DappRadar May report: DeFi market value dropped by 45% due to Terra crash; NFT trading volume dropped by 20% month-on-month

Original Title: "DappRadar Blockchain Industry Report May 2022"

Original Source: DappRadar

Blockchain Industry Showing how resilient it has become in the crypto winter exacerbated by the  Terra crash. NFT   and gaming continue to show signs of development and maturity, while  DeFi appears to be starting to recover.

The collapse of Terra, the former second-largest DeFi ecosystem, and the related collapse of the LUNA token and UST stablecoin have exacerbated the bear market affecting the crypto space.

Bitcoin dragged down the entire cryptocurrency market, closing below $30,000 for the first time since December 2020. Some altcoins are down 90% from their November peaks.

DApp activity has fallen to its lowest point this year, with 2.22 million unique active wallets (UAW) connected to blockchain DApps per day in May. This figure is down 5% month-on-month, but still 32% higher than in May 2021.

However, while ongoing problems with the infrastructure typically disrupt the network,  Solana  's daily UAW count surpassed 20 for the first time in network history Ten thousand.

On the positive side, not all is gloomy. Despite the extended bear market, the DApp industry has become quite resilient. The NFT market continues to grow with refreshing projects like Goblintown and Otherside, while pushing the boundaries of virtual worlds.

The user activity of blockchain games has declined, but the continued accumulation of venture capital has maintained a bullish momentum. Most importantly, leading DeFi networks are vying for market share left by Terra.

Important Takeaway

In Terra Blockchain Crash, DeFi Lost 45% Value; Uniswap   has a historical trading volume of more than $1 trillion, while expanding its capabilities to Polygon   and Optimism .

The NFT market generated $3.7 billion in May, down 20% from April’s USD volume; however, transactions measured in tokens Volumes showed a drop of just 6.5%.

Otherside's transaction volume hit $750 million, pushing virtual worlds to a peak of over $850 million in May.

Investment in blockchain games continues to increase. The gaming category is resisting the cryptocurrency crash, with activity down just 5% and up 197% year-over-year.

Table of Contents

Terra's collapse dealt a huge blow to the industry

b>

DeFi lost 45% of value due to Terra crash

NFT market is far from dead< /b>

Blue chips in trouble as Goblins and Otherdeeds run out of liquidity

OpenSea   Will it be replaced by emerging markets?

Can blockchain games avoid market crash?

Conclusion

Terra’s collapse has taken a toll on the industry Huge blow

The crash of Terra on May 9th is hard to forget on the timeline of crypto history. The price of UST, the third-largest stablecoin at the time, plummeted to as low as 35 cents. As a result, the drop affected the entire industry, with most stablecoins temporarily de-pegged from the U.S. dollar. The Luna Foundation Guard (LFG) used 79,687 bitcoins worth approximately $3.5 billion to maintain the value of UST.

This move won't work for the ecosystem, apparently LUNA (Classic), ANC and other related tokens don't have enough value to the network to help UST re-peg.

Finally, on May 12th, the Terra blockchain was shut down. The collapse of Terra resulted in a loss of $60 billion, the largest loss of wealth in modern history. The event had a selling effect on the price of  BTC   and created fear across the crypto asset, exacerbating a bear market the industry was already experiencing.

Terra co-founder   Do Kwon has since announced a revival plan that includes a Terra hard fork called Terra 2.0 , which came out on May 28. On the same day, LUNA Classic token holders received a new version of LUNA through an airdrop, but lost 99% of its value. Still, the situation at Do Kwon is far from over, with South Korean authorities digging into the circumstances of thousands of investors severely affected by the crisis.

At the end of April, Terra is an emerging DeFi ecosystem with a TVL of more than $25 billion, second only to Ethereum. It will be difficult for Terra to regain its status as Ethereum’s runner-up in the DeFi space. Peer blockchains, on the other hand, will take advantage of this situation, grabbing the developer talent and audience that Terra leaves behind.

DeFi lost 45% of value due to Terra crash

No doubt, DeFi is the vertical blockchain most affected by the bear market due to its direct impact on cryptocurrency prices. After the first four months of emerging DeFi blockchains including Avalanche, Cronos, Near, and of course Terra, the DeFi space is still able to keep going. While DeFi tokens have lost 25% to 40% of their value over the same time frame, TVL in the industry has only dropped 15% in the first four months.

