The most recent edition of DappRadar’s quarterly report was released, and it focused on how the demise of Terra, Celsius, and 3AC altered the blockchain landscape as the liquidity crisis worsened and affected significant CeFi players. The document also delves into the intense rivalry between NFT markets, noting that OpenSea’s dominance continued to decline in Q2.
Under the Light: CeFi
According to the Q2 industry report provided to CryptoPotato, users’ interest in DeFi activities has been significantly decreased as a result of the ongoing market crash. Only 2.11 million Unique Active Wallets (UAW) interacted with blockchain apps daily on average in Q2, which is an 11 percent decrease from Q1 2022 but still represented a 62 percent YoY growth.
The Terra fiasco and the liquidity problems faced by CeFi players like BlockFi, Celsius, Voyager, and 3AC further contributed to the collapse of cryptocurrency prices. Following Terra’s demise, the market capitalization of cryptocurrencies has decreased by 34%, dropping below the $1 trillion threshold at a level not seen since Q4 2020.
Concerns about centralized organizations keeping custody of users’ crypto assets are raised by the concentration of troubled businesses in the CeFi space. Exchanges lent out user money to produce high yields that were only possible by exposure to risky DeFi projects, as was shown by the demise of Celsius and Voyagers. Users’ funds were at risk as a result of exchanges abruptly suspending withdrawals in order to protect the dwindling liquidity during a severe liquidity crisis.
The report also emphasizes the security issue plaguing the sector, with a total of $676 million in crypto assets stolen in Q2. The hack on Harmony’s bridge in June, which resulted in a loss of $100 million in ETH, served as a notable example. According to DappRadar, Elrond’s dapps Arda and Maiar were used by $127 million and $113 million respectively in the same month.
Increased rivalry between NFT markets
It’s important to note that NFTs performed steadily in the quarter despite the downward pressure brought on by the overall crypto market, in part because blue-chip collections recovered some of their June losses. It kind of establishes their credibility as a potential store of value.
Due to the growing number of NFT marketplaces vying for market share, OpenSea saw a decline in trading activity and revenue. According to the report:
The decrease in trading can be attributed to both the rise in competition in the NFT trading market and the decline in the market value of cryptocurrencies. However, while the volume of the market measured in USD has decreased by about 70% since May, the volume measured in ETH has decreased by 55% during the same period.
The three main rivals of OpenSea, according to DappRadar, are Magic Eden, based in Solana, Ebay’s KnownOrigin, and Uniswap’s recently acquired NFT aggregator platform Genie. Solana has developed into a competitive alternative to Ethereum for emerging NFT projects because of its low gas fees and entry requirements.