Although the event already seems to be classified in the historical facts of the crypto ecosystem, the collapse of Earth has not finished shaking the various sectors. A cataclysm whose shock wave could still produce violent aftershocks in the months to come. With a decidedly uneven impact depending on the areas concerned. All this according to a principle summarized under the very explicit term of “crypto contagion”. But, after nearly three months of chronic instability, the time has come to take stock of this misadventure. An exercise that the DappRadar structure followed in its latest report entitled: “The adoption of cryptocurrencies after the collapse of the Earth and its contagion”. A whole program …
Whatever you think, the case of the Earth (LUNA) disaster is already an integral part of the short history of the cryptocurrency industry. To the point of being compared by some to the equally spectacular and dramatic failure of the banking giant Lehman Brothers in 2008. With as a direct consequence, a global economic crisis at the origin of the birth of Bitcoin. And, in this case, the sudden and definitive loss of an estimated figure of over 40 billion dollars.
A turning point that can be clearly defined in the form of a boundary between a “before” and an “after”. And whose repercussions are far from identical for all sectors of this very young digital economy and its derivative markets. A very instructive observation in this downtrend period, however in full attempt of a summer technical recovery. Because, according to the report delivered by the DappRadar facility, this “coup has put a lot of pressure on the entire cryptocurrency market”. And all collateral victims are not necessarily to be pitied …
DeFi and NFT – Major collateral damage
In its latest report, the DappRadar Framework is doing some tough, but necessary work. That is, to identify and list the possible and visible consequences of the collapse of the Earth ecosystem, which occurred a few months ago. This is to measure the extent of this historic cataclysm. But also the strength of the resilience of the different sectors of this digital economy, in the face of the violence propagated by this unprecedented shock wave.. And the least we can say is that not all areas suffer the same damage. To the point of seeing some of them doing quite (very) well …
” When Terra, the second largest DeFi ecosystem of the time, collapsed in May, it wiped out an estimated $ 40 billion in venture capital and retail money. The move has put a lot of pressure on the entire cryptocurrency market. Starting with Bitcoin and Ethereum, which had a ripple effect on the rest of the industry, also known as crypto contagion. As a result, several parts were hit, with 3AC, BlockFi and Celsius in the spotlight. “
Indeed, according to the data advanced by DappRadar, DeFi would undoubtedly be the big loser of this crisis. With the overall transaction count – the metric at the heart of this analysis – down 14.8% from last May. This even though “the overall blockchain activity remains relatively flat, with a 1% drop in the overall number of transactions since the first quarter”. With cascading bankruptcies, as in the cases of Celsius, BlockFi or, more recently, the Three Arrows Capital (3AC) venture capital facility.
With a more moderate decline for the NFTS sector, of “only” 12.2% in the same period. But a market whose transaction volumes show -67% in the month of May alone. The most significant fall since its record rise began in 2021.
Metavers and crypto games – Not bad either
However, the inventory compiled by DappRadar has not only negative points. In fact, some industries are faring much better than DeFi and NFT. And this is especially true of the very new trend represented by the metaverse.. These virtual universes are torn between Meta’s fierce and centralized appetite and the more Web3 ambitions of established players in the cryptocurrency ecosystem. With a 97% increase for NFT projects related to the metaverse from the second quarter. But also the crypto-game, currently very fashionable despite the persistent opposition of some gamers. This “posting increases of 27% and 9.51% each” that clearly pale the competition, swimming underwater.
” Blockchain gaming transactions challenged the bear market and grew 9.51% from the first quarter. Investments in games and metaverse projects remain constant with $ 2.5 billion invested in the first and second quarters.”
With a special mention for crypto games. Because even with a 7% drop in the average amount of Unique Active Wallet (UAW) assets, players continue to engage with their favorite games. And this “more or less at the same pace as before the Earth accident”. A commitment not to be taken lightly, because it could well partially counteract the effects of volatility “due to the non-speculative aspects of the games themselves”. A trend verified in July, according to data from DappRadar.
” This bullish activity indicates that engagement with virtual worlds is not based on their profitability for the end user. This shows that virtual worlds are inherently fun for the end user as communities remain active despite the devaluation of native tokens”
A report by DappRadar pointing to the still significant success of the game Axie Infinity (AXS, SLP), whose NFT collection is “the most searched in 112 countries”. And important institutional investments in the blockchain gaming and metaverse sectors that underline the motivation of large companies in the sector. Ecosystems sometimes intertwine too quickly, but they represent “potential for strong growth in the future”.