Then, the events of Terra happened. Since Terra stopped, BTC and  ETH   have lost 25% and 40% of their value respectively. Likewise, the industry's TVL has fallen 45% since the end of April and is now estimated at $117 billion. In the long run, though, the value locked in the DeFi space has grown by 11% since May 2021.

With a month-on-month growth of 47%, Tron is the only blockchain with a positive TVL. Ethereum, BNB , Polygon and Solana saw their local currencies drop by a similar amount, between 27% and 38%. Avalanche, Cronos, Fantom     and Near have lost 60% of key metrics in DeFi.

In a more positive trend, Uniswap reached a major milestone. The leading DeFi DEX  has surpassed $1 trillion in historical transaction volume. Meanwhile, Solana DeFi DApps (Orca , up 77% month-on-month), Saber (33%), and Solend (11%) saw their usage rise despite native blockchains continuing to encounter technical issues.

The next few months will be critical for the future of this related blockchain category. It remains to be seen which blockchain ecosystem can replace Terra as the runner-up to Ethereum. Or can a layer 2 scaling solution like Optimism challenge the established layer 1 blockchain ecosystem with its token airdrop? That remains to be seen.

The NFT market is far from dead

During turbulent times, the NFT category remains a staple of the DApp industry important contributor. The amount of interest and publicity this category generates is an intangible factor that can easily be overlooked. The exposure the blockchain industry has gained from NFTs puts today’s crypto market in a completely different position than it did in 2018’s crypto winter. In those days, the level of engagement and enthusiasm across the industry was surprisingly low. While the mainstream media continues to call for the NFT bubble to burst, the market conditions in the NFT field are different.

The NFT market generated $3.7 billion in revenue in May, down 20% from April.

While volumes measured in USD at first glance suggest that the market is contracting, analyzing market volumes for their native tokens suggests otherwise.

For example, OpenSea, the industry's largest NFT marketplace, had a transaction volume of 950,000 ETH in May, down only 6.5% from April. Since changes in ETH price have a weighted impact on the indicator, USD volume presents a different perspective. OpenSea transaction volume in dollar terms fell 25% quarter-over-quarter. A comparison of the two perspectives shows an 18.5% difference between the two volumes for USD and ETH.

Likewise, Solana NFT was immune to bearish trends, posting the best trading month in the network’s history. Solana NFTs generated $335 million across all markets, up 13% from April.

Despite the negative sentiment across the industry and the apparent contraction of the NFT market, the space continues to grow while generating billions in transaction volume. Almost every month, the NFT field witnesses how new series change the narrative of the entire field

.

Blue chips in trouble as Goblins and Otherdeeds run out of liquidity

Moonbirds and Solana's Okay Bears topped market trends last month The headwinds have managed to drive an uptick in NFT sales, giving them a leading position in their respective markets. In May, Otherdeeds propelled the virtual world to its best month in history. Additionally, Goblintown has generated $31 million since its May 22 release. Additionally, after the 10K Club kicked off an exciting season around these Web3 domains, ENS completed 41% of their all-time sales this month.

The high demand for these items has driven their prices up significantly. Goblintown went from a free release to a base price of 6 ETH, and there are rumors that Yuga Labs is also behind this mysterious project. Likewise, the average selling price of ENS increased from 0.07 ETH in April to 0.11 ETH in May, with the floor prices of 10K Club and 999 Club reaching 0.7 ETH and 8 ETH respectively.

Meanwhile, several so-called "blue-chip" collections have fallen sharply in value in the last month. The hype around some new collections has undoubtedly hoarded liquidity from the market. Nonetheless, several specific events related to these blue-chip ecosystems were also major factors in the price drop.

Events in BAYC and MAYC are directly related to Otherside. Holders of these collections were airdropped Otherdeeds NFTs, creating a hype cycle leading up to the end-April snapshot, resulting in record values. As soon as the distribution project is completed, the reserve price begins to drop. The BAYC low price dropped 38% from April 30, from 150 ETH to 93 ETH. MAYC is down 57% over the same period, trading at 18 ETH. A similar situation happened with Doodles, whose price dropped by 48% from 23 ETH to 12 ETH following the launch of Dooplicator.

