Within Flow’s ecosystem, NBA Top Shot and NFL All Day remained the most active applications. Average daily NFT trading volume (USD) increased 26.7% to $122,380, while All Day averaged $39,600, a 68.7% QoQ increase as the NFL season kicked off. The Metaverse Football League (MFL) remained the highlight of Flow’s gaming sector, as MFL trading volume (USD) increased 73.6% to $0.33 million.

All-in-all, with the resurgence of DeFi and NFT activity on Flow, average daily active addresses (DAAs) increased 47.8% QoQ to 27,440, while average daily transactions increased 11.9% to 251,100. Financially, FLOW’s token price increased 19.5% QoQ to $0.70, but its market cap rank fell from 77th to 89th. Looking forward, Flow hopes to continue momentum sparked by Crescendo and developer momentum that has been spurred by recent Flow World Tour hackathons.

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