On-chain data points to crypto consolidation in Q3
A third quarter industry report from DappRadar citing chain metrics suggests that cryptocurrency markets are showing signs of recovery from ongoing market conditions.
A number of factors played their part in a busy third quarter of 2022, with Ethereum’s merger marking a successful shift to proof-of-stake having a significant influence on layer-2 activity prior to the event. The report also highlights a slight improvement in the total cryptocurrency market cap, which remains below $1 trillion.
Third quarter data reflected an 8.5% increase in total crypto market capitalization from July to the end of September 2022. The decentralized finance space also showed signs of consolidation, with total value locked (TVL) in the space increasing by 2.9 % in the third quarter to 69 billion dollars. Ethereum continues to account for the bulk of TVL, with $48 billion locked up in smart contracts.
DappRadar also highlights a 12% increase in unique active wallets across the cryptocurrency ecosystem quarter-on-quarter, bringing it up to 1.8 million. The blockchain gaming sector contributed significantly, with unique wallet addresses increasing by 8% from August to September.
ImmutableX saw its unique active wallets grow by 30% in the same time period and recorded an 87% growth in non-fungible tokenNFT trading volume from the previous quarter, while Polygon followed a similar trajectory, seeing its unique active wallets increase by 17% to 148,000 .
The number of non-fungible token (NFT) trades increased by 11% from the second quarter of 2022, while Ethereum’s NFT trade volume decreased by a large margin of 76%. NFT trading volume totaled $2.71 billion during the third quarter, still marking a significant 67% drop from Q2 2022.
Related: Blockchain players rise as users seek to ‘stack crypto’ – DappRadar
Yuga Labs-owned NFT projects dominated the market in September, with Otherside, Bored Ape Yacht Club, Mutant Ape Yacht Club and CryptoPunks accounting for 46.21% of the entire NFT market cap.
The theft of cryptocurrency assets was also highlighted once again, with blockchain bridges still being targeted. DappRadar listed the $190 million Nomad exploit in August as a significant contributor to the $461 million in crypto assets stolen in the third quarter. Algorithmic market maker Wintermute also succumbed to a $160 million exploit in the same period.
The DappRadar report also highlights the impact of broader macroeconomic factors on the global economy. How central banks seem to manage inflation to stave off recessionary effects by raising interest rates:
“Current macroeconomic conditions significantly affect the crypto market, making it impossible to foresee a worldwide expansion of cryptocurrencies without a general recovery in conventional financial markets.”
This slightly gloomy outlook was offset by a series of positive events during the third quarter of 2022. The European Union’s approval of the Markets in Crypto-Assets regulatory plan indicates that governments are looking to closely manage the industry.
Similarly, the White House published the “First-ever Comprehensive Framework for Responsible Development of Digital Assets” in September 2022 in an effort to protect investors, indicating that cryptocurrencies have become a fully established industry.