But each NFT series has a different story. In May, the anime-inspired Azuki series lost 75% of its value due to a scandal in which the project's founders were linked to three Rug Pulls ). The floor price dropped from 31 ETH to 8 ETH, although with the help of Beanz, the project managed to get back to the current floor price of 12 ETH.

Overall, the value loss of the top NFT projects led to a decline in the market cap of the top 100 Ethereum collectible NFTs. The price of ETH is down 37% since the end of April, but a plunge in blue-chip projects has pushed the metric down 45% to $10 billion from $18 billion in April.

Despite declining numbers, blue chips are still among the most traded NFT families, suggesting that their respective ecosystems are only going through a period of consolidation. Furthermore, despite the price decline in the value of cryptocurrencies, the value of these assets has fallen at a slower rate than that of the underlying cryptocurrencies over the past few months. Similar to the Art100 during the Great Recession of 2008, the Art100 fell 26%, compared with a 56% drop for the S&P 500. It feels like NFT transactions are becoming assets that may be somewhat decoupled from financial markets.

Will OpenSea be replaced by emerging markets?

Another interesting trend in the NFT market is the increasing competition between markets. OpenSea is still the dominant market, but the increase in activity data of other competitors shows signs of maturity and development of the NFT field.

OpenSea's dominance in sales has fallen from 90 percent in the first four months of this year to 84 percent in May of this year. This comes despite a 2% month-on-month increase in the number of UAWs interacting with the marketplace this month (from 398,000 in May). In a way, market aggregators like Gem and Genie are giving  LooksRare    LooksRare   and X2Y2 more visibility by providing a holistic view of the NFT market

.

In May of this year, LooksRare attracted 30,000 UAWs, a 22% increase in the number of users compared to April. Using Hildoby's (famous Web3 data scientist) formula to filter for wash trading activity*, we see a 473% increase in trading volume in the community-driven marketplace, reaching $250 million in May.

Similarly, Ethereum marketplace X2Y2, which operates with 0.5% transaction fees, saw its user base grow 93% in May, attracting 11,500 UAW users. The market saw $22 million in turnover, a 286% increase from the previous month.

As the NFT space has become more mature and competitive, OpenSea's dominance has undoubtedly declined, Solana's Magic Eden, Wax's Atomic Hub and Ethereum Ethereum The volume of art-centered foundations is on the rise. What is certain, though, is that OpenSea will remain dominant in the coming months. The market has improved interface with a new layout, providing a new user experience. Additionally, the company acquired Gem on April 27 and released seport, an open-source platform that helps creators distribute NFTs.

Without a doubt, the biggest loser is the  Coinbase   market, a failed attempt that has generated only 250 since its launch on April 20, 2022 Ten thousand U.S. dollars. In the coming months, we will continue to closely monitor the development of the NFT market.

Can blockchain games avoid market crash?

Blockchain games have been the most resistant category in the industry bear market. The number of game transactions and the number of UAWs connected to game DAPPs per day is only 5% lower than in April. Despite the decline, blockchain games have been least affected compared to DeFi or even NFTs.

The top-ranked blockchain games continue to maintain their player base, showing real user stickiness on the leaderboard. In addition, projects based on the metaverse and blockchain games are attracting more and more venture capital. In May, Dapper Labs  announced a fund to accelerate the growth of the Flow  ecosystem ($725 million), while A16Z also committed to raising $4.5 billion for its fourth cryptocurrency fund, The fund will focus on developing blockchain projects.

In general, blockchain games continue to add more talents through DApps such as STEPN or Genopets, and embed gamification elements into move-to- In the trend, go with the trend. Finally, on the other hand, in May, the revenue of the BAYC metaverse project in the "play-to-earn" model reached 760 million US dollars, which prompted the virtual world NFT to generate a performance of 850 million US dollars in May.

For more insights on blockchain games, As well as trends like virtual worlds, move-to-earn, and leading gaming DApps, be sure to read our upcoming BGA Gaming Report.

Conclusion