CoinGecko Analyzes 2022 Q2 Crypto Trends in New Quarterly Report

From the fall of Terra, contagion effects, to the rise of Solana NFTs, CoinGecko’s Q2 Report dives deep into 2022 Q2 crypto trends.  Total crypto market capitalization fell below $1 trillion, a 50% drop since the first quarter.

CoinGecko, the world’s largest independent cryptocurrency aggregator, has just released its Quarterly Report for the second quarter of 2022.

The report examines heavy hits on the crypto market, in wake of the Terra death spiral and Three Arrows Capital (3AC) debacle. As markets trended lower, DeFi’s dominance continued eroding. Even stablecoins, which had a tendency to grow in the bear, took a tumble. Meanwhile, NFT trading volumes dropped to new intra-year low in June (-26.2% QoQ), though NFT marketplaces such as Magic Eden and X2Y2 have gotten hold of a bigger share.

“The hype surrounding crypto had far outpaced actual progress, and was never going to be sustainable. While there will always be collateral damage from market pullbacks, it helps to refocus the industry on the genuine fundamentals,” noted Bobby Ong, Co-founder and COO of CoinGecko. “Challenging times are the best time to build.”

Q2 Cryptocurrency Report Highlights

1. Stablecoins lost $34B in market cap (-18%)

The decrease, discounting USTC, in stablecoin market share suggests that some capital has exited the crypto ecosystem, in contrast to Q1 where investors de-risked into stables amidst market uncertainty. Tether may have retained its lead, but it lost ground to USDC. USTC surprisingly still managed to cling onto the 7th place despite never restoring its peg. Similarly, FRAX and DAI also saw heavy losses in market cap, possibly due to a negative association with algorithmic stables.

2. The 3AC liquidation dominos continue falling

Centralized entities like BlockFi, Voyager and others that had invested in Three Arrows Capital are now also victims of its liquidation, sustaining heavy losses. Even DeFi protocols such as Maple Finance were also not spared from the ordeal as they fall victim to third-order effects.

As Terra implodes, old and new contenders arise to take its spot: Ethereum partially regains its TVL dominance, while Avalanche, Polygon, and Solana maintain their respective shares. The collapse of UST and LUNA in May saw Terra’s TVL shrink to just 5%, while the new Terra 2.0 network failed to regain the popularity of its predecessor. Additionally, total DeFi TVL plummeted by 55% within the quarter.

Contagion Effects from Terra to Three Arrows Capital and more

3. DeFi's dominance continued eroding as markets trended lower

DeFi market cap suffered a hefty drop, decreasing from $142 million to $36 million in a span of 3 months, along with the rest of the crypto market. Much of the DeFi market cap was wiped out largely due to the collapse of Terra and its stablecoin, UST. Terra ecosystem projects were wiped out, alongside protocols that supported these assets. Notably, the panic spread towards other stablecoins, leading to mass redemptions of USDT and other algo-stablecoins depegging.

Besides that, DeFi exploits have ramped up in Q2, affecting projects such as Inverse and Rari – negatively impacting token prices as investors lose faith in these hacked protocols.

4. OpenSea’s dominance slips in a shrinking NFT market from 59% in April to 42% in June 2022; competitors Magic Eden and X2Y2 gain ground

OpenSea successfully retained its teetering hold over the top position, but Magic Eden and X2Y2 are hot on its heels. Moreover, OpenSea’s integration of Solana seemed to have “backfired”, opening up the floodgates for Solana NFTs, a move that ended up benefiting Magic Eden more. Similar to LooksRare in Q1, X2Y2 rose rapidly as traders capitalized on its rebate and incentive program with wash trades – without which would put its volume at around LooksRare’s level.

5. Decentralized Exchange (DEX) trading volume plummeted by -38.6% from Q1

Combined across all chains, Uniswap is still the dominant DEX but Curve recorded the largest quarterly growth, because of both the (collapsed) USTC pools and the flight to stablecoins in the bear. Noticeably, DEXs on Solana and BNB Chain have either increased or maintained their relative market share, signifying real market activity on chains outside Ethereum.

 Full report can be viewed here